UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
 FORM 10-Q
 
☒     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 20212022
 OR
     ☐        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Exact Name of Registrant as Specified in Its CharterCommission File NumberI.R.S. Employer Identification No.
HAWAIIAN ELECTRIC INDUSTRIES, INC. 1-8503 99-0208097
and Principal Subsidiary
HAWAIIAN ELECTRIC COMPANY, INC. 1-4955 99-0040500
State of Hawaii
(State or other jurisdiction of incorporation or organization)
 
Hawaiian Electric Industries, Inc. – 1001 Bishop Street, Suite 2900, Honolulu, Hawaii  96813
Hawaiian Electric Company, Inc. – 1001 Bishop Street, Suite, 2500, Honolulu, Hawaii  96813
(Address of principal executive offices and zip code)
 
Hawaiian Electric Industries, Inc. – (808) 543-5662
Hawaiian Electric Company, Inc. – (808) 543-7771
(Registrant’s telephone number, including area code) 
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
RegistrantTitle of each classTrading Symbol(s)Name of each exchange on which registered
Hawaiian Electric Industries, Inc.Common Stock, Without Par ValueHENew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Hawaiian Electric Industries, Inc.Yes☒No☐ Hawaiian Electric Company, Inc.Yes☒No☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Hawaiian Electric Industries, Inc.Yes☒No☐ Hawaiian Electric Company, Inc.Yes☒No☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act of 1934.
Hawaiian Electric Industries, Inc.: Hawaiian Electric Company, Inc.:
Large accelerated filer☒Smaller reporting company☐Large accelerated filer☐Smaller reporting company☐
Accelerated filer☐Emerging growth company☐Accelerated filer☐Emerging growth company☐
Non-accelerated filer☐Non-accelerated filer☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Hawaiian Electric Industries, Inc.☐Hawaiian Electric Company, Inc.☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Hawaiian Electric Industries, Inc.Yes☐No☒Hawaiian Electric Company, Inc.Yes☐No☒
Securities registered pursuant to 12(b) of the Act:
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuers’ classes of common stock, as of the latest practicable date.
Class of Common Stock Outstanding April 23, 202125, 2022
Hawaiian Electric Industries, Inc. (Without Par Value) 109,181,493109,431,346 Shares
Hawaiian Electric Company, Inc. ($6-2/3 Par Value) 17,324,37617,753,533 Shares (not publicly traded)
Hawaiian Electric Industries, Inc. (HEI) is the sole holder of Hawaiian Electric Company, Inc. (Hawaiian Electric) common stock.
This combined Form 10-Q is separately filed by HEI and Hawaiian Electric. Information contained herein relating to any individual registrant is filed by such registrant on its own behalf. No registrant makes any representation as to information relating to the other registrant, except that information relating to Hawaiian Electric is also attributed to HEI.


Hawaiian Electric Industries, Inc. and Subsidiaries
Hawaiian Electric Company, Inc. and Subsidiaries
Form 10-Q—Quarter ended March 31, 20212022
 
TABLE OF CONTENTS
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i

Hawaiian Electric Industries, Inc. and Subsidiaries
Hawaiian Electric Company, Inc. and Subsidiaries
Form 10-Q—Quarter ended March 31, 20212022
GLOSSARY OF TERMS
Terms Definitions
ACLAllowance for credit losses, which is the current credit loss standard, requires recording the allowance based on the expected loss model
AES HawaiiAES Hawaii, Inc.
AFSAvailable for sale
AMIAdvanced Metering Infrastructure
AOCIAccumulated other comprehensive income/(loss)
ARAAnnual revenue adjustment
ASBAmerican Savings Bank, F.S.B., a wholly owned subsidiary of ASB Hawaii, Inc.
ASB HawaiiASB Hawaii, Inc., a wholly owned subsidiary of Hawaiian Electric Industries, Inc. and the parent company of American Savings Bank, F.S.B.
ASUAccounting Standards Update
CARES ActThe Coronavirus Aid, Relief, and Economic Security Act enacted March 27, 2020
CBRECommunity-based renewable energy
CompanyHawaiian 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.; and Pacific Current, LLC and its subsidiaries Hamakua Holdings, LLC (and its subsidiary, Hamakua Energy, LLC), Mauo, LLC and Ka‘ie‘ie Waho Company, LLC; and(listed under Pacific Current). The Old Oahu Tug Service, Inc. (formerly Hawaiian Tug & Barge Corp.)was dissolved in March 2022.
Consumer AdvocateDivision of Consumer Advocacy, Department of Commerce and Consumer Affairs of the State of Hawaii
D&ODecision and order from the PUC
Dodd-Frank ActDodd-Frank Wall Street Reform and Consumer Protection Act of 2010
DOHDepartment of Health of the State of Hawaii
DRIPHEI Dividend Reinvestment and Stock Purchase Plan
ECRCEnergy cost recovery clause
EIP2010 Equity and Incentive Plan, as amended and restated
EPAEnvironmental Protection Agency — federal
EPRMExceptional Project Recovery Mechanism
EPSEarnings per share
ERP/EAMEnterprise Resource Planning/Enterprise Asset Management
ESGEnvironmental, Social & Governance
ESMEarnings Sharing Mechanism
EVEEconomic value of equity
Exchange ActSecurities Exchange Act of 1934
FASBFinancial Accounting Standards Board
FDICFederal Deposit Insurance Corporation
federalU.S. Government
FHLBFederal Home Loan Bank
FHLMCFederal Home Loan Mortgage Corporation
FitchFitch Ratings, Inc.
FNMAFederal National Mortgage Association
FRBFederal Reserve Board
GAAPAccounting principles generally accepted in the United States of America
GHGGreenhouse gas
GNMAGovernment National Mortgage Association
GSPAGrid Services Purchase Agreement
Hamakua EnergyHamakua Energy, LLC, an indirect subsidiary of HEIPacific Current
Hawaii Electric LightHawaii Electric Light Company, Inc., an electric utility subsidiary of Hawaiian Electric Company, Inc.

ii
GLOSSARY OF TERMS, continued

Terms Definitions
Hawaiian ElectricHawaiian Electric Company, Inc., an electric utility subsidiary of Hawaiian Electric Industries, Inc. and parent company of Hawaii Electric Light Company, Inc., Maui Electric Company, Limited and Renewable Hawaii, Inc. Uluwehiokama Biofuels Corp. was dissolved effective as of July 14, 2020
HEIHawaiian Electric Industries, Inc., direct parent company of Hawaiian Electric Company, Inc., ASB Hawaii, Inc., and Pacific Current, LLC andLLC. The Old Oahu Tug Service, Inc. (formerly Hawaiian Tug & Barge Corp.)was dissolved in March 2022.
HEIRSPHawaiian Electric Industries Retirement Savings Plan
HELOCHome equity line of credit
HPOWERCity and County of Honolulu with respect to a power purchase agreement for a refuse-fired plant
IPPIndependent power producer
IRLCsInterest rate lock commitments
KalaeloaKalaeloa Partners, L.P.
kWhKilowatthour/s (as applicable)
LMILow-to-moderate income
LTIPLong-term incentive plan
Maui ElectricMaui Electric Company, Limited, an electric utility subsidiary of Hawaiian Electric Company, Inc.
MauoMauo, LLC, an indirecta subsidiary of HEIPacific Current
Moody’sMoody’s Investors Service’s
MPIRMajor Project Interim Recovery
MSRMSRsMortgage servicing rightrights
MWMegawatt/s (as applicable)
MRPMulti-year rate period
NIINet interest income
NPBCNet periodic benefit costs
NPPCNet periodic pension costs
O&MOther operation and maintenance
OCCOffice of the Comptroller of the Currency
OPEBPostretirement benefits other than pensions
Pacific Current
Pacific Current, LLC, a wholly owned subsidiary of HEI and parent company of Hamakua Holdings, LLC, Mauo, LLC, and Ka‘ie‘Alenuihaha Developments, LLC, Kaʻieʻie Waho Company, LLC, Kaʻaipuaʻa, LLC, Upena, LLC and Mahipapa, LLC
PBRPerformance-based regulation
PGVPuna Geothermal Venture
PIMsPerformance incentive mechanisms
PPAPower purchase agreement
PPACPurchased power adjustment clause
PUCPublic Utilities Commission of the State of Hawaii
PVPhotovoltaic
RAMRateRevenue adjustment mechanism
RBARevenue balancing account
REIPRenewable Energy Infrastructure Program
RFPRequest for proposals
ROACEReturn on average common equity
RORBReturn on rate base
RPSRenewable portfolio standards
S&PS&P Global Ratings
SBASmall Business Administration
SECSecurities and Exchange Commission
SeeMeans the referenced material is incorporated by reference
Tax Act2017 Tax Cuts and Jobs Act (H.R. 1, An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018)
TDRTroubled debt restructuring
UtilitiesHawaiian Electric Company, Inc., Hawaii Electric Light Company, Inc. and Maui Electric Company, Limited
VIEVIEsVariable interest entityentities
iii

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report and other presentations made by Hawaiian Electric Industries, Inc. (HEI) and Hawaiian Electric Company, Inc. (Hawaiian Electric) and their subsidiaries contain “forward-looking statements,” which include statements that are predictive in nature, depend upon or refer to future events or conditions and usually include words such as “will,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “predicts,” “estimates” or similar expressions. In addition, any statements concerning future financial performance, ongoing business strategies or prospects or possible future actions are also forward-looking statements. Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties and the accuracy of assumptions concerning HEI and its subsidiaries (collectively, the Company), the performance of the industries in which they do business and economic, political and market factors, among other things. These forward-looking statements are not guarantees of future performance and actual results and financial condition may differ materially from those indicated in the forward-looking statements.
Risks, uncertainties and other important factors that could cause actual results to differ materially from those described in forward-looking statements and from historical results include, but are not limited to, the following:
•international, national and local economic and political conditions—including the state of the Hawaii tourism, defense and construction industries; the strength or weakness of the Hawaii and continental U.S. real estate markets (including the fair value and/or the actual performance of collateral underlying loans held by ASB, which could result in higher loan loss provisions and write-offs); decisions concerning the extent of the presence of the federal government and military in Hawaii; the implications and potential impacts of future Federal government shutdowns, including the impact to our customerscustomers’ ability to pay their electric bills and/or bank loans and the impact on the state of Hawaii economy; the implications and potential impacts of U.S. and foreign capital and credit market conditions and federal, state and international responses to those conditions; the potential impacts of global and local developments (including global economic conditions and uncertainties, unrest, terrorist acts, wars (such as the Russia-Ukraine war), conflicts, political protests, deadly virus epidemic or other crisis); the effects of changes that have or may occur in U.S. policy, such as with respect to immigration and trade; and pandemics;
•the extent of the impact of the COVID-19 pandemic, including the duration, spread, severity and any recurrence of the COVID-19 pandemic due to new variants or insufficient vaccinations, the duration and scope of related government orders and restrictions, the impact on our employees, customers and suppliers, and the impact of the COVID-19 pandemic on the overall demand or ability to pay for the Company’s goods and services, all of which could be affected by the pace of distribution, administration, and efficacy of COVID-19 vaccines over the short- and long-term, as well as the proportion of the population vaccinated;
•ability to adequately address risks and capitalize on opportunities related to our ESGenvironmental, social and governance (ESG) priority areas, which currently include decarbonization, economic health and affordability, reliability and resilience, secure digitalization, diversity, equity and inclusion, employee engagement, and climate-related risks and opportunities;
•citizen activism, including civil unrest, especially in times of severe economic depression and social divisiveness, which could negatively impact customers and employees, impair the ability of the Company and the Utilities to operate and maintain itstheir facilities in an effective and safe manner, and citizen activism andor stakeholder activism that could delay the construction, increase project costs or preclude the completion, of third-party or Utility projects that are required to meet electricity demand, resilience and reliability objectives and renewable portfolio standards (RPS) and other climate-related goals;
•the effects of future actions or inaction of the U.S. government or related agencies, including those related to the U.S. debt ceiling or budget funding, monetary policy, trade policy and tariffs, energy and environmental policy, and other policy and regulatory changes advanced or proposed by President Biden and his administration;
•weather, natural disasters (e.g., hurricanes, earthquakes, tsunamis, lightning strikes, lava flows and the increasing effects of climate change, such as more severe storms, flooding, droughts, heat waves, and rising sea levels) and wildfires, including their impact on the resilience and reliability and cost of the Company’s and Utilities’ operations and the economy;
•the timing, speed and extent of changes in interest rates and the shape of the yield curve, which could result in lower portfolio yields and net interest margin;margin, or higher borrowing costs;
•the ability of the Company and the Utilities to access the credit and capital markets (e.g., to obtain commercial paper and other short-term and long-term debt financing, including lines of credit, and, in the case of HEI, to issue common stock) under volatile and challenging market conditions, and the potential higher cost of such financings, if available;
•the risks inherent in changes in the value of the Company’s pension and other retirement plan assets and ASB’s securities available for sale, and the risks inherent in changes in the value of the Company’s pension liabilities, including changes driven by interest rates;rates and mortality improvements;
•changes in laws, regulations (including tax regulations), market conditions, interest rates and other factors that result in changes in assumptions used to calculate retirement benefits costs and funding requirements;
•the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) and of the rules and regulations that the Dodd-Frank Act requires to be promulgated, as amended by the Economic Growth, Regulatory Relief and Consumer Protection Act;
•increasing competition in the banking industry from traditional financial institutions as well as from non-traditional providers of financial services, including financial service subsidiaries of commercial and manufacturing companies (e.g., increased price competition for loans and deposits, or an outflow of deposits to alternative investments or platforms, which may have an adverse impact on ASB’s cost of funds)net interest margin and portfolio growth);
iv

•the potential delay by the Public Utilities Commission of the State of Hawaii (PUC) in considering (and potential disapproval of actual or proposed) renewable energy proposals and related costs; reliance by the Utilities on outside parties such as the state, independent power producers (IPPs) and developers; supply-chain challenges; and uncertainties surrounding technologies, solar power, wind power, biofuels, environmental assessments required to meet RPS and other climate-related goals; the impacts of implementation of the renewable energy proposals on future costs of electricity and potential penalties imposed by the PUC for delays in the commercial operations of renewable energy projects;
•the ability of the Utilities to develop, implement and recover the costs of implementing the Utilities’ action plans included in their updated Power Supply Improvement Plans, Demand Response Portfolio Plan, Distributed Generation Interconnection Plan, Grid Modernization Plans, and business model changes, which have been and are continuing to be developed and updated in response to the orders issued by the PUC, the PUC’s April 2014 statement of its inclinations on the future of Hawaii’s electric utilities and the vision, business strategies and regulatory policy changes required to align the Utilities’ business model with customer interests and the state’s public policy goals, and subsequent orders of the PUC;
•the ability of the Utilities to recover undepreciated cost of fossil fuel generating units, if they are required to be retired before the end of their expected useful life;
•capacity and supply constraints or difficulties, especially if generating units (utility-owned or IPP-owned) fail or measures such as demand-side management, distributed generation, combined heat and power or other firm capacity supply-side resources fall short of achieving their forecasted benefits or are otherwise insufficient to reduce or meet peak demand;
•high and/or volatile fuel oil price changes,prices, which increases working capital requirements and customer bills, or delivery of adequate fuel by suppliers (including as a result of the Russia-Ukraine war), which could affect the reliability of utility operations, and the continued availability to the electric utilities of their energy cost recovery clauses (ECRCs);
•the continued availability to the electric utilities or modifications of other cost recovery mechanisms, including the purchased power adjustment clauses (PPACs), rateannual revenue adjustment mechanisms (RAMs)(ARA) and pension and postretirement benefits other than pensions (OPEB) tracking mechanisms, and the continued decoupling of revenues from sales to mitigate the effects of declining kilowatthourkilowatt-hour sales;
•the ability of the Utilities to recover increasing costs and earn a reasonable return on capital investments not covered by the annual revenue adjustment (ARA), while providing the customer dividend required by performance-based regulation (PBR);
•the ability of the Utilities to achieve performance incentive goals currently in place;
•the impact from the PUC’s implementation of performance-based ratemakingPBR for the Utilities pursuant to Act 005, Session Laws 2018, including the potential addition of new performance incentive mechanisms (PIMs), third-party proposals adopted by the PUC in its implementation of performance-based regulation (PBR),PBR, and the implications of not achieving performance incentive goals;
•the impact of fuel price levels and volatility on customer satisfaction and political and regulatory support for the Utilities;
•the risks associated with increasing reliance on renewable energy, including the availability and cost of non-fossil fuel supplies for renewable energy generation and the operational impacts of adding intermittent sources of renewable energy to the electric grid;
•the growing risk that energy production from renewable generating resources may be curtailed and the interconnection of additional resources will be constrained as more generating resources are added to the Utilities’ electric systems and as customers reduce their energy usage;
•the ability of IPPs to deliver the firm capacity anticipated in their power purchase agreements (PPAs);
•the potential that, as IPP contracts near the end of their terms, there may be less economic incentive for the IPPs to make investments in their units to ensure the availability of their units;
•the ability of the Utilities to negotiate, periodically, favorable agreements for significant resources such as fuel supply contracts and collective bargaining agreements and avoid or mitigate labor disputes and work stoppages;
•new technological developments that could affect the operations and prospects of the Utilities and ASB or their competitors such as the commercial development of energy storage and microgrids and banking through alternative channels;channels, including use of digital currencies, which could include a central bank digital currency;
•cybersecurity risks and the potential for cyber incidents, including potential incidents at HEI, its third-party vendors, and its subsidiaries (including at ASB branches, and electric utility plants)plants and IPP-owned facilities) and incidents at data processing centers used, to the extent not prevented by intrusion detection and prevention systems, anti-virus software, firewalls and other general IT controls;
•failure to achieve remaining cost savings commitment related to the Enterprise Resource Planning/Enterprise Asset Management (ERP/EAM) project-related benefits and the management audit committed savings of $33 million over the 2021 to 2025 multi-year rate period (MRP);
•federal, state, county and international governmental and regulatory actions, such as existing, new and changes in laws, rules and regulations applicable to HEI, the Utilities and ASB (including changes in taxation and tax rates, increases in capital requirements, regulatory policy changes, environmental laws and regulations (including resulting compliance costs and risks of fines and penalties and/or liabilities), the regulation of greenhouse gas emissions, governmental fees and assessments (such as Federal Deposit Insurance Corporation assessments), and potential carbon pricing or “cap and trade” legislation that may fundamentally alter costs to produce electricity and accelerate the move to renewable generation);
v

•developments in laws, regulations and policies governing protections for historic, archaeological and cultural sites, and plant and animal species and habitats, as well as developments in the implementation and enforcement of such laws, regulations and policies;
v

•discovery of conditions that may be attributable to historical chemical releases, including any necessary investigation and remediation, and any associated enforcement, litigation or regulatory oversight;
•decisions by the PUC in rate cases and other proceedings (including the risks of delays in the timing of decisions, adverse changes in final decisions from interim decisions and the disallowance of project costs as a result of adverse regulatory audit reports or otherwise);
•decisions by the PUC and by other agencies and courts on land use, environmental and other permitting issues (such as required corrective actions, restrictions and penalties that may arise, such as with respect to environmental conditions or RPS);
•potential enforcement actions by the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board (FRB), the Federal Deposit Insurance Corporation (FDIC) and/or other governmental authorities (such as consent orders, required corrective actions, restrictions and penalties that may arise, for example, with respect to compliance deficiencies under existing or new banking and consumer protection laws and regulations or with respect to capital adequacy);
•the risks associated with the geographic concentration of HEI’s businesses and ASB’s loans, ASB’s concentration in a single product type (i.e., first mortgages) and ASB’s significant credit relationships (i.e., concentrations of large loans and/or credit lines with certain customers);
•changes in accounting principles applicable to HEI and its subsidiaries, including the adoption of new U.S. accounting standards, the potential discontinuance of regulatory accounting related to PBR or other regulatory changes, the effects of potentially required consolidation of variable interest entities (VIEs), or required finance lease or on-balance-sheet operating lease accounting for PPAs with IPPs;
•downgrades by securities rating agencies in their ratings of the securities of HEI and Hawaiian Electric and their impact on results of financing efforts;
•faster than expected loan prepayments that can cause a decrease in net interest income and portfolio yields, an acceleration of the amortization of premiums on loans and investments and the impairment of mortgage-servicing assets of ASB;
•changes in ASB’s loan portfolio credit profile and asset quality and/or mix, which may increase or decrease the required level of provision for credit losses, allowance for credit losses (ACL) and charge-offs;
•changes in ASB’s deposit cost or mix which may have an adverse impact on ASB’s cost of funds;
•unanticipated changes from the expected discontinuance of LIBOR and the transition to an alternative reference rate, which may include adverse impacts to the Company’s cost of capital, loan portfolio and interest income on loans;
•the final outcome of tax positions taken by HEI and its subsidiaries;
•the risks of suffering losses and incurring liabilities that are uninsured (e.g., damages to the Utilities’ transmission and distribution system and losses from business interruption) or underinsured (e.g., losses not covered as a result of insurance deductibles or other exclusions or exceeding policy limits), and the risks associated with the operation of transmission and distribution assets and power generation facilities, including public and employee safety issues, and assets causing or contributing to wildfires;
•the ability of the Company’s non-regulated subsidiary, Pacific Current, LLC (Pacific Current), to achieve its performance and growth objectives, which in turn could affect its ability to service its non-recourse debt;
•the Company’s reliance on third parties and the risk of their non-performance, which has increased due to the impact from the COVID-19 pandemic; and
•other risks or uncertainties described elsewhere in this report and in other reports (e.g., “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K) previously and subsequently filed by HEI and/or Hawaiian Electric with the Securities and Exchange Commission.
Forward-looking statements speak only as of the date of the report, presentation or filing in which they are made. Except to the extent required by the federal securities laws, HEI, Hawaiian Electric, ASB, Pacific Current and their subsidiaries undertake no obligation to publicly update or revise any forward-looking statements, whether written or oral and whether as a result of new information, future events or otherwise.
vi

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

Hawaiian Electric Industries, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (unaudited)
Three months ended March 31
(in thousands, except per share amounts)20212020
Revenues  
Electric utility$564,864 $597,442 
Bank77,131 79,738 
Other951 6 
Total revenues642,946 677,186 
Expenses  
Electric utility495,750 553,484 
Bank41,835 60,335 
Other7,330 3,665 
Total expenses544,915 617,484 
Operating income (loss)  
Electric utility69,114 43,958 
Bank35,296 19,403 
Other(6,379)(3,659)
Total operating income98,031 59,702 
Retirement defined benefits credit (expense)—other than service costs2,435 (934)
Interest expense, net—other than on deposit liabilities and other bank borrowings(23,736)(21,775)
Allowance for borrowed funds used during construction747 688 
Allowance for equity funds used during construction2,191 2,015 
Gain on sale of investment securities, net528 0 
Income before income taxes80,196 39,696 
Income taxes15,365 5,803 
Net income64,831 33,893 
Preferred stock dividends of subsidiaries473 473 
Net income for common stock$64,358 $33,420 
Basic earnings per common share$0.59 $0.31 
Diluted earnings per common share$0.59 $0.31 
Weighted-average number of common shares outstanding109,221 109,051 
Net effect of potentially dilutive shares271 314 
Weighted-average shares assuming dilution109,492 109,365 
Three months ended March 31
(in thousands, except per share amounts)20222021
Revenues  
Electric utility$708,792 $564,864 
Bank75,115 77,131 
Other1,161 951 
Total revenues785,068 642,946 
Expenses  
Electric utility635,197 495,750 
Bank45,085 41,835 
Other5,510 7,330 
Total expenses685,792 544,915 
Operating income (loss)  
Electric utility73,595 69,114 
Bank30,030 35,296 
Other(4,349)(6,379)
Total operating income99,276 98,031 
Retirement defined benefits credit—other than service costs1,243 2,435 
Interest expense, net—other than on deposit liabilities and other bank borrowings(24,349)(23,736)
Allowance for borrowed funds used during construction778 747 
Allowance for equity funds used during construction2,409 2,191 
Gain on sales of investment securities, net and equity-method investment8,123 528 
Income before income taxes87,480 80,196 
Income taxes17,840 15,365 
Net income69,640 64,831 
Preferred stock dividends of subsidiaries473 473 
Net income for common stock$69,167 $64,358 
Basic earnings per common share$0.63 $0.59 
Diluted earnings per common share$0.63 $0.59 
Weighted-average number of common shares outstanding109,361 109,221 
Net effect of potentially dilutive shares273 271 
Weighted-average shares assuming dilution109,634 109,492 
This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 20202021 Form 10-K.

1

Hawaiian Electric Industries, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (unaudited)
 Three months ended March 31
(in thousands)20212020
Net income for common stock$64,358 $33,420 
Other comprehensive income (loss), net of taxes:  
Net unrealized gains on available-for-sale investment securities:  
Net unrealized gains on available-for-sale investment securities arising during the period, net of taxes of $(16,616) and $7,120, respectively(45,390)19,448 
Reclassification adjustment for net realized gains included in net income, net of taxes of $(142) and NaN, respectively(387)0 
Derivatives qualifying as cash flow hedges:  
Unrealized interest rate hedging losses arising during the period, net of taxes of $542 and $(619), respectively1,562 (1,784)
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 of $2,084 and $1,986, respectively6,010 5,706 
Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes of $(2,015) and $(1,789), respectively(5,811)(5,158)
Other comprehensive income (loss), net of taxes(44,016)18,212 
Comprehensive income attributable to Hawaiian Electric Industries, Inc.$20,342 $51,632 
 Three months ended March 31
(in thousands)20222021
Net income for common stock$69,167 $64,358 
Other comprehensive income (loss), net of taxes:  
Net unrealized gains (losses) on available-for-sale investment securities:  
Net unrealized losses on available-for-sale investment securities arising during the period, net of taxes of $(44,079) and $(16,616), respectively(120,407)(45,390)
Reclassification adjustment for net realized gains included in net income, net of taxes of $— and $(142), respectively— (387)
Derivatives qualifying as cash flow hedges:  
Unrealized interest rate hedging gains arising during the period, net of taxes of $1,046 and $542, respectively3,017 1,562 
Reclassification adjustment for net realized losses included in net income, net of taxes of $19 and nil, respectively55 — 
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 of $1,562 and $2,084, respectively4,501 6,010 
Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes of $(1,500) and $(2,015), respectively(4,325)(5,811)
Other comprehensive loss, net of tax benefits(117,159)(44,016)
Comprehensive income (loss) attributable to Hawaiian Electric Industries, Inc.$(47,992)$20,342 
This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 20202021 Form 10-K.

2

Hawaiian Electric Industries, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited) 
(dollars in thousands)(dollars in thousands)March 31, 2021December 31, 2020(dollars in thousands)March 31, 2022December 31, 2021
AssetsAssets  Assets  
Cash and cash equivalentsCash and cash equivalents$277,579 $341,421 Cash and cash equivalents$301,704 $305,551 
Restricted cashRestricted cash14,067 17,558 Restricted cash5,912 5,911 
Accounts receivable and unbilled revenues, netAccounts receivable and unbilled revenues, net273,197 281,216 Accounts receivable and unbilled revenues, net359,807 344,213 
Available-for-sale investment securities, at fair valueAvailable-for-sale investment securities, at fair value2,305,257 1,970,417 Available-for-sale investment securities, at fair value2,621,375 2,574,618 
Held-to-maturity investment securities, at amortized costHeld-to-maturity investment securities, at amortized cost295,046 226,947 Held-to-maturity investment securities, at amortized cost517,150 522,270 
Stock in Federal Home Loan Bank, at costStock in Federal Home Loan Bank, at cost10,000 8,680 Stock in Federal Home Loan Bank, at cost10,000 10,000 
Loans held for investment, netLoans held for investment, net5,218,288 5,232,642 Loans held for investment, net5,117,522 5,139,984 
Loans held for sale, at lower of cost or fair valueLoans held for sale, at lower of cost or fair value23,637 28,275 Loans held for sale, at lower of cost or fair value7,961 10,404 
Property, plant and equipment, net of accumulated depreciation of $2,947,647 and $2,903,144 at March 31, 2021 and December 31, 2020, respectively5,283,768 5,265,735 
Property, plant and equipment, net of accumulated depreciation of $3,077,453 and $3,028,130 at March 31, 2022 and December 31, 2021, respectivelyProperty, plant and equipment, net of accumulated depreciation of $3,077,453 and $3,028,130 at March 31, 2022 and December 31, 2021, respectively5,411,746 5,392,068 
Operating lease right-of-use assetsOperating lease right-of-use assets162,713 153,069 Operating lease right-of-use assets136,207 122,416 
Regulatory assetsRegulatory assets773,426 766,708 Regulatory assets559,161 565,543 
OtherOther639,505 629,149 Other777,694 747,469 
GoodwillGoodwill82,190 82,190 Goodwill82,190 82,190 
Total assetsTotal assets$15,358,673 $15,004,007 Total assets$15,908,429 $15,822,637 
Liabilities and shareholders’ equityLiabilities and shareholders’ equity  Liabilities and shareholders’ equity  
LiabilitiesLiabilities  Liabilities  
Accounts payableAccounts payable$164,936 $182,347 Accounts payable$240,296 $205,544 
Interest and dividends payableInterest and dividends payable32,405 23,547 Interest and dividends payable33,519 19,889 
Deposit liabilitiesDeposit liabilities7,745,294 7,386,957 Deposit liabilities8,289,272 8,172,212 
Short-term borrowings—other than bankShort-term borrowings—other than bank100,242 129,379 Short-term borrowings—other than bank71,491 53,998 
Other bank borrowingsOther bank borrowings102,685 89,670 Other bank borrowings137,385 88,305 
Long-term debt, net—other than bankLong-term debt, net—other than bank2,229,738 2,119,129 Long-term debt, net—other than bank2,316,046 2,321,937 
Deferred income taxesDeferred income taxes380,365 395,089 Deferred income taxes340,246 384,760 
Operating lease liabilitiesOperating lease liabilities175,334 160,432 Operating lease liabilities151,832 136,760 
Regulatory liabilitiesRegulatory liabilities956,139 959,786 Regulatory liabilities1,003,444 996,768 
Defined benefit pension and other postretirement benefit plans liabilityDefined benefit pension and other postretirement benefit plans liability558,191 567,438 Defined benefit pension and other postretirement benefit plans liability341,845 348,072 
OtherOther557,758 618,438 Other645,118 669,215 
Total liabilitiesTotal liabilities13,003,087 12,632,212 Total liabilities13,570,494 13,397,460 
Preferred stock of subsidiaries - not subject to mandatory redemptionPreferred stock of subsidiaries - not subject to mandatory redemption34,293 34,293 Preferred stock of subsidiaries - not subject to mandatory redemption34,293 34,293 
Commitments and contingencies (Notes 3 and 4)Commitments and contingencies (Notes 3 and 4)00Commitments and contingencies (Notes 3 and 4)00
Shareholders’ equityShareholders’ equity  Shareholders’ equity  
Preferred stock, 0 par value, authorized 10,000,000 shares; issued: NaN0 0 
Common stock, 0 par value, authorized 200,000,000 shares; issued and outstanding: 109,281,493 shares and 109,181,124 shares at March 31, 2021 and December 31, 2020, respectively1,678,973 1,678,368 
Preferred stock, no par value, authorized 10,000,000 shares; issued: nonePreferred stock, no par value, authorized 10,000,000 shares; issued: none— — 
Common stock, no par value, authorized 200,000,000 shares; issued and outstanding: 109,431,346 shares and 109,311,785 shares at March 31, 2022 and December 31, 2021, respectivelyCommon stock, no par value, authorized 200,000,000 shares; issued and outstanding: 109,431,346 shares and 109,311,785 shares at March 31, 2022 and December 31, 2021, respectively1,684,547 1,685,496 
Retained earningsRetained earnings687,600 660,398 Retained earnings788,787 757,921 
Accumulated other comprehensive loss, net of tax benefitsAccumulated other comprehensive loss, net of tax benefits(45,280)(1,264)Accumulated other comprehensive loss, net of tax benefits(169,692)(52,533)
Total shareholders’ equityTotal shareholders’ equity2,321,293 2,337,502 Total shareholders’ equity2,303,642 2,390,884 
Total liabilities and shareholders’ equityTotal liabilities and shareholders’ equity$15,358,673 $15,004,007 Total liabilities and shareholders’ equity$15,908,429 $15,822,637 
This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 20202021 Form 10-K.

3

Hawaiian Electric Industries, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Shareholders’ Equity (unaudited) 
Common stockRetainedAccumulated
other
comprehensive		  Common stockRetainedAccumulated
other
comprehensive		 
(in thousands)(in thousands)SharesAmountEarningsincome (loss)Total(in thousands)SharesAmountEarningsincome (loss)Total
Balance, December 31, 2021Balance, December 31, 2021109,312 $1,685,496 $757,921 $(52,533)$2,390,884 
Net income for common stockNet income for common stock— — 69,167 — 69,167 
Other comprehensive loss, net of tax benefitsOther comprehensive loss, net of tax benefits— — — (117,159)(117,159)
Share-based expenses and other, netShare-based expenses and other, net119 (949)— — (949)
Common stock dividends (35¢ per share)Common stock dividends (35¢ per share)— — (38,301)— (38,301)
Balance, March 31, 2022Balance, March 31, 2022109,431 $1,684,547 $788,787 $(169,692)$2,303,642 
Balance, December 31, 2020Balance, December 31, 2020109,181 $1,678,368 $660,398 $(1,264)$2,337,502 Balance, December 31, 2020109,181 $1,678,368 $660,398 $(1,264)$2,337,502 
Net income for common stockNet income for common stock— — 64,358 — 64,358 Net income for common stock— — 64,358 — 64,358 
Other comprehensive income, net of taxesOther comprehensive income, net of taxes— — — (44,016)(44,016)Other comprehensive income, net of taxes— — — (44,016)(44,016)
Share-based expenses and other, netShare-based expenses and other, net100 605 — — 605 Share-based expenses and other, net100 605 — — 605 
Common stock dividends (34¢ per share)Common stock dividends (34¢ per share)— — (37,156)— (37,156)Common stock dividends (34¢ per share)— — (37,156)— (37,156)
Balance, March 31, 2021Balance, March 31, 2021109,281 $1,678,973 $687,600 $(45,280)$2,321,293 Balance, March 31, 2021109,281 $1,678,973 $687,600 $(45,280)$2,321,293 
Balance, December 31, 2019108,973 $1,678,257 $622,042 $(20,039)$2,280,260 
Impact of adoption of ASU No. 2016-13
— — (15,372)— (15,372)
Balance, January 1, 2020 after adoption of
ASU No. 2016-13		108,973 1,678,257 606,670 (20,039)2,264,888 
Net income for common stock— — 33,420 — 33,420 
Other comprehensive income, net of taxes— — — 18,212 18,212 
Share-based expenses and other, net172 (3,996)— — (3,996)
Common stock dividends (33¢ per share)— — (36,019)— (36,019)
Balance, March 31, 2020109,145 $1,674,261 $604,071 $(1,827)$2,276,505 
This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 20202021 Form 10-K.

4

Hawaiian Electric Industries, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
Three months ended March 31
(in thousands)20222021
Cash flows from operating activities  
Net income$69,640 $64,831 
Adjustments to reconcile net income to net cash provided by operating activities  
Depreciation of property, plant and equipment62,990 61,427 
Other amortization9,425 10,951 
Provision for credit losses(3,263)(8,435)
Loans originated, held for sale(73,931)(162,901)
Proceeds from sale of loans, held for sale75,629 170,862 
Gain on sales of investment securities, net and equity-method investment(8,123)(528)
Gain on sale of loans, net(1,077)(4,300)
Deferred income taxes(5,255)(2,196)
Share-based compensation expense2,117 2,602 
Allowance for equity funds used during construction(2,409)(2,191)
Other(2,552)(3,519)
Changes in assets and liabilities  
Decrease in accounts receivable and unbilled revenues, net4,454 5,664 
Increase in fuel oil stock(35,333)(16,400)
Increase in regulatory assets(5,089)(14,869)
Increase (decrease) in regulatory liabilities5,520 (4,716)
Increase in accounts, interest and dividends payable71,490 7,677 
Change in prepaid and accrued income taxes, tax credits and utility revenue taxes(14,928)(25,513)
Decrease in defined benefit pension and other postretirement benefit plans liability(1,309)(2,621)
Change in other assets and liabilities(55,411)(34,095)
Net cash provided by operating activities92,585 41,730 
Cash flows from investing activities  
Available-for-sale investment securities purchased(291,168)(781,992)
Principal repayments on available-for-sale investment securities104,654 184,755 
Proceeds from sale of available-for-sale investment securities— 197,354 
Purchases of held-to-maturity investment securities— (88,262)
Proceeds from repayments or maturities of held-to-maturity investment securities4,547 20,185 
Purchase of stock from Federal Home Loan Bank— (22,296)
Redemption of stock from Federal Home Loan Bank— 20,976 
Net decrease in loans held for investment28,076 23,922 
Capital expenditures(79,163)(74,079)
Contributions to low income housing investments— (3,205)
Other5,340 4,622 
Net cash used in investing activities(227,714)(518,020)
Three months ended March 31
(in thousands)20212020
Cash flows from operating activities  
Net income$64,831 $33,893 
Adjustments to reconcile net income to net cash provided by operating activities  
Depreciation of property, plant and equipment61,427 59,614 
Other amortization10,951 11,418 
Provision for credit losses(8,435)10,401 
Loans originated, held for sale(162,901)(76,770)
Proceeds from sale of loans, held for sale170,862 72,533 
Gain on sale of investment securities, net(528)0 
Gain on sale of loans(4,300)(2,000)
Deferred income taxes(2,196)(4,996)
Share-based compensation expense2,602 1,704 
Allowance for equity funds used during construction(2,191)(2,015)
Other(3,519)224 
Changes in assets and liabilities  
Decrease (increase) in accounts receivable and unbilled revenues, net5,664 (6,563)
Decrease (increase) in fuel oil stock(16,400)2,566 
Decrease (increase) in regulatory assets(14,869)1,171 
Increase (decrease) in regulatory liabilities(4,716)16,586 
Increase in accounts, interest and dividends payable7,677 8,935 
Change in prepaid and accrued income taxes, tax credits and utility revenue taxes(25,513)(45,205)
Decrease in defined benefit pension and other postretirement benefit plans liability(2,621)(490)
Change in other assets and liabilities(34,095)(19,713)
Net cash provided by operating activities41,730 61,293 
Cash flows from investing activities  
Available-for-sale investment securities purchased(781,992)(159,173)
Principal repayments on available-for-sale investment securities184,755 77,642 
Proceeds from sale of available-for-sale investment securities197,354 0 
Principal repayments of held-to-maturity investment securities20,185 4,851 
Purchases of held-to-maturity investment securities(88,262)0 
Purchase of stock from Federal Home Loan Bank(22,296)(20,766)
Redemption of stock from Federal Home Loan Bank20,976 19,440 
Net increase in loans held for investment23,922 (65,544)
Proceeds from sale of low-income housing investments0 6,725 
Capital expenditures(74,079)(125,554)
Contributions to low income housing investments(3,205)(1,026)
Other4,622 2,942 
Net cash used in investing activities(518,020)(260,463)
Cash flows from financing activities  
Net increase in deposit liabilities358,337 111,881 
Net increase (decrease) in short-term borrowings with original maturities of three months or less35,751 (135,710)
Net increase in other bank borrowings with original maturities of three months or less13,015 42,495 
Proceeds from issuance of short-term debt0 50,000 
Repayment of short-term debt(65,000)0 
Proceeds from issuance of long-term debt161,800 186,925 
Repayment of long-term debt(50,699)(909)
Withheld shares for employee taxes on vested share-based compensation(1,997)(5,700)
Common stock dividends(37,156)(36,018)
Preferred stock dividends of subsidiaries(473)(473)
Other(4,621)(4,590)
Net cash provided by financing activities408,957 207,901 
Net increase (decrease) in cash, cash equivalents and restricted cash(67,333)8,731 
Cash, cash equivalents and restricted cash, beginning of period358,979 227,685 
Cash, cash equivalents and restricted cash, end of period291,646 236,416 
Less: Restricted cash(14,067)(30,902)
Cash and cash equivalents, end of period$277,579 $205,514 
(continued)

5

Hawaiian Electric Industries, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)(continued)
Three months ended March 31
(in thousands)20222021
Cash flows from financing activities  
Net increase in deposit liabilities117,060 358,337 
Net increase in short-term borrowings with original maturities of three months or less17,493 35,751 
Net increase in other bank borrowings with original maturities of three months or less49,080 13,015 
Repayment of short-term debt— (65,000)
Proceeds from issuance of long-term debt7,312 161,800 
Repayment of long-term debt(13,446)(50,699)
Withheld shares for employee taxes on vested share-based compensation(3,065)(1,997)
Common stock dividends(38,301)(37,156)
Preferred stock dividends of subsidiaries(473)(473)
Other(4,377)(4,621)
Net cash provided by financing activities131,283 408,957 
Net decrease in cash, cash equivalents and restricted cash(3,846)(67,333)
Cash, cash equivalents and restricted cash, beginning of period311,462 358,979 
Cash, cash equivalents and restricted cash, end of period307,616 291,646 
Less: Restricted cash(5,912)(14,067)
Cash and cash equivalents, end of period$301,704 $277,579 
This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 20202021 Form 10-K.
56

Hawaiian Electric Company, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (unaudited)
Three months ended March 31
(in thousands)20212020
Revenues$564,864 $597,442 
Expenses  
Fuel oil127,427 173,221 
Purchased power142,296 139,816 
Other operation and maintenance114,570 127,547 
Depreciation57,355 55,850 
Taxes, other than income taxes54,102 57,050 
Total expenses495,750 553,484 
Operating income69,114 43,958 
Allowance for equity funds used during construction2,191 2,015 
Retirement defined benefits credit (expense)—other than service costs1,021 (381)
Interest expense and other charges, net(17,983)(16,594)
Allowance for borrowed funds used during construction747 688 
Income before income taxes55,090 29,686 
Income taxes11,233 5,282 
Net income43,857 24,404 
Preferred stock dividends of subsidiaries229 229 
Net income attributable to Hawaiian Electric43,628 24,175 
Preferred stock dividends of Hawaiian Electric270 270 
Net income for common stock$43,358 $23,905 
Three months ended March 31
(in thousands)20222021
Revenues$708,792 $564,864 
Expenses  
Fuel oil221,286 127,427 
Purchased power163,533 142,296 
Other operation and maintenance125,257 114,570 
Depreciation58,471 57,355 
Taxes, other than income taxes66,650 54,102 
Total expenses635,197 495,750 
Operating income73,595 69,114 
Allowance for equity funds used during construction2,409 2,191 
Retirement defined benefits credit —other than service costs990 1,021 
Interest expense and other charges, net(18,326)(17,983)
Allowance for borrowed funds used during construction778 747 
Income before income taxes59,446 55,090 
Income taxes12,538 11,233 
Net income46,908 43,857 
Preferred stock dividends of subsidiaries229 229 
Net income attributable to Hawaiian Electric46,679 43,628 
Preferred stock dividends of Hawaiian Electric270 270 
Net income for common stock$46,409 $43,358 
This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 20202021 Form 10-K.
HEI owns all of the common stock of Hawaiian Electric. Therefore, per share data with respect to shares of common stock of Hawaiian Electric are not meaningful.

Hawaiian Electric Company, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (unaudited)
 Three months ended March 31
(in thousands)20212020
Net income for common stock$43,358 $23,905 
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 taxes of $2,027 and $1,798, respectively5,845 5,184 
Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes of $(2,015) and $(1,789), respectively(5,811)(5,158)
Other comprehensive income, net of taxes34 26 
Comprehensive income attributable to Hawaiian Electric Company, Inc.$43,392 $23,931 
 Three months ended March 31
(in thousands)20222021
Net income for common stock$46,409 $43,358 
Other comprehensive income, 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 taxes of $1,518 and $2,027, respectively4,376 5,845 
Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes of $(1,500) and $(2,015), respectively(4,325)(5,811)
Other comprehensive income, net of taxes51 34 
Comprehensive income attributable to Hawaiian Electric Company, Inc.$46,460 $43,392 
This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 20202021 Form 10-K.
67

Hawaiian Electric Company, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
(dollars in thousands, except par value)March 31, 2022December 31, 2021
Assets  
Property, plant and equipment
Utility property, plant and equipment  
Land$52,057 $51,937 
Plant and equipment7,796,069 7,735,983 
Less accumulated depreciation(2,985,762)(2,940,517)
Construction in progress212,748 204,569 
Utility property, plant and equipment, net5,075,112 5,051,972 
Nonutility property, plant and equipment, less accumulated depreciation of $60 and $59 as of March 31, 2022 and December 31, 2021, respectively6,948 6,949 
Total property, plant and equipment, net5,082,060 5,058,921 
Current assets  
Cash and cash equivalents29,055 52,169 
Restricted cash2,140 3,089 
Customer accounts receivable, net181,400 186,859 
Accrued unbilled revenues, net140,005 129,155 
Other accounts receivable, net7,040 7,267 
Fuel oil stock, at average cost139,372 104,078 
Materials and supplies, at average cost72,706 71,877 
Prepayments and other41,415 46,031 
Regulatory assets78,875 66,664 
Total current assets692,008 667,189 
Other long-term assets  
Operating lease right-of-use assets114,478 101,470 
Regulatory assets480,286 498,879 
Other166,344 165,166 
Total other long-term assets761,108 765,515 
Total assets$6,535,176 $6,491,625 
Capitalization and liabilities  
Capitalization  
Common stock ($6 2/3 par value, authorized 50,000,000 shares; outstanding 17,753,533 shares at
March 31, 2022 and December 31, 2021)
$118,376 $118,376 
Premium on capital stock798,526 798,526 
Retained earnings1,363,211 1,348,277 
Accumulated other comprehensive loss, net of tax benefits-retirement benefit plans(3,229)(3,280)
Common stock equity2,276,884 2,261,899 
Cumulative preferred stock — not subject to mandatory redemption34,293 34,293 
Long-term debt, net1,624,599 1,624,427 
Total capitalization3,935,776 3,920,619 
Commitments and contingencies (Note 3)00
Current liabilities  
Current portion of operating lease liabilities39,958 49,368 
Current portion of long-term debt, net51,982 51,975 
Short-term borrowings from non-affiliates6,000 — 
Accounts payable168,189 160,007 
Interest and preferred dividends payable28,154 17,325 
Taxes accrued, including revenue taxes181,324 208,280 
Regulatory liabilities29,928 29,760 
Other80,218 71,569 
Total current liabilities585,753 588,284 
Deferred credits and other liabilities  
Operating lease liabilities88,689 65,780 
Deferred income taxes406,324 408,634 
Regulatory liabilities973,516 967,008 
Unamortized tax credits101,967 103,945 
Defined benefit pension and other postretirement benefit plans liability315,675 321,780 
Other127,476 115,575 
Total deferred credits and other liabilities2,013,647 1,982,722 
Total capitalization and liabilities$6,535,176 $6,491,625 
(dollars in thousands, except par value)March 31, 2021December 31, 2020
Assets  
Property, plant and equipment
Utility property, plant and equipment  
Land$51,611 $51,611 
Plant and equipment7,551,879 7,509,343 
Less accumulated depreciation(2,859,719)(2,819,079)
Construction in progress203,988 188,342 
Utility property, plant and equipment, net4,947,759 4,930,217 
Nonutility property, plant and equipment, less accumulated depreciation of $116 and $115 as of March 31, 2021 and December 31, 2020, respectively6,952 6,953 
Total property, plant and equipment, net4,954,711 4,937,170 
Current assets  
Cash and cash equivalents51,743 47,360 
Restricted cash11,506 15,966 
Customer accounts receivable, net141,649 147,832 
Accrued unbilled revenues, net101,813 101,036 
Other accounts receivable, net5,073 7,673 
Fuel oil stock, at average cost74,688 58,238 
Materials and supplies, at average cost69,726 67,344 
Prepayments and other36,419 44,083 
Regulatory assets54,322 30,435 
Total current assets546,939 519,967 
Other long-term assets  
Operating lease right-of-use assets138,534 127,654 
Regulatory assets719,104 736,273 
Other135,620 136,309 
Total other long-term assets993,258 1,000,236 
Total assets$6,494,908 $6,457,373 
Capitalization and liabilities  
Capitalization  
Common stock ($6 2/3 par value, authorized 50,000,000 shares; outstanding 17,324,376 shares at
March 31, 2021 and December 31, 2020)
$115,515 $115,515 
Premium on capital stock746,987 746,987 
Retained earnings1,297,768 1,282,335 
Accumulated other comprehensive loss, net of tax benefits-retirement benefit plans(2,885)(2,919)
Common stock equity2,157,385 2,141,918 
Cumulative preferred stock — not subject to mandatory redemption34,293 34,293 
Long-term debt, net1,675,863 1,561,302 
Total capitalization3,867,541 3,737,513 
Commitments and contingencies (Note 3)00
Current liabilities  
Current portion of operating lease liabilities66,301 64,730 
Short-term borrowings from non-affiliates0 49,979 
Accounts payable123,199 133,849 
Interest and preferred dividends payable28,172 20,350 
Taxes accrued, including revenue taxes155,125 192,524 
Regulatory liabilities30,370 37,301 
Other70,000 74,262 
Total current liabilities473,167 572,995 
Deferred credits and other liabilities  
Operating lease liabilities84,102 69,494 
Deferred income taxes396,758 397,798 
Regulatory liabilities925,769 922,485 
Unamortized tax credits110,181 111,915 
Defined benefit pension and other postretirement benefit plans liability522,286 530,532 
Other115,104 114,641 
Total deferred credits and other liabilities2,154,200 2,146,865 
Total capitalization and liabilities$6,494,908 $6,457,373 
This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 20202021 Form 10-K.
78

Hawaiian Electric Company, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Common Stock Equity (unaudited)
 Common stockPremium
on
capital		RetainedAccumulated
other
comprehensive		 
(in thousands)SharesAmountstockearningsincome (loss)Total
Balance, December 31, 202017,324 $115,515 $746,987 $1,282,335 $(2,919)$2,141,918 
Net income for common stock— — — 43,358 — 43,358 
Other comprehensive income, net of taxes— — — — 34 34 
Common stock dividends— — — (27,925)— (27,925)
Balance, March 31, 202117,324 $115,515 $746,987 $1,297,768 $(2,885)$2,157,385 
Balance, December 31, 201917,048 $113,678 $714,824 $1,220,129 $(1,279)$2,047,352 
Net income for common stock— — — 23,905 — 23,905 
Other comprehensive income, net of taxes— — — — 26 26 
Common stock dividends— — — (26,784)— (26,784)
Balance, March 31, 202017,048 $113,678 $714,824 $1,217,250 $(1,253)$2,044,499 
This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2020 Form 10-K.


8

Hawaiian Electric Company, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
Three months ended March 31
(in thousands)20212020
Cash flows from operating activities  
Net income$43,857 $24,404 
Adjustments to reconcile net income to net cash provided by operating activities  
Depreciation of property, plant and equipment57,355 55,850 
Other amortization6,577 7,704 
Deferred income taxes(4,671)(3,762)
State refundable credit(2,662)(2,530)
Bad debt expense457 2,724 
Allowance for equity funds used during construction(2,191)(2,015)
Other(1)20 
Changes in assets and liabilities  
Decrease (increase) in accounts receivable6,078 (9,020)
Decrease (increase) in accrued unbilled revenues(427)2,704 
Decrease (increase) in fuel oil stock(16,450)2,410 
Increase in materials and supplies(2,382)(496)
Decrease (increase) in regulatory assets(14,869)1,171 
Increase (decrease) in regulatory liabilities(4,716)16,586 
Increase (decrease) in accounts payable6,254 (7,153)
Change in prepaid and accrued income taxes, tax credits and revenue taxes(24,802)(43,919)
Decrease in defined benefit pension and other postretirement benefit plans liability(1,434)(1,017)
Change in other assets and liabilities(14,012)(4,520)
Net cash provided by operating activities31,961 39,141 
Cash flows from investing activities  
Capital expenditures(70,361)(119,144)
Other1,863 2,713 
Net cash used in investing activities(68,498)(116,431)
Cash flows from financing activities  
Common stock dividends(27,925)(26,784)
Preferred stock dividends of Hawaiian Electric and subsidiaries(499)(499)
Proceeds from issuance of short-term debt0 50,000 
Repayment of short-term debt(50,000)0 
Proceeds from issuance of long-term debt115,000 95,000 
Net decrease in short-term borrowings from non-affiliates and affiliates with original maturities of three months or less0 (38,987)
Other(116)(23)
Net cash provided by financing activities36,460 78,707 
Net increase (decrease) in cash and cash equivalents(77)1,417 
Cash, cash equivalents and restricted cash, beginning of period63,326 41,894 
Cash, cash equivalents and restricted cash, end of period63,249 43,311 
Less: Restricted cash(11,506)(30,902)
Cash and cash equivalents, end of period$51,743 $12,409 
 Common stockPremium
on
capital		RetainedAccumulated
other
comprehensive		 
(in thousands)SharesAmountstockearningsincome (loss)Total
Balance, December 31, 202117,753 $118,376 $798,526 $1,348,277 $(3,280)$2,261,899 
Net income for common stock— — — 46,409 — 46,409 
Other comprehensive income, net of taxes— — — — 51 51 
Common stock dividends— — — (31,475)— (31,475)
Balance, March 31, 202217,753 $118,376 $798,526 $1,363,211 $(3,229)$2,276,884 
Balance, December 31, 202017,324 $115,515 $746,987 $1,282,335 $(2,919)$2,141,918 
Net income for common stock— — — 43,358 — 43,358 
Other comprehensive income, net of taxes— — — — 34 34 
Common stock dividends— — — (27,925)— (27,925)
Balance, March 31, 202117,324 $115,515 $746,987 $1,297,768 $(2,885)$2,157,385 
This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 20202021 Form 10-K.


9

Hawaiian Electric Company, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
Three months ended March 31
(in thousands)20222021
Cash flows from operating activities  
Net income$46,908 $43,857 
Adjustments to reconcile net income to net cash provided by operating activities  
Depreciation of property, plant and equipment58,471 57,355 
Other amortization6,355 6,577 
Deferred income taxes(6,021)(4,671)
State refundable credit(2,759)(2,662)
Bad debt expense1,619 457 
Allowance for equity funds used during construction(2,409)(2,191)
Other(2)(1)
Changes in assets and liabilities  
Decrease in accounts receivable16,236 6,078 
Increase in accrued unbilled revenues(10,825)(427)
Increase in fuel oil stock(35,294)(16,450)
Increase in materials and supplies(829)(2,382)
Increase in regulatory assets(5,089)(14,869)
Increase (decrease) in regulatory liabilities5,520 (4,716)
Increase in accounts payable29,624 6,254 
Change in prepaid and accrued income taxes, tax credits and revenue taxes(16,080)(24,802)
Decrease in defined benefit pension and other postretirement benefit plans liability(1,206)(1,434)
Change in other assets and liabilities(7,444)(14,012)
Net cash provided by operating activities76,775 31,961 
Cash flows from investing activities  
Capital expenditures(76,358)(70,361)
Other1,494 1,863 
Net cash used in investing activities(74,864)(68,498)
Cash flows from financing activities  
Common stock dividends(31,475)(27,925)
Preferred stock dividends of Hawaiian Electric and subsidiaries(499)(499)
Repayment of short-term debt— (50,000)
Proceeds from issuance of long-term debt— 115,000 
Net increase in short-term borrowings from non-affiliates and affiliates with original maturities of three months or less6,000 — 
Other— (116)
Net cash provided by (used in) financing activities(25,974)36,460 
Net decrease in cash, cash equivalents and restricted cash(24,063)(77)
Cash, cash equivalents and restricted cash, beginning of period55,258 63,326 
Cash, cash equivalents and restricted cash, end of period31,195 63,249 
Less: Restricted cash(2,140)(11,506)
Cash and cash equivalents, end of period$29,055 $51,743 
This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2021 Form 10-K.

910

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, 2020.2021.
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 March 31, 20212022 and December 31, 20202021 and the results of their operations and cash flows for the three months ended March 31, 20212022 and 2020.2021. 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.
Income TaxesCredit Losses.. In December 2019,March 2022, Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2019-12, “Income Taxes2022-02, “Financial Instruments-Credit Losses (Topic 740)326): Simplifying the Accounting for Income Taxes,Troubled Debt Restructurings and Vintage Disclosures,” which removes specific exceptionseliminates the accounting guidance for Troubled Debt Restructurings (TDRs) by creditors in Subtopic 310-40, Receivables-Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. Specifically, rather than applying the recognition and measurement guidance for TDRs, an entity must apply the loan refinancing and restructuring guidance in paragraphs 310-20-35-9 through 35-11 to determine whether a modification results in a new loan or a continuation of an existing loan. The amendments in this update also require that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the general principlesscope of Subtopic 326-20, “Financial Instruments-Credit Losses-Measured at Amortized Cost.” Gross write-off information must be included in Topic 740, improves financial statement preparers’ application of income tax-related guidance and simplifies GAAP under certain situations. ASU 2019-12 is effectivethe vintage disclosures required for public business entities in accordance with paragraph 325-20-50-6, which requires that an entity disclose the amortized cost basis of financing receivables by credit-quality indicator and class of financing receivable by year of origination. The amendments in this update are effective for fiscal years beginning after December 15, 2020, and2022, including interim periods within those fiscal years. The Company adoptedASB is assessing the ASU asrequirements of January 1, 2021 with no material impact on its consolidated financial statements and related disclosures.



the ASU.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
Note 2 · Segment financial information
(in thousands) (in thousands) Electric utilityBankOtherTotal(in thousands) Electric utilityBankOtherTotal
Three months ended March 31, 2022Three months ended March 31, 2022    
Revenues from external customersRevenues from external customers$708,788 $75,115 $1,165 $785,068 
Intersegment revenues (eliminations)Intersegment revenues (eliminations)4 — (4)— 
RevenuesRevenues$708,792 $75,115 $1,161 $785,068 
Income (loss) before income taxesIncome (loss) before income taxes$59,446 $30,215 $(2,181)$87,480 
Income taxes (benefit)Income taxes (benefit)12,538 6,345 (1,043)17,840 
Net income (loss)Net income (loss)46,908 23,870 (1,138)69,640 
Preferred stock dividends of subsidiariesPreferred stock dividends of subsidiaries499 — (26)473 
Net income (loss) for common stockNet income (loss) for common stock$46,409 $23,870 $(1,112)$69,167 
Total assets (at March 31, 2022)Total assets (at March 31, 2022)$6,535,176 $9,252,325 $120,928 $15,908,429 
Three months ended March 31, 2021Three months ended March 31, 2021    Three months ended March 31, 2021    
Revenues from external customersRevenues from external customers$564,855 $77,131 $960 $642,946 Revenues from external customers$564,855 $77,131 $960 $642,946 
Intersegment revenues (eliminations)Intersegment revenues (eliminations)9 0 (9)0 Intersegment revenues (eliminations)9 — (9)— 
RevenuesRevenues$564,864 $77,131 $951 $642,946 Revenues$564,864 $77,131 $951 $642,946 
Income (loss) before income taxesIncome (loss) before income taxes$55,090 $37,102 $(11,996)$80,196 Income (loss) before income taxes$55,090 $37,102 $(11,996)$80,196 
Income taxes (benefit)Income taxes (benefit)11,233 7,546 (3,414)15,365 Income taxes (benefit)11,233 7,546 (3,414)15,365 
Net income (loss)Net income (loss)43,857 29,556 (8,582)64,831 Net income (loss)43,857 29,556 (8,582)64,831 
Preferred stock dividends of subsidiariesPreferred stock dividends of subsidiaries499 0 (26)473 Preferred stock dividends of subsidiaries499 — (26)473 
Net income (loss) for common stockNet income (loss) for common stock$43,358 $29,556 $(8,556)$64,358 Net income (loss) for common stock$43,358 $29,556 $(8,556)$64,358 
Total assets (at March 31, 2021)$6,494,908 $8,718,024 $145,741 $15,358,673 
Three months ended March 31, 2020    
Revenues from external customers$597,430 $79,738 $18 $677,186 
Intersegment revenues (eliminations)12 0 (12)0 
Revenues$597,442 $79,738 $6 $677,186 
Income (loss) before income taxes$29,686 $18,969 $(8,959)$39,696 
Income taxes (benefit)5,282 3,208 (2,687)5,803 
Net income (loss)24,404 15,761 (6,272)33,893 
Preferred stock dividends of subsidiaries499 0 (26)473 
Net income (loss) for common stock$23,905 $15,761 $(6,246)$33,420 
Total assets (at December 31, 2020)$6,457,373 $8,396,533 $150,101 $15,004,007 
Total assets (at December 31, 2021)Total assets (at December 31, 2021)$6,491,625 $9,181,603 $149,409 $15,822,637 
 
Intercompany electricity sales of the Utilities to ASB 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.
Hamakua Energy, LLC’s (Hamakua Energy’s) sales to Hawaii Electric Light (a regulated affiliate) are eliminated in consolidation.
1112

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
Note 3 · Electric utility segment
Unconsolidated variable interest entities.
Power purchase agreements.  As of March 31, 2021,2022, the Utilities had 5 PPAs for firm capacity (including the Puna Geothermal Venture (PGV) PPA as PGVthat went offline in May 2018 due to lava flow on Hawaii Island, but returned to service with firm capacity of 1313.0 MW in the first quarter of 2021)2021, ramped up to 23.9 MW in the second quarter of 2021, and continued to provide capacity at the same level to date) 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 are 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 Hamakua Energy by reason of the provisions of the PPA that the Utilities have with the 3 IPPs. However, management has concluded that the Utilities are not the primary beneficiary of Kalaeloa, AES Hawaii and Hamakua Energy because the Utilities do not have the power to direct the activities that most significantly impact the 3 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 Hamakua Energy in its condensed consolidated financial statements. However, Hamakua Energy is an indirect subsidiary of Pacific Current and is consolidated in HEI’s condensed consolidated financial 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 IPP was considered a “governmental organization,” and thus excluded from the scope of accounting standards for VIEs. 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.
Commitments and contingencies.
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.
Power purchase agreements.  Purchases from all IPPs were as follows:
Three months ended March 31 Three months ended March 31
(in millions)(in millions)20212020(in millions)20222021
KalaeloaKalaeloa$37 $38 Kalaeloa$60 $37 
AES HawaiiAES Hawaii30 31 AES Hawaii27 30 
HPOWERHPOWER17 17 HPOWER19 17 
Hamakua EnergyHamakua Energy11 13 Hamakua Energy16 11 
Puna Geothermal VenturePuna Geothermal Venture4 0 Puna Geothermal Venture10 4 
Wind IPPsWind IPPs29 28 Wind IPPs18 29 
Solar IPPsSolar IPPs12 11 Solar IPPs13 12 
Other IPPs 1
Other IPPs 1
2 2 
Other IPPs 1
1 2 
Total IPPsTotal IPPs$142 $140 Total IPPs$164 $142 
1Includes hydro power and other PPAs
Kalaeloa Partners, L.P.  Under a 1988 PPA, as amended, Hawaiian Electric is committed to purchase 208 MW of firm capacity from Kalaeloa. In October 2021, Hawaiian Electric and Kalaeloa continue negotiationssigned the Amended and Restated Power Purchase Agreement for Firm Dispatchable Capacity and Energy (Amended and Restated PPA) to addressextend the PPA for an additional 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.of 10 years. In November 2021, Hawaiian Electric submitted an application for approval of the Amended and Restated PPA to the PUC, which is pending approval before the PUC. The price of purchases from Kalaeloa in the first quarter of 2022 have agreed that neither party will terminateincreased 62% over the PPA (which has been subjectfirst quarter of 2021, primarily due to automatic extension on a month-to-month basis) prior to May 31, 2021, to allow for a negotiated resolution.increased fuel oil cost.
13

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
AES Hawaii, Inc. Under a PPA entered into in March 1988, as amended (through Amended and Restated Amendment No. 2)4) for a period of 30 years ending September 2022, Hawaiian Electric agreed to purchase 180 MW of firm capacity from AES Hawaii. Hawaiian
12

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
Electric and AES Hawaii have been in dispute over an additional 9 MW of capacity. In February 2018, Hawaiian Electric reached agreement with AES Hawaii on an amendmentdoes not intend to extend the PPA. However, in June 2018, the PUC issued an order suspending reviewterm of the amendment pending a Department of Health of the State of Hawaii (DOH) decisionPPA which will expire on AES Hawaii’s 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.September 1, 2022.
Hu Honua Bioenergy, LLC (Hu Honua). In May 2012, Hawaii Electric Light signed a PPA, which the PUC approved in December 2013, with 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, which resulted in an amended and restated PPA between Hawaii Electric Light and Hu Honua dated May 9, 2017. In July 2017, the PUC approved the amended and restated PPA, which becomes effective once the PUC’s order is final and non-appealable. In August 2017, the PUC’s approval was appealed by a third party. On May 10, 2019, the Hawaii Supreme Court issued a decision remanding the matter to the PUC for further proceedings consistent with the court’s decision, which must include express consideration of greenhouse gas (GHG) emissions that would result from approving the PPA, whether the cost of energy under the PPA is reasonable in light of the potential for GHG emissions, and whether the terms of the PPA are prudent and in the public interest, in light of its potential hidden and long-term consequences. On June 20, 2019,As a result, the PUC issued an order reopeningreopened the docket for further proceedings, including re-examining all of the issues in the proceedings. On September 29, 2019, the PUC issued an order setting the procedural schedule for the matter and on December 20, 2019, issued an order modifying the procedural schedule. Pre-hearing matters were completed on March 6, 2020. On July 9, 2020, the PUC issued an order denying Hawaii Electric Light’s request to waive the amended and restated PPA from the PUC’s competitive bidding requirements and therefore, dismissed the request for approval of the amended and restated PPA without prejudice to possible participation in any future competitive bidding process. On July 20,September 9, 2020, the PUC denied Hu Honua filed aHonua’s motion for reconsideration of the PUC’s order which was denied by the PUC on September 9, 2020. On September 16, 2020,order. Hu Honua filed its notice of appeal to the Hawaii Supreme Court of the PUC’s order denying Hu Honua’s motion for reconsideration. Oral arguments were held beforeOn May 24, 2021, the Hawaii Supreme Court on April 22, 2021.vacated the PUC’s decision and remanded the matter back to the PUC for further proceedings. On June 30, 2021, the PUC issued an order reopening the docket consistent with the Hawaii Supreme Court’s order. A contested case hearing was held in March 2022. The matter is currently with the PUC for decision making.
Molokai New Energy Partners (MNEP). In July 2018, the PUC approved Maui Electric’s PPA with MNEP to purchase solar energy from a photovoltaic (PV) plus battery storage project. The 4.88 MW PV and 3 MW Battery Energy Storage System project was to deliver no more than 2.64 MW at any time to the Molokai system. On March 25, 2020, MNEP filed a complaint in the United Stated District Court for the District of Hawaii against Maui Electric claiming breach of contract. On June 3, 2020, Maui Electric provided Notice of Default and Termination of the PPA to MNEP terminating the PPA with an effective date of July 10, 2020. Thereafter, MNEP filed an amended Complaint to include claims relating to the termination and Hawaiian Electric filed its Answer to the Amended Complaint on September 11, 2020, disputing the facts presented by MNEP and all claims within the original and amended complaint. Currently, the discovery phase is ongoing.
Fuels barging contract.On August 23, 2021, the Utilities entered into a five-year inter-island fuel transportation contract with Sause Bros., Inc. On December 23, 2021, the PUC issued an interim D&O approving the inter-island fuels transportation contract and recovery of associated costs on an interim basis. The interim decision is effective until the PUC issues its final D&O in the proceeding. The Utility recorded a lease liability of $32 million in connection with the contract, which commenced in January 2022 with an estimated annual base rent of $6.2 million.
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 or community support 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. The ERP/EAM Implementation Project went live in October 2018. Hawaii Electric Light and Hawaiian Electric began to incorporate their portion of the deferred project costs in rate base and started the amortization over a 12-year period in January 2020 and November 2020, respectively. The PUC required thea minimum of $246 million ERP/EAM project-related benefit savings of the project to be passed ondelivered to customers.customers over the system’s 12-year service life.
In February 2019, the PUC approved a methodology for passing the future cost saving benefits of the new ERP/EAM system to customers developed by the Utilities in collaboration with the Consumer Advocate. The Utilities filed a benefits clarification document on June 10, 2019, reflecting $150 million in future net O&M expense reductions and cost avoidance, and $96 million in capital cost reductions and tax savings over the 12-year service life. To the extent the reduction in O&M expense relates to amounts reflected in electric rates, the Utilities would reduce future rates for such amounts. In October 2019, the PUC approved the Utilities and the Consumer Advocate’s Stipulated Performance Metrics and Tracking Mechanism. As of March 31, 2021,2022, the Utilities’ regulatory liability was $11.2$9.1 million ($6.55.1 million for Hawaiian Electric, $1.9$1.6 million for Hawaii
14

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
Electric Light and $2.8$2.4 million for Maui Electric) for the O&M expense savings that are being amortized or to be included in future rates. As part of the settlement agreement approved in the Hawaiian Electric 2020 test year rate case, the regulatory liability for Hawaiian Electric will be amortized over five years, beginning in November 2020, and the O&M benefits for Hawaiian Electric will bewas considered flowed through to customers. As part
On July 7, 2021, the PUC issued an order modifying the reporting frequency of the PBR proceeding, the regulatory liability as of
13

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
December 31, 2020 of approximately $1.6 million and $2.3 million, respectively, for Hawaii Electric Light and Maui Electric will be flowed to customers as part of the customer dividend in the annual revenue adjustment in 2021.
At the PUC’s direction, the Utilities have been filing Semi-Annual Enterprise System Benefits (SAESB) reports to an Annual Enterprise System Benefits (AESB) report on the achieved benefits savings. The most recent SAESB report was filed on February 26, 202114, 2022 for the period JulyJanuary 1 through December 31, 2020.2021.
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 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 1985.1985 and left the property in 1987. The federal Environmental Protection Agency (EPA) has since identified environmental impacts in the subsurface soil at the Site. In cooperation with the DOHDepartment of Health of State of Hawaii (DOH) and EPA, Maui Electric further investigated the Site and the Adjacent Parceladjacent parcel to determine the extent of impacts of polychlorinated biphenyls (PCBs), residual fuel oils and other subsurface contaminants. Maui Electric has a reserve balance of $2.7 million as of March 31, 2021,2022, representing the probable and reasonably estimable undiscounted cost for remediation of the Site and the Adjacent Parcel;adjacent parcel based on presently available information; however, final costs of remediation will depend on the cleanup approach implemented.
Additionally, on November 24, 2021, the current landowners of the Site, Misaki’s, Inc., filed a lawsuit against Hawaiian Electric (as alleged successor in interest to Molokai Electric, the prior owner of the Site) in the Circuit Court of the Second Circuit of the State of Hawaii (removed to the U.S. District Court for the District of Hawaii). The complaint which was subsequently amended to include Maui Electric, alleges that Hawaiian Electric is responsible for remediation of the Site based on the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), and the Hawaii Environmental Response Law under Hawaii Revised Statutes Chapter 128D, as well as being liable on contractual claims related to a short leaseback period during the transition of ownership from Molokai Electric. At this time, the Utilities are unable to determine the ultimate outcome of the lawsuit or the amount of any possible loss. The Utilities intend to vigorously defend the action.
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 under CERCLA responsible for the costs of investigation and cleanup of PCBsPCB contamination in sediment in the area offshore of the Waiau Power Plant as part of the Pearl Harbor Superfund Site. Hawaiian Electric was also required by the EPA to assess potential sources and extent of PCB contamination onshore at Waiau Power Plant.
As of March 31, 2021,2022, the reserve account balance recorded by Hawaiian Electric to address the PCB contamination was $9.8$10.1 million. The reserve balance represents the probable and reasonably estimable undiscounted cost for the onshore and offshore investigation and remediation. The final remediation costs will depend on the actual onshore and offshore cleanup costs.
Regulatory proceedings
Current decouplingDecoupling. 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 current decoupling mechanism hasDecoupling delinks the following major components: (1) monthly revenue balancing account (RBA) revenues or refunds for the difference between PUC-approved target revenues and recorded adjusted revenues, which delinksutility’s revenues from kWhthe utility’s sales, (2) rate adjustment mechanism (RAM) revenues for escalation in certain O&M expensesremoving the disincentive to promote energy efficiency and rate base changes, (3) major project interim recovery (MPIR) component, (4) performance incentive mechanisms (PIMs), and (5) an earnings sharing mechanism, which would provide for a reduction of revenues between rate cases inaccept more renewable energy. Decoupling continues under the event the utility exceeds the return on average common equity (ROACE) allowed in its most recent rate case.PBR Framework.
Performance-based regulation framework. On December 23, 2020, the PUC issued a D&O (PBR D&O) approvingestablishing a new performance-based regulation framework (PBR Framework).PBR Framework to govern the Utilities. The PBR Framework incorporates an annual revenue adjustment (ARA) and a suite of new regulatory mechanisms in addition to previously established regulatory mechanisms. Under the PBR Framework, the Utilities’ current decoupling mechanism (i.e., the Revenue Balancing Account (RBA)) established by the previous regulatory framework will continue to be used with modifications, as described below.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
continue. The existing cost recovery mechanisms will continue as currently implemented (e.g.(i.e., the Energy Cost Recovery Clause (ECRC), Purchased Power Adjustment Clause (PPAC), Demand Side Management surcharge (DSM), Renewable Energy Infrastructure Program (REIP), Demand Response Adjustment Clause (DRAC), Pension and Other Post-Employment Benefits (OPEB) tracking mechanisms). In addition to annual revenues provided by the annual revenue adjustment (ARA),ARA, the Utilities may seek relief for extraordinary projects or programs through the Exceptional Project Recovery Mechanism (EPRM) (formerly known as the Major Project Interim Recovery (MPIR) adjustment mechanism) and earn financial rewards for exemplary performance as provided through a portfolio of Performance Incentive Mechanisms (PIMs) and Shared Savings Mechanisms (SSMs). The PBR Framework will incorporateincorporates a variety of otheradditional performance mechanisms, including Scorecards, Reported Metrics, and an expedited Pilot Process. The PBR Framework also contains a number of safeguards, including a symmetric Earnings Sharing Mechanism (ESM) which protects the Utilities and customers from excessive earnings or losses, as measured by the Utilities’ Return on Equity (ROE)achieved rate-making ROACE and a Re-Opener
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mechanism, under which the PUC will open an examination, at its discretion, to determine if adjustments or modifications to specific PBR mechanisms are appropriate. The new PBR Framework became fully effective on June 1, 2021.
SubsequentOn September 17, 2021, the PUC issued an order introducing the PUC staff’s proposal for the development of new PIMs to address the following areas of concern:
•Grid reliability,
•Timely retirement of fossil fuel generation units,
•Interconnection of large-scale renewable energy projects,
•Cost control for fossil fuel, purchased power, and other non-ARA costs, and
•Expedient utilization of grid services from demand-side resources
The order also established a procedural schedule, including technical conferences, statements of position, and a PUC hearing, to govern the PBR Working Group’s review and development of the new PIMs. On March 10, 2022, the PUC issued an order modifying the procedural schedule. In accordance with the modified procedural schedule, the PBR Parties filed final statements of position on April 8, 2022. The PUC hearing was held on April 26 to 27, 2022.
Revenue adjustment mechanism. Prior to the issuanceimplementation of the PBR D&O,Framework, the PUC has initiatedRAM was a collaborative process during which working groups consistingmajor component of the PUC, the Utilities and other parties have addressed the development of the proposed PBR implementation tariffs and the final details of the Prioritized Performance Mechanisms (i.e., Interconnection Approval PIM, Low-to-Moderate Income (LMI) Energy Efficiency PIM, Advanced Metering Infrastructure (AMI) Utilization PIM and the portfolio of Scorecards and Reported Metrics).previously established regulatory framework. The Utilities and other parties filed their refined proposals addressing the Prioritized Performance Mechanisms on March 16, 2021 and April 9, 2021. An order addressing the Prioritized Performance Mechanisms is expected to be issued in May 2021. Written tariffs to implement the PBR Framework have been either approved (see below) or will be submitted for PUC approval in May 2021 and expected to go into effect June 1, 2021.
Rate adjustment mechanism. The existing RAM iswas 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 may be reset upon the issuance of an interim or final decision and order (D&O) in a rate case. All Utilities were limited to the RAM Cap in 2020. Under the new PBR Framework, the ARA mechanism will replacereplaced the RAM, and became effective on June 1, 2021. The transitionRAM revenue adjustments approved by the PUC in 2020 will continue to be included in the new ARA includes the continuation of the 2020 RAM Revenue adjustment.RBA provision’s target revenue and RBA rate adjustment unless modified with PUC approval.
Annual revenue adjustment mechanism. The PBR Framework established a five-year multi-year rate period during which there will be no general rate cases. Target revenues will be adjusted according to an index-driven ARA based on (i) an inflation factor, (ii) a predetermined X-factor to encompass productivity, which is set at zero, (iii) a Z-factor to account for exceptional circumstances not in the Utilities’ control and (iv) a customer dividend consisting of a negative adjustment of 0.22% of adjusted revenue requirements compounded annually and a flow through of the “pre-PBR” savings commitment from the management audit recommendations developed in a prior docket.
As a result of an Order issued by the PUC pursuant to a motion for partial reconsideration the customer dividend for “pre-PBR” savings commitment portion to be delivered to customers will bedocket at a rate of $6.6 million per year from 2021 to 2025, and the Enterprise Resource Planning system benefits savings of $3.9 million, to be delivered to customers in 2021.2025. The implementation of the ARA is scheduled to occuroccurred on June 1, 2021.
Earnings sharing mechanism. A symmetrical ESM for actual return on equityachieved rate-making ROACE outside of a 300 basis points dead band above andor below a target ROE of 9.5%, which is the current authorized ROEROACE of 9.5% for each of the Utilities. There is a 50/50 sharing between customers and Utilities for the actual earningsachieved rate-making ROACE falling within 150 basis points outside of the dead band in either direction, and a 90/10 sharing for any further difference. A reopening or review of the PBR terms will be triggered if the Utilities credit rating outlook indicates a potential credit downgrade below investment grade status, or if its earned ROEachieved rate-making ROACE enters the outer most tier of the ESM.
MajorExceptional project interim recovery mechanism. On April 27, 2017,Prior to the implementation of the PBR Framework, the PUC issued an order that provided guidelinesestablished the Major Project Interim Recovery (MPIR) adjustment mechanism and MPIR Guidelines. The MPIR mechanism provides the opportunity to recover revenues for interim recoverynet costs of revenues to support majorapproved eligible projects placed in service between general rate cases.
Projects eligible for recovery through In establishing the PBR Framework, the MPIR adjustment mechanism are major projects (i.e., projectsGuidelines were terminated and replaced 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 throughEPRM Guidelines. Although the MPIR adjustmentGuidelines were terminated and replaced by the EPRM Guidelines, the MPIR mechanism must be offset by any related benefits. The guidelineswill continue within the PBR Framework to provide for accrualrecovery of revenuesproject costs previously approved for recovery upon in-service date to be collected from customers throughunder 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.
On March 31, 2021, the Utilities submitted 2021 MPIR amounts totaling $21.8 million for the Schofield Generating Station ($17.6 million), West Loch PV Project ($3.3 million), and Grid Modernization Strategy Phase 1 project ($0.9 million for all three utilities) for the accrual of revenues effective January 1, 2021, that included the 2021 return on project amount (based on approved amounts) in rate base, depreciation and incremental O&M expenses. Subject to PUC approval, as part of the transition to the PBR framework, the Utilities will begin recovery of the annualized 2021 MPIR amounts effective June 1, 2021 through the RBA rate adjustment.
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Exceptional project recovery mechanism.MPIR. The existing MPIR adjustment mechanism was renamednewly established EPRM to include deferred and O&M expense projects and toGuidelines permit the Utilities to include the full amount of approved costs in the EPRM for recovery in the first year the project goes into service, pro-rated for the portion of the year the project is in service. Deferred and O&M expense projects
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are also eligible for MPIR relief submitted by the Utilities prior to the PBR D&O, will be grandfatheredEPRM recovery under the MPIR Guidelines. The Utilities may alternatively request that pending MPIR applications be reviewed under EPRM Guidelines. EPRM recoveryrecoverable costs will be in accordance with the EPRM Guidelines limited to the lesser of actual incurred project costs or PUC- PUC‑approved amounts, net of savings. To date,
As of March 31, 2022, the Utilities have requestedsubmitted 2022 MPIR amounts totaling $25.9 million, including revenue taxes, for the Schofield Generating Station ($16.5 million), West Loch PV Project ($3.3 million), and Grid Modernization Strategy (GMS) Phase 1 project ($6.1 million for all three utilities) for the accrual of revenues effective January 1, 2022, that included the 2022 return on project amount (based on approved amounts) in rate base, depreciation and incremental O&M expenses. Subject to PUC approval, the Utilities will begin recovery of 4the annualized 2022 MPIR amounts effective June 1, 2022 through the RBA rate adjustment.
As of March 31, 2022, the PUC approved 2 EPRM projects totaling $41 million to the extent that the project costs are not included in rates. Currently, the Utilities are seeking EPRM recovery of 5 projects with total estimated capitalproject costs of $95$264 million, subject to PUC approval.
Pilot process. The PBR D&O approved a Pilot Process to foster innovation by establishing an expedited implementation process for pilots that test new technologies, programs, business models, and other arrangements. This is intended to support initiatives by the Utilities to test new programs and ideas quickly and elevate any successful pilots for consideration of full-scale implementation. The proposed pilots would be subject to PUC approval with a total annual cap of $10 million. The Pilot Process will feature the two primary activities: an initial “Workplan Development” phase, during which the Utilities identify and scope areas of interests, so as to inform the subsequent “Implementation” phase, during which the Utilities submit specific pilot proposals for expedited review by the PUC and implement the pilot upon approval. The PUC will issue an order, approving, denying, or modifying a proposed Pilot within 45 days of receiving notice of a specific pilot project.
On July 9, 2021, the PUC issued an order approving the Utilities’ proposed Pilot Process submitted in April 2021 with modifications, including a cost recovery process that generally allows the Utilities to defer and recover total annual expenditures of approved pilot projects in full over twelve months beginning June 1 of the year following implementation through EPRM.the RBA rate adjustment, although the Utilities may determine on a case-by-case basis that a particular project’s deferred costs should be amortized over a period greater than twelve months. On July 28, 2021, the Utilities submitted the finalized Pilot Process to govern the review of the pilot project proposals in accordance with the July 9, 2021 order.
On November 12, 2021, the Utilities requested PUC approval of their proposed Pilot Process Workplan to guide the development of pilot projects over the next three years. A PUC order on the Workplan is pending.
On February 28, 2022, the Utilities filed their first annual Pilot Update report covering pilot projects approved through the Pilot Process framework. The Pilot Update reported on approximately $0.1 million of 2021 deferred costs to be reviewed by the PUC in their review of the Utilities’ proposed adjustments to target revenue in the 2022 spring revenue report.
Performance incentive mechanisms. The PUC has established the following PIMs: (1) Service Quality performance incentives, (2) Phase 1 Request for proposal (RFP) PIM for procurement of low-cost renewable energy, (3) Phase 2 RFP PIMs for generation and generation plus storage project, and Grid Services and standalone storage.storage, (4) new PIMs established in the PBR D&O.
•Service Quality performance incentives (ongoing). Service Quality performance 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 issuanceremain constant in interim periods, unless otherwise amended by order of an interim or final order in a general rate case for each utility.the PUC.
•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 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 $6.8 million - for both indices in total for the three utilities). For the 2021 evaluation period, the Utilities earned $0.2 million in penalties.
•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 reward is 8 basis points applied to the common equity share of each respective utility’s approved rate base (or maximum penalties or rewards of approximately $1.4 million - in total for the three utilities).
In December 2020, the Utilities accrued $0.9 million in estimated rewards for call center performance, net of service reliability penalties, for 2020. The net service quality performance rewards related to 2020 was reflected in the 2021 annual decoupling filing and pending PUC’s approval, will increase customer rates effective June 1, 2021.
•Phase 1 RFP PIM. Procurement of low-cost variable renewable resources through the request for proposalRFP process in 2018 is measured by comparison of the procurement price to target prices. Half of the incentive was earned upon PUC
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approval of the PPAs. Based on the 7 PPAs approved in 2019, the Utilities recognized $1.7 million in 2019 with the remaining award to be recognized in the year following the in-service date of the projects, which is estimated to occur from 2023 to 2024.
•Phase 2 RFP PIMs. The PUC order issued on October 9, 2019 establishes pricing thresholds, timelines to complete contracting, and other performance criteria for the performance incentive eligibility. The PIMs provide incentives only without penalties. The order requires contracts under the Grid Service RFP be filed for approval by May 2020 (subsequently extended to July 9, 2020), and by September 2020 under the Renewable RFPs, with a declining PIM for projects that are not filed by these deadlines. On July 9, 2020, the Utilities filed 2 Grid ServiceServices Purchase Agreements (GSPA) for the Grid Service RFP whichthat potentially qualify for PIMs,a demand response PIM; however, details of the incentive metrics will be determined by the PUC. On September 15, 2020, the Utilities filed 8 power purchase agreements for the Phase 2 RFP. Of those 8, only 1 projecta PPA that qualified for a potential PIM incentive. Onincentive and on February 16, 2021, the Utilities filed 1 additional power purchase agreementPPA that qualifiesqualified for thea declining PIM. OnPIM incentive. The PUC approved two PPAs in September 2021 and November 2021 and 2 GSPAs on December 31, 2020,2020. For the PUC approved2021 evaluation period, the Utilities earned $0.1 million in rewards related to the 2 Grid Services Purchase Agreements without further clarification regarding the PIM. The Utility has filed a letter to the PUC in January 2021 to seek guidance to the next step of defining the details of the incentive metrics.PPAs.
•The PUC established the following 2 new PIMs in its PBR D&O, which were approved in an order issued on March 23, 2021. The2021 and became effective date for these PIM tariffs ison June 1, 2021.
•Renewable portfolio standard (RPS)-A PIM that provides a financial reward for accelerating the achievement of RPS goals. The Utilities may earn a reward for the amount of system generation above the interpolated statutory RPS goal at $20/MWh in 2021 and 2022, $15/MWh in 2023, and $10/MWh for the remainder of the multi-year rate period (MRP). Penalties are already prescribed in the RPS as $20/MWh for failing to meet RPS targets in 2030, 2040 and 2045. The evaluation period commenced on January 1, 2021. For the 2021 evaluation period, the Utilities earned $1.0 million in rewards.
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•Grid Services Procurement PIM that provides financial rewards for grid services acquired in 2021 and 2022. The Utilities can earn a total maximum reward of $1.5 million over 2021 and 2022. The evaluation period commenced on January 1, 2021.
•The PUC also established the following 3 new PIMs in its PBR D&O, which are subject towere approved by the PUC final design approval anticipated byon May 17, 2021 and became effective on June 1, 2021.
•Interconnection Approval PIM that provides financial rewards and penalties for interconnection times for distributed energy resources systems <100 kW in size. The Utilities can earn a total annual maximum reward of $3.0 million or a total annual maximum penalty of $0.9 million. TheFor the 2021 evaluation period, commenced on January 1, 2021.the Utilities earned $2.8 million in rewards.
•Low-to-Moderate Income (LMI) Energy Efficiency PIM that provides financial rewardsreward for collaboration between the Utilities and the third-party Public Benefits Fee Administrator to deliver energy savings for low- and moderate-income customers. The rewards for the PIM metrics will be collectively capped atUtilities can earn a total annual maximum reward of $2.0 million. The PIM will initially have a duration of three years and be subject to an annual review. The evaluation period will commence asis based on Hawaii Energy’s program year with the initial evaluation year being the period of the date of the effective tariff.July 1, 2021 through June 30, 2022.
•Advanced Metering Infrastructure (AMI) Utilization PIM that provides financial rewards for acceleration ofleveraging grid modernization investments and engaging customers beyond what is already planned in the number of customers with advanced meters enabled to support time-varying rates and next generation distributed energy resources programs.Phase 1 Grid Modernization program. The Utilities can earn a total annual maximum reward of $2.0 million. The PIM will initially have a duration of three years after which it will be re-evaluated. The evaluation period will commence ascommenced on January 1, 2021.
For the 2021 evaluation period, the Utilities accrued $3.7 million ($2.8 million for Hawaiian Electric, $0.4 million for Hawaii Electric Light and $0.5 million for Maui Electric) in rewards net of penalties. The net rewards related to 2021 were reflected in the date of the effective tariff.2021 fall revenue report and 2022 spring revenue report filings.
Annual decoupling filingsreview cycle. PBR D&O established an annual review cycle for revenue adjustments under the PBR Framework, including the biannual submission of the revenue reports. The Utilities filed annual decoupling filingsthe spring revenue report on March 31, 2021,2022, which areis subject to PUC approval.

The net annual incremental amounts between the 2021 fall and 2022 spring revenue reports are proposed to be collected (refunded) from June 1, 20212022 through DecemberMay 31, 2021 are2023 as follows:
(in millions)Hawaiian ElectricHawaii Electric LightMaui ElectricTotal
2021 Annual incremental RAM adjusted revenues and ARA revenues$(13.8)$(2.0)$(5.9)$(21.7)
Annual change in accrued RBA balance as of December 31, 2020 (and associated revenue taxes)10.4 5.7 8.9 25.0 
Incremental Performance Incentive Mechanisms (net)0 0.2 0.5 0.7 
Incremental MPIR/EPRM Revenue Adjustment12.6 0.1 0.1 12.8
Incremental Affiliate Transaction Refund/PUC Ordered Adjustment0 N/A2.0 2.0
Net annual incremental amount to be collected under the tariffs$9.1 $4.0 $5.6 $18.7 
18
Note: Columns may not foot due to rounding.
Most recent rate proceedings.
Hawaiian Electric 2020 test year rate case. On October 22, 2020, the PUC issued a final D&O approving the stipulated settlement agreement filed in the proceeding. As a result, there will be no increase in base electric rates established in the 2017 test year rate case. In the final D&O, the PUC approved the capital structure that consists of a 58% total equity ratio, and a ROACE of 9.5% for the 2020 test year. The resulting return on rate base (RORB) is 7.37%. The D&O approved the agreement to implement the overall lower depreciation rates approved in the last depreciation study proceeding, effective January 1, 2020. See “Annual revenue adjustment mechanism” under “Performance-based regulation framework” above, regarding the PUC’s decision on the treatment of Hawaiian Electric’s Management Audit savings commitment. Hawaiian Electric’s proposed RBA provision tariff and ECRC tariff submitted on November 6, 2020 were approved by the PUC on December 11, 2020 and took effect on January 1, 2021.
Hawaii Electric Light 2019 test year rate caseNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS . On July 28, 2020, the PUC issued a final D&O, approving the Stipulated Partial Settlement Letter in part and ordering final rates for the 2019 test year to remain at current effective rates such that there is a zero increase in rates. The PUC determined that an appropriate ROACE for the 2019 test year is 9.5%, approved a capital structure of 58% total equity and approved as fair a 7.52% RORB. In addition, the order, among others, (1) approved a 10-year amortization period for the state investment tax credit; and (2) approved a modification to Hawaii Electric Light’s ECRC to incorporate a 98%/2% risk-sharing split between customers and Hawaii Electric Light with an annual maximum exposure cap of +/- $600,000. The proposed final tariffs and PIM tariffs took effect on November 1, 2020, and the ECRC tariff took effect on January 1, 2021.continued (Unaudited)
(in millions)Hawaiian ElectricHawaii Electric LightMaui ElectricTotal
Incremental accrued RBA balance through September 30, 2021 (and associated revenue taxes)$(5.7)$2.1 $(4.7)$(8.3)
Incremental Performance Incentive Mechanisms (net)1.9 0.4 0.4 2.7 
Incremental MPIR/EPRM Revenue Adjustment1.3 0.8 0.7 2.8
Other(0.1)— — $(0.1)
Net incremental amount to be collected under the RBA rate tariffs$(2.6)$3.3 $(3.6)$(2.9)

Regulatory assets for COVID-19 related costs. On May 4, 2020, the PUC issued an order, authorizing all utilities, including the Utilities, to establish regulatory assets to record costs resulting from the suspension of disconnections of service during the
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
pendency of the Governor’s Emergency Proclamation and until otherwise ordered by the PUC. In future proceedings, the PUC will consider the reasonableness of the costs, the appropriate period of recovery, any amount of carrying costs thereon, and any savings directly attributable to suspension of disconnects, and other related matters. As part of the order, the PUC prohibits the Utilities from charging late payment fees on past due payments. On June 30, 2020,As the moratorium on customer disconnections ended on May 31, 2021, the Utilities have resumed charging late payment fees in July 2021. Pursuant to PUC issued an order approvingorders, the Utilities’ request made in April 2020 for deferral treatment of COVID-19 related costs throughby the Utilities ended on December 31, 2020. On March 8,October 1, 2021, the PUC approved the Utilities’ request to extend the deferral period to June 30,December 31, 2021. In December 2021, to keep customers connected and provide some relief to customers experiencing financial difficulty during the pandemic, the Utilities committed to issuing $2 million in bill credits to qualified customers. The Utilities are required to file quarterly reports to update the Utilities’ financial condition, report measures in place to assist their customers during the COVID-19 emergency situation, identify the planned deferred costs and detailswill not seek recovery for the deferred costs, and identify funds received or benefits received that have resulted from the COVID-19 emergency period. The recovery of the regulatory assets would be determinedissued bill credits, resulting in a subsequent proceeding and management believesreduction to the cumulative deferred costs are probable of recovery. In addition, starting in December 2020 and monthly moving forward until otherwise ordered by the PUC, the Utilities are required to file information on, among other things, number of customers, arrears balances, payment arrangements entered into, and available assistance used to assists customer bill payment. The monthly report is intended to assist the PUC in determining next steps regarding appropriate regulatory measures.costs. As of March 31, 2021,2022, the Utilities had recorded a total of $22.2$27.8 million in regulatory assets pursuant to the orders.
Condensed consolidating financial information. Condensed consolidating financial information for Hawaiian Electric and its subsidiaries are presented for the three month periods ended March 31, 20212022 and 2020,2021, and as of March 31, 20212022 and December 31, 2020.2021.
Hawaiian Electric 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, and (b) under their respective private placement note agreements and the Hawaii Electric Light notes and Maui Electric notes issued thereunder. 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.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
Hawaiian Electric Company, Inc. and Subsidiaries
Condensed Consolidating Statement of Income
Three months ended March 31, 2022
(in thousands)Hawaiian ElectricHawaii Electric LightMaui ElectricOther subsidiariesConsolidating adjustmentsHawaiian Electric
Consolidated
Revenues$500,242 108,528 100,028 — (6)$708,792 
Expenses
Fuel oil154,425 25,251 41,610 — — 221,286 
Purchased power124,183 30,712 8,638 — — 163,533 
Other operation and maintenance83,656 20,214 21,387 — — 125,257 
Depreciation39,484 10,351 8,636 — — 58,471 
Taxes, other than income taxes47,274 10,032 9,344 — — 66,650 
   Total expenses449,022 96,560 89,615 — — 635,197 
Operating income51,220 11,968 10,413 — (6)73,595 
Allowance for equity funds used during construction1,990 193 226 — — 2,409 
Equity in earnings of subsidiaries13,661 — — — (13,661)— 
Retirement defined benefits credit (expense)—other than service costs855 167 (32)— — 990 
Interest expense and other charges, net(13,093)(2,609)(2,630)— 6 (18,326)
Allowance for borrowed funds used during construction651 60 67 — — 778 
Income before income taxes55,284 9,779 8,044 — (13,661)59,446 
Income taxes8,605 2,268 1,665 — — 12,538 
Net income46,679 7,511 6,379 — (13,661)46,908 
Preferred stock dividends of subsidiaries— 134 95 — — 229 
Net income attributable to Hawaiian Electric46,679 7,377 6,284 — (13,661)46,679 
Preferred stock dividends of Hawaiian Electric270 — — — — 270 
Net income for common stock$46,409 7,377 6,284 — (13,661)$46,409 


Hawaiian Electric Company, Inc. and Subsidiaries
Condensed Consolidating Statement of Comprehensive Income
Three months ended March 31, 2022
(in thousands)Hawaiian ElectricHawaii Electric LightMaui ElectricOther subsidiariesConsolidating adjustmentsHawaiian Electric Consolidated
Net income for common stock$46,409 7,377 6,284 — (13,661)$46,409 
Other comprehensive income, 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 taxes4,376 670 603 — (1,273)4,376 
Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes(4,325)(670)(603)— 1,273 (4,325)
Other comprehensive income, net of taxes51 — — — — 51 
Comprehensive income attributable to common shareholder$46,460 7,377 6,284 — (13,661)$46,460 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)

Hawaiian Electric Company, Inc. and Subsidiaries
Condensed Consolidating Statement of Income
Three months ended March 31, 2021

(in thousands)(in thousands)Hawaiian ElectricHawaii Electric LightMaui ElectricOther subsidiariesConsolidating adjustmentsHawaiian Electric
Consolidated		(in thousands)Hawaiian ElectricHawaii Electric LightMaui ElectricOther subsidiariesConsolidating adjustmentsHawaiian Electric
Consolidated
RevenuesRevenues$400,554 85,149 79,181 0 (20)$564,864 Revenues$400,554 85,149 79,181 — (20)$564,864 
ExpensesExpensesExpenses
Fuel oilFuel oil88,728 16,485 22,214 0 0 127,427 Fuel oil88,728 16,485 22,214 — — 127,427 
Purchased powerPurchased power108,604 21,597 12,095 0 0 142,296 Purchased power108,604 21,597 12,095 — — 142,296 
Other operation and maintenanceOther operation and maintenance77,335 17,912 19,323 0 0 114,570 Other operation and maintenance77,335 17,912 19,323 — — 114,570 
DepreciationDepreciation38,914 10,048 8,393 0 0 57,355 Depreciation38,914 10,048 8,393 — — 57,355 
Taxes, other than income taxesTaxes, other than income taxes38,627 7,993 7,482 0 0 54,102 Taxes, other than income taxes38,627 7,993 7,482 — — 54,102 
Total expenses Total expenses352,208 74,035 69,507 0 0 495,750  Total expenses352,208 74,035 69,507 — — 495,750 
Operating incomeOperating income48,346 11,114 9,674 0 (20)69,114 Operating income48,346 11,114 9,674 — (20)69,114 
Allowance for equity funds used during constructionAllowance for equity funds used during construction1,748 132 311 0 0 2,191 Allowance for equity funds used during construction1,748 132 311 — — 2,191 
Equity in earnings of subsidiariesEquity in earnings of subsidiaries12,510 0 0 0 (12,510)0 Equity in earnings of subsidiaries12,510 — — — (12,510)— 
Retirement defined benefits expense—other than service costs886 168 (33)0 0 1,021 
Retirement defined benefits credit (expense)—other than service costsRetirement defined benefits credit (expense)—other than service costs886 168 (33)— — 1,021 
Interest expense and other charges, netInterest expense and other charges, net(12,832)(2,581)(2,590)0 20 (17,983)Interest expense and other charges, net(12,832)(2,581)(2,590)— 20 (17,983)
Allowance for borrowed funds used during constructionAllowance for borrowed funds used during construction591 44 112 0 0 747 Allowance for borrowed funds used during construction591 44 112 — — 747 
Income before income taxesIncome before income taxes51,249 8,877 7,474 0 (12,510)55,090 Income before income taxes51,249 8,877 7,474 — (12,510)55,090 
Income taxesIncome taxes7,621 2,051 1,561 0 0 11,233 Income taxes7,621 2,051 1,561 — — 11,233 
Net incomeNet income43,628 6,826 5,913 0 (12,510)43,857 Net income43,628 6,826 5,913 — (12,510)43,857 
Preferred stock dividends of subsidiariesPreferred stock dividends of subsidiaries0 134 95 0 0 229 Preferred stock dividends of subsidiaries— 134 95 — — 229 
Net income attributable to Hawaiian ElectricNet income attributable to Hawaiian Electric43,628 6,692 5,818 0 (12,510)43,628 Net income attributable to Hawaiian Electric43,628 6,692 5,818 — (12,510)43,628 
Preferred stock dividends of Hawaiian ElectricPreferred stock dividends of Hawaiian Electric270 0 0 0 0 270 Preferred stock dividends of Hawaiian Electric270 — — — — 270 
Net income for common stockNet income for common stock$43,358 6,692 5,818 0 (12,510)$43,358 Net income for common stock$43,358 6,692 5,818 — (12,510)$43,358 


Hawaiian Electric Company, Inc. and Subsidiaries
Condensed Consolidating Statement of Comprehensive Income
Three months ended March 31, 2021

(in thousands)Hawaiian ElectricHawaii Electric LightMaui ElectricOther subsidiariesConsolidating adjustmentsHawaiian Electric Consolidated
Net income for common stock$43,358 6,692 5,818 0 (12,510)$43,358 
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 taxes5,845 835 761 0 (1,596)5,845 
Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes(5,811)(834)(761)0 1,595 (5,811)
Other comprehensive income, net of taxes34 1 0 0 (1)34 
Comprehensive income attributable to common shareholder$43,392 6,693 5,818 0 (12,511)$43,392 

19

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)

Hawaiian Electric Company, Inc. and Subsidiaries
Condensed Consolidating Statement of Income
Three months ended March 31, 2020


(in thousands)Hawaiian ElectricHawaii Electric LightMaui ElectricOther subsidiariesConsolidating adjustmentsHawaiian Electric
Consolidated
Revenues$421,166 89,293 87,198 0 (215)$597,442 
Expenses
Fuel oil120,535 22,432 30,254 0 0 173,221 
Purchased power107,951 19,521 12,344 0 0 139,816 
Other operation and maintenance85,637 19,104 22,806 0 0 127,547 
Depreciation38,011 9,760 8,079 0 0 55,850 
Taxes, other than income taxes40,501 8,342 8,207 0 0 57,050 
   Total expenses392,635 79,159 81,690 0 0 553,484 
Operating income28,531 10,134 5,508 0 (215)43,958 
Allowance for equity funds used during construction1,743 119 153 0 0 2,015 
Equity in earnings of subsidiaries8,804 0 0 0 (8,804)0 
Retirement defined benefits expense—other than service costs(546)194 (29)0 0 (381)
Interest expense and other charges, net(12,002)(2,484)(2,323)0 215 (16,594)
Allowance for borrowed funds used during construction602 36 50 0 0 688 
Income before income taxes27,132 7,999 3,359 0 (8,804)29,686 
Income taxes2,957 1,798 527 005,282 
Net income24,175 6,201 2,832 0 (8,804)24,404 
Preferred stock dividends of subsidiaries0 134 95 0 0229 
Net income attributable to Hawaiian Electric24,175 6,067 2,737 0 (8,804)24,175 
Preferred stock dividends of Hawaiian Electric270 0 0 0 0 270 
Net income for common stock$23,905 6,067 2,737 0 (8,804)$23,905 


Hawaiian Electric Company, Inc. and Subsidiaries
Condensed Consolidating Statement of Comprehensive Income
Three months ended March 31, 2020

(in thousands)Hawaiian ElectricHawaii Electric LightMaui ElectricOther subsidiariesConsolidating adjustmentsHawaiian Electric Consolidated
Net income for common stock$23,905 6,067 2,737 0 (8,804)$23,905 
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 benefits5,184 748 652 0 (1,400)5,184 
Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes(5,158)(747)(652)0 1,399 (5,158)
Other comprehensive income, net of taxes26 1 0 0 (1)26 
Comprehensive income attributable to common shareholder$23,931 6,068 2,737 0 (8,805)$23,931 

20

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)

Hawaiian Electric Company, Inc. and Subsidiaries
Condensed Consolidating Balance Sheet
March 31, 2021
(in thousands)Hawaiian ElectricHawaii Electric LightMaui ElectricOther
subsi-
diaries		Consoli-
dating
adjustments		Hawaiian Electric
Consolidated
Assets      
Property, plant and equipment
Utility property, plant and equipment      
Land$42,411 5,606 3,594 0 0 $51,611 
Plant and equipment4,986,417 1,358,367 1,207,095 0 0 7,551,879 
Less accumulated depreciation(1,706,529)(604,021)(549,169)0 0 (2,859,719)
Construction in progress160,331 13,927 29,730 0 0 203,988 
Utility property, plant and equipment, net3,482,630 773,879 691,250 0 0 4,947,759 
Nonutility property, plant and equipment, less accumulated depreciation5,305 115 1,532 0 0 6,952 
Total property, plant and equipment, net3,487,935 773,994 692,782 0 0 4,954,711 
Investment in wholly owned subsidiaries, at equity631,976 0 0 0 (631,976)0 
Current assets      
Cash and cash equivalents29,727 7,730 14,209 77 0 51,743 
Restricted cash11,506 0 0 0 0 11,506 
Customer accounts receivable, net101,605 21,358 18,686 0 0 141,649 
Accrued unbilled revenues, net72,784 14,911 14,118 0 0 101,813 
Other accounts receivable, net12,967 3,006 3,570 0 (14,470)5,073 
Fuel oil stock, at average cost51,894 9,981 12,813 0 0 74,688 
Materials and supplies, at average cost40,395 9,873 19,458 0 0 69,726 
Prepayments and other29,769 3,534 3,791 0 (675)36,419 
Regulatory assets42,852 2,840 8,630 0 0 54,322 
Total current assets393,499 73,233 95,275 77 (15,145)546,939 
Other long-term assets      
Operating lease right-of-use assets123,992 14,198 344 0 0 138,534 
Regulatory assets501,393 111,700 106,011 0 0 719,104 
Other102,767 18,591 20,424 0 (6,162)135,620 
Total other long-term assets728,152 144,489 126,779 0 (6,162)993,258 
Total assets$5,241,562 991,716 914,836 77 (653,283)$6,494,908 
Capitalization and liabilities      
Capitalization      
Common stock equity$2,157,385 320,494 311,405 77 (631,976)$2,157,385 
Cumulative preferred stock—not subject to mandatory redemption22,293 7,000 5,000 0 0 34,293 
Long-term debt, net1,176,229 246,310 253,324 0 0 1,675,863 
Total capitalization3,355,907 573,804 569,729 77 (631,976)3,867,541 
Current liabilities      
Current portion of operating lease liabilities64,423 1,844 34 0 0 66,301 
Accounts payable87,437 16,037 19,725 0 0 123,199 
Interest and preferred dividends payable20,075 3,698 4,400 0 (1)28,172 
Taxes accrued, including revenue taxes107,552 25,372 22,876 0 (675)155,125 
Regulatory liabilities17,000 5,901 7,469 0 0 30,370 
Other55,478 11,951 17,189 0 (14,618)70,000 
Total current liabilities351,965 64,803 71,693 0 (15,294)473,167 
Deferred credits and other liabilities      
Operating lease liabilities71,431 12,353 318 0 0 84,102 
Deferred income taxes282,513 53,582 60,663 0 0 396,758 
Regulatory liabilities658,584 174,820 92,365 0 0 925,769 
Unamortized tax credits81,297 15,126 13,758 0 0 110,181 
Defined benefit pension and other postretirement benefit plans liability373,376 76,357 78,566 0 (6,013)522,286 
Other66,489 20,871 27,744 0 0 115,104 
Total deferred credits and other liabilities1,533,690 353,109 273,414 0 (6,013)2,154,200 
Total capitalization and liabilities$5,241,562 991,716 914,836 77 (653,283)$6,494,908 
(in thousands)Hawaiian ElectricHawaii Electric LightMaui ElectricOther subsidiariesConsolidating adjustmentsHawaiian Electric Consolidated
Net income for common stock$43,358 6,692 5,818 — (12,510)$43,358 
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 benefits5,845 835 761 — (1,596)5,845 
Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes(5,811)(834)(761)— 1,595 (5,811)
Other comprehensive income, net of taxes34 1 — — (1)34 
Comprehensive income attributable to common shareholder$43,392 6,693 5,818 — (12,511)$43,392 

21

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
Hawaiian Electric Company, Inc. and Subsidiaries
Condensed Consolidating Balance Sheet
March 31, 2022
(in thousands)Hawaiian ElectricHawaii Electric LightMaui ElectricOther
subsi-
diaries		Consoli-
dating
adjustments		Hawaiian Electric
Consolidated
Assets      
Property, plant and equipment
Utility property, plant and equipment      
Land$42,857 5,606 3,594 — — $52,057 
Plant and equipment5,144,377 1,394,875 1,256,817 — — 7,796,069 
Less accumulated depreciation(1,788,280)(627,421)(570,061)— — (2,985,762)
Construction in progress164,073 19,691 28,984 — — 212,748 
Utility property, plant and equipment, net3,563,027 792,751 719,334 — — 5,075,112 
Nonutility property, plant and equipment, less accumulated depreciation5,301 115 1,532 — — 6,948 
Total property, plant and equipment, net3,568,328 792,866 720,866 — — 5,082,060 
Investment in wholly owned subsidiaries, at equity681,998 — — — (681,998)— 
Current assets      
Cash and cash equivalents19,894 6,017 3,067 77 — 29,055 
Restricted cash2,140 — — — — 2,140 
Advances to affiliates5,000 — 12,800 — (17,800)— 
Customer accounts receivable, net128,263 27,735 25,402 — — 181,400 
Accrued unbilled revenues, net98,511 21,235 20,259 — — 140,005 
Other accounts receivable, net15,846 5,128 4,269 — (18,203)7,040 
Fuel oil stock, at average cost105,780 13,895 19,697 — — 139,372 
Materials and supplies, at average cost42,852 9,673 20,181 — — 72,706 
Prepayments and other29,677 4,602 5,883 — 1,253 41,415 
Regulatory assets69,638 4,877 4,360 — — 78,875 
Total current assets517,601 93,162 115,918 77 (34,750)692,008 
Other long-term assets      
Operating lease right-of-use assets61,826 38,368 14,284 — — 114,478 
Regulatory assets325,063 78,877 76,346 — — 480,286 
Other128,934 18,620 19,607 — (817)166,344 
Total other long-term assets515,823 135,865 110,237 — (817)761,108 
Total assets$5,283,750 1,021,893 947,021 77 (717,565)$6,535,176 
Capitalization and liabilities      
Capitalization      
Common stock equity$2,276,884 336,177 345,744 77 (681,998)$2,276,884 
Cumulative preferred stock—not subject to mandatory redemption22,293 7,000 5,000 — — 34,293 
Long-term debt, net1,136,739 234,413 253,447 — — 1,624,599 
Total capitalization3,435,916 577,590 604,191 77 (681,998)3,935,776 
Current liabilities      
Current portion of operating lease liabilities31,078 6,370 2,510 — — 39,958 
Current portion of long-term debt39,986 11,996 — — — 51,982 
Short-term borrowings from non-affiliates6,000 — — — — 6,000 
Short-term borrowings from affiliate12,800 5,000 — — (17,800)— 
Accounts payable124,463 22,175 21,551 — — 168,189 
Interest and preferred dividends payable20,057 3,687 4,414 — (4)28,154 
Taxes accrued, including revenue taxes125,425 29,109 25,537 — 1,253 181,324 
Regulatory liabilities19,416 5,495 5,017 — — 29,928 
Other60,491 18,869 19,214 — (18,356)80,218 
Total current liabilities439,716 102,701 78,243 — (34,907)585,753 
Deferred credits and other liabilities      
Operating lease liabilities44,785 32,066 11,838 — — 88,689 
Deferred income taxes289,376 52,859 64,089 — — 406,324 
Regulatory liabilities702,745 178,224 92,547 — — 973,516 
Unamortized tax credits74,821 13,927 13,219 — — 101,967 
Defined benefit pension and other postretirement benefit plans liability216,181 47,842 52,312 — (660)315,675 
Other80,210 16,684 30,582 — — 127,476 
Total deferred credits and other liabilities1,408,118 341,602 264,587 — (660)2,013,647 
Total capitalization and liabilities$5,283,750 1,021,893 947,021 77 (717,565)$6,535,176 

22

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
Hawaiian Electric Company, Inc. and Subsidiaries
Condensed Consolidating Balance Sheet
December 31, 2020
(in thousands)Hawaiian ElectricHawaii Electric LightMaui ElectricOther
subsi-diaries		Consoli-
dating
adjustments		Hawaiian Electric
Consolidated
Assets      
Property, plant and equipment
Utility property, plant and equipment      
Land$42,411 5,606 3,594 0 0 $51,611 
Plant and equipment4,960,470 1,352,885 1,195,988 0 0 7,509,343 
Less accumulated depreciation(1,677,256)(597,606)(544,217)0 0 (2,819,079)
Construction in progress143,616 13,043 31,683 0 0 188,342 
Utility property, plant and equipment, net3,469,241 773,928 687,048 0 0 4,930,217 
Nonutility property, plant and equipment, less accumulated depreciation5,306 115 1,532 0 0 6,953 
Total property, plant and equipment, net3,474,547 774,043 688,580 0 0 4,937,170 
Investment in wholly owned subsidiaries, at equity
626,890 0 0 0 (626,890)0 
Current assets      
Cash and cash equivalents42,205 3,046 2,032 77 0 47,360 
Restricted cash15,966 0 0 0 0 15,966 
Advances to affiliates26,700 0 0 0 (26,700)0 
Customer accounts receivable, net102,736 23,989 21,107 0 0 147,832 
Accrued unbilled revenues, net73,628 13,631 13,777 0 0 101,036 
Other accounts receivable, net17,984 3,028 2,856 0 (16,195)7,673 
Fuel oil stock, at average cost38,777 8,471 10,990 0 0 58,238 
Materials and supplies, at average cost38,786 9,896 18,662 0 0 67,344 
Prepayments and other34,306 5,197 4,580 0 0 44,083 
Regulatory assets22,095 1,954 6,386 0 0 30,435 
Total current assets413,183 69,212 80,390 77 (42,895)519,967 
Other long-term assets      
Operating lease right-of-use assets125,858 1,443 353 0 0 127,654 
Regulatory assets513,192 114,461 108,620 0 0 736,273 
Other98,307 17,992 20,010 0 0 136,309 
Total other long-term assets737,357 133,896 128,983 0 0 1,000,236 
Total assets$5,251,977 977,151 897,953 77 (669,785)$6,457,373 
Capitalization and liabilities      
Capitalization
Common stock equity$2,141,918 317,451 309,363 77 (626,891)$2,141,918 
Cumulative preferred stock—not subject to mandatory redemption22,293 7,000 5,000 0 0 34,293 
Long-term debt, net1,116,426 216,447 228,429 0 0 1,561,302 
Total capitalization3,280,637 540,898 542,792 77 (626,891)3,737,513 
Current liabilities     
Current portion of operating lease liabilities64,599 98 33 0 0 64,730 
Short-term borrowings-non-affiliate49,979 0 0 0 0 49,979 
Short-term borrowings-affiliate0 18,800 7,900 0 (26,700)0 
Accounts payable97,102 19,570 17,177 0 0 133,849 
Interest and preferred dividends payable14,480 3,138 2,790 0 (58)20,350 
Taxes accrued, including revenue taxes135,018 29,869 27,637 0 0 192,524 
Regulatory liabilities20,224 8,785 8,292 0 0 37,301 
Other57,926 13,851 18,621 0 (16,136)74,262 
Total current liabilities439,328 94,111 82,450 0 (42,894)572,995 
Deferred credits and other liabilities     
Operating lease liabilities67,824 1,344 326 0 0 69,494 
Deferred income taxes282,685 54,108 61,005 0 0 397,798 
Regulatory liabilities656,270 173,938 92,277 0 0 922,485 
Unamortized tax credits82,563 15,363 13,989 0 0 111,915 
Defined benefit pension and other postretirement benefit plans liability373,112 77,679 79,741 0 0 530,532 
Other69,558 19,710 25,373 0 0 114,641 
Total deferred credits and other liabilities1,532,012 342,142 272,711 0 0 2,146,865 
Total capitalization and liabilities$5,251,977 977,151 897,953 77 (669,785)$6,457,373 
2021
(in thousands)Hawaiian ElectricHawaii Electric LightMaui ElectricOther
subsi-diaries		Consoli-
dating
adjustments		Hawaiian Electric
Consolidated
Assets      
Property, plant and equipment
Utility property, plant and equipment      
Land$42,737 5,606 3,594 — — $51,937 
Plant and equipment5,097,033 1,390,361 1,248,589 — — 7,735,983 
Less accumulated depreciation(1,757,096)(619,991)(563,430)— — (2,940,517)
Construction in progress159,854 17,129 27,586 — — 204,569 
Utility property, plant and equipment, net3,542,528 793,105 716,339 — — 5,051,972 
Nonutility property, plant and equipment, less accumulated depreciation5,302 115 1,532 — — 6,949 
Total property, plant and equipment, net3,547,830 793,220 717,871 — — 5,058,921 
Investment in wholly owned subsidiaries, at equity
676,237 — — — (676,237)— 
Current assets      
Cash and cash equivalents23,344 5,326 23,422 77 — 52,169 
Restricted cash3,089 — — — — 3,089 
Advances to affiliates1,000 — — — (1,000)— 
Customer accounts receivable, net135,949 28,469 22,441 — — 186,859 
Accrued unbilled revenues, net92,469 19,529 17,157 — — 129,155 
Other accounts receivable, net18,624 3,347 3,031 — (17,735)7,267 
Fuel oil stock, at average cost71,184 12,814 20,080 — — 104,078 
Materials and supplies, at average cost42,006 9,727 20,144 — — 71,877 
Prepayments and other32,140 6,052 7,114 — 725 46,031 
Regulatory assets58,695 3,051 4,918 — — 66,664 
Total current assets478,500 88,315 118,307 77 (18,010)667,189 
Other long-term assets      
Operating lease right-of-use assets78,710 22,442 318 — — 101,470 
Regulatory assets337,903 81,645 79,331 — — 498,879 
Other130,546 17,124 18,510 — (1,014)165,166 
Total other long-term assets547,159 121,211 98,159 — (1,014)765,515 
Total assets$5,249,726 1,002,746 934,337 77 (695,261)$6,491,625 
Capitalization and liabilities      
Capitalization
Common stock equity$2,261,899 332,900 343,260 77 (676,237)$2,261,899 
Cumulative preferred stock—not subject to mandatory redemption22,293 7,000 5,000 — — 34,293 
Long-term debt, net1,136,620 234,390 253,417 — — 1,624,427 
Total capitalization3,420,812 574,290 601,677 77 (676,237)3,920,619 
Current liabilities     
Current portion of operating lease liabilities45,955 3,378 35 — — 49,368 
Current portion of long-term debt39,981 11,994 — — — 51,975 
Short-term borrowings-affiliate— 1,000 — — (1,000)— 
Accounts payable111,024 26,139 22,844 — — 160,007 
Interest and preferred dividends payable12,442 2,617 2,269 — (3)17,325 
Taxes accrued, including revenue taxes143,723 33,153 30,679 — 725 208,280 
Regulatory liabilities22,240 3,247 4,273 — — 29,760 
Other56,752 14,158 18,540 — (17,881)71,569 
Total current liabilities432,117 95,686 78,640 — (18,159)588,284 
Deferred credits and other liabilities     
Operating lease liabilities46,426 19,063 291 — — 65,780 
Deferred income taxes291,027 53,298 64,309 — — 408,634 
Regulatory liabilities695,152 179,267 92,589 — — 967,008 
Unamortized tax credits76,201 14,212 13,532 — — 103,945 
Defined benefit pension and other postretirement benefit plans liability220,480 48,900 53,257 — (857)321,780 
Other67,511 18,030 30,042 — (8)115,575 
Total deferred credits and other liabilities1,396,797 332,770 254,020 — (865)1,982,722 
Total capitalization and liabilities$5,249,726 1,002,746 934,337 77 (695,261)$6,491,625 

2223

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)

Hawaiian Electric Company, Inc. and Subsidiaries
Condensed Consolidating Statement of Changes in Common Stock Equity
Three months ended March 31, 2021
(in thousands)Hawaiian ElectricHawaii Electric LightMaui ElectricOther
subsidiaries		Consolidating
adjustments		Hawaiian Electric
Consolidated
Balance, December 31, 2020$2,141,918 317,451 309,363 77 (626,891)$2,141,918 
Net income for common stock43,358 6,692 5,818 — (12,510)43,358 
Other comprehensive income, net of taxes34 1 — — (1)34 
Common stock dividends(27,925)(3,650)(3,776)— 7,426 (27,925)
Balance, March 31, 2021$2,157,385 320,494 311,405 77 (631,976)$2,157,385 
2022
(in thousands)Hawaiian ElectricHawaii Electric LightMaui ElectricOther
subsidiaries		Consolidating
adjustments		Hawaiian Electric
Consolidated
Balance, December 31, 2021$2,261,899 332,900 343,260 77 (676,237)$2,261,899 
Net income for common stock46,409 7,377 6,284 — (13,661)46,409 
Other comprehensive income, net of taxes51 — — — — 51 
Common stock dividends(31,475)(4,100)(3,800)— 7,900 (31,475)
Balance, March 31, 2022$2,276,884 336,177 345,744 77 (681,998)$2,276,884 
 
Hawaiian Electric Company, Inc. and Subsidiaries
Condensed Consolidating Statement of Changes in Common Stock Equity
Three months ended March 31, 2020  
(in thousands)Hawaiian ElectricHawaii Electric LightMaui ElectricOther
subsidiaries		Consolidating
adjustments		Hawaiian Electric
Consolidated
Balance, December 31, 2019$2,047,352 298,998 292,870 101 (591,969)$2,047,352 
Net income for common stock23,905 6,067 2,737 — (8,804)23,905 
Other comprehensive income, net of taxes26 1 — — (1)26 
Common stock dividends(26,784)(4,080)(3,596)— 7,676 (26,784)
Common stock issuance expenses— — (1)— 1 0 
Balance, March 31, 2020$2,044,499 300,986 292,010 101 (593,097)$2,044,499 

23

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)

Hawaiian Electric Company, Inc. and Subsidiaries
Condensed Consolidating Statement of Cash Flows
Three months ended March 31, 2021
(in thousands)Hawaiian ElectricHawaii Electric LightMaui ElectricOther
subsidiaries		Consolidating
adjustments		Hawaiian Electric
Consolidated
Net cash provided by operating activities$18,764 9,635 10,988 0 (7,426)$31,961 
Cash flows from investing activities      
Capital expenditures(45,293)(12,728)(12,340)0 0 (70,361)
Advances from affiliates26,700 0 0 0 (26,700)0 
Other1,182 372 309 0 0 1,863 
Net cash used in investing activities(17,411)(12,356)(12,031)0 (26,700)(68,498)
Cash flows from financing activities      
Common stock dividends(27,925)(3,650)(3,776)0 7,426 (27,925)
Preferred stock dividends of Hawaiian Electric and subsidiaries(270)(134)(95)0 0 (499)
Repayment of short-term debt(50,000)0 0 0 0 (50,000)
Proceeds from issuance of long-term debt60,000 30,000 25,000 0 0 115,000 
Net decrease in short-term borrowings from non-affiliates and affiliate with original maturities of three months or less0 (18,800)(7,900)0 26,700 0 
Other(96)(11)(9)0 0 (116)
Net cash provided by (used in) financing activities(18,291)7,405 13,220 0 34,126 36,460 
Net increase (decrease) in cash and cash equivalents(16,938)4,684 12,177 0 0 (77)
Cash, cash equivalents and restricted cash, beginning of period58,171 3,046 2,032 77 0 63,326 
Cash, cash equivalents and restricted cash, end of period41,233 7,730 14,209 77 0 63,249 
Less: Restricted cash(11,506)0 0 0 0 (11,506)
Cash and cash equivalents, end of period$29,727 7,730 14,209 77 0 $51,743 
(in thousands)Hawaiian ElectricHawaii Electric LightMaui ElectricOther
subsidiaries		Consolidating
adjustments		Hawaiian Electric
Consolidated
Balance, December 31, 2020$2,141,918 317,451 309,363 77 (626,891)$2,141,918 
Net income for common stock43,358 6,692 5,818 — (12,510)43,358 
Other comprehensive income, net of taxes34 1 — — (1)34 
Common stock dividends(27,925)(3,650)(3,776)— 7,426 (27,925)
Balance, March 31, 2021$2,157,385 320,494 311,405 77 (631,976)$2,157,385 

24

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)

Hawaiian Electric Company, Inc. and Subsidiaries
Condensed Consolidating Statement of Cash Flows
Three months ended March 31, 2020
(in thousands)Hawaiian ElectricHawaii Electric LightMaui ElectricOther
subsidiaries		Consolidating
adjustments		Hawaiian Electric
Consolidated
Net cash provided by operating activities$29,004 9,478 7,931 0 (7,272)$39,141 
Cash flows from investing activities                                                                                                                                        
Capital expenditures(83,191)(18,181)(17,772)0 0 (119,144)
Advances from (to) affiliates(17,000)8,000 0 0 9,000 0 
Other2,752 64 301 0 (404)2,713 
Net cash used in investing activities(97,439)(10,117)(17,471)0 8,596 (116,431)
Cash flows from financing activities     
Common stock dividends(26,784)(4,080)(3,596)0 7,676 (26,784)
Preferred stock dividends of Hawaiian Electric and subsidiaries(270)(134)(95)0 0 (499)
Proceeds from issuance of short-term debt50,000 0 0 0 0 50,000 
Proceeds from issuance of long-term debt95,000 0 0 0 0 95,000 
Net increase (decrease) in short-term borrowings from non-affiliates and affiliate with original maturities of three months or less(46,987)2,500 14,500 0 (9,000)(38,987)
Other(21)(1)(1)0 0 (23)
Net cash provided by (used in) financing activities70,938 (1,715)10,808 0 (1,324)78,707 
Net increase (decrease) in cash and cash equivalents2,503 (2,354)1,268 0 0 1,417 
Cash, cash equivalents and restricted cash, beginning of period32,988 7,008 1,797 101 0 41,894 
Cash, cash equivalents and restricted cash, end of period35,491 4,654 3,065 101 0 43,311 
Less: Restricted cash(30,902)0 0 0 0 (30,902)
Cash and cash equivalents, end of period$4,589 4,654 3,065 101 0 $12,409 
2022
(in thousands)Hawaiian ElectricHawaii Electric LightMaui ElectricOther
subsidiaries		Consolidating
adjustments		Hawaiian Electric
Consolidated
Net cash provided by operating activities$55,669 15,778 13,228 — (7,900)$76,775 
Cash flows from investing activities      
Capital expenditures(44,084)(15,133)(17,141)— — (76,358)
Advances to affiliates(4,000)— (12,800)— 16,800 — 
Other961 280 253 — — 1,494 
Net cash used in investing activities(47,123)(14,853)(29,688)— 16,800 (74,864)
Cash flows from financing activities      
Common stock dividends(31,475)(4,100)(3,800)— 7,900 (31,475)
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 less18,800 4,000 — — (16,800)6,000 
Net cash used in financing activities(12,945)(234)(3,895)— (8,900)(25,974)
Net increase (decrease) in cash and cash equivalents(4,399)691 (20,355)— — (24,063)
Cash, cash equivalents and restricted cash, beginning of period26,433 5,326 23,422 77 — 55,258 
Cash, cash equivalents and restricted cash, end of period22,034 6,017 3,067 77 — 31,195 
Less: Restricted cash(2,140)— — — — (2,140)
Cash and cash equivalents, end of period$19,894 6,017 3,067 77 — $29,055 

25

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)

Hawaiian Electric Company, Inc. and Subsidiaries
Condensed Consolidating Statement of Cash Flows
Three months ended March 31, 2021
(in thousands)Hawaiian ElectricHawaii Electric LightMaui ElectricOther
subsidiaries		Consolidating
adjustments		Hawaiian Electric
Consolidated
Net cash provided by operating activities$18,764 9,635 10,988 — (7,426)$31,961 
Cash flows from investing activities     
Capital expenditures(45,293)(12,728)(12,340)— — (70,361)
Advances from affiliates26,700 — — — (26,700)— 
Other1,182 372 309 — — 1,863 
Net cash used in investing activities(17,411)(12,356)(12,031)— (26,700)(68,498)
Cash flows from financing activities     
Common stock dividends(27,925)(3,650)(3,776)— 7,426 (27,925)
Preferred stock dividends of Hawaiian Electric and subsidiaries(270)(134)(95)— — (499)
Repayment of short-term debt(50,000)— — — — (50,000)
Proceeds from issuance of long-term debt60,000 30,000 25,000 — — 115,000 
Net decrease in short-term borrowings from non-affiliates and affiliate with original maturities of three months or less— (18,800)(7,900)— 26,700 — 
Other(96)(11)(9)— — (116)
Net cash provided by (used in) financing activities(18,291)7,405 13,220 — 34,126 36,460 
Net increase (decrease) in cash and cash equivalents(16,938)4,684 12,177 — — (77)
Cash, cash equivalents and restricted cash, beginning of period58,171 3,046 2,032 77 — 63,326 
Cash, cash equivalents and restricted cash, end of period41,233 7,730 14,209 77 — 63,249 
Less: Restricted cash(11,506)— — — — (11,506)
Cash and cash equivalents, end of period$29,727 7,730 14,209 77 — $51,743 

26

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
Note 4 · Bank segment
Selected financial information
American Savings Bank, F.S.B.
Statements of Income and Comprehensive Income Data
 Three months ended March 31
(in thousands)20212020
Interest and dividend income  
Interest and fees on loans$49,947 $55,545 
Interest and dividends on investment securities8,673 9,430 
Total interest and dividend income58,620 64,975 
Interest expense  
Interest on deposit liabilities1,462 3,587 
Interest on other borrowings27 313 
Total interest expense1,489 3,900 
Net interest income57,131 61,075 
Provision for credit losses(8,435)10,401 
Net interest income after provision for credit losses65,566 50,674 
Noninterest income  
Fees from other financial services5,073 4,571 
Fee income on deposit liabilities3,863 5,113 
Fee income on other financial products2,442 1,872 
Bank-owned life insurance2,561 794 
Mortgage banking income4,300 2,000 
Gain on sale of investment securities, net528 0 
Other income, net272 413 
Total noninterest income19,039 14,763 
Noninterest expense  
Compensation and employee benefits28,037 25,777 
Occupancy4,969 5,267 
Data processing4,351 3,837 
Services2,862 2,809 
Equipment2,222 2,339 
Office supplies, printing and postage1,044 1,341 
Marketing648 802 
FDIC insurance816 102 
Other expense2,554 4,194 
Total noninterest expense47,503 46,468 
Income before income taxes37,102 18,969 
Income taxes7,546 3,208 
Net income29,556 15,761 
Other comprehensive income (loss), net of taxes(45,754)19,847 
Comprehensive income (loss)$(16,198)$35,608 


26

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)20212020
Interest and dividend income$58,620 $64,975 
Noninterest income19,039 14,763 
Less: Gain on sale of investment securities, net528 0 
*Revenues-Bank77,131 79,738 
Total interest expense1,489 3,900 
Provision for credit losses(8,435)10,401 
Noninterest expense47,503 46,468 
Less: Retirement defined benefits expense (credit)—other than service costs(1,278)434 
*Expenses-Bank41,835 60,335 
*Operating income-Bank35,296 19,403 
Add back: Retirement defined benefits expense (credit)—other than service costs(1,278)434 
Add back: Gain on sale of investment securities, net528 0 
Income before income taxes$37,102 $18,969 

 Three months ended March 31
(in thousands)20222021
Interest and dividend income  
Interest and fees on loans$46,005 $49,947 
Interest and dividends on investment securities13,984 8,673 
Total interest and dividend income59,989 58,620 
Interest expense  
Interest on deposit liabilities947 1,462 
Interest on other borrowings5 27 
Total interest expense952 1,489 
Net interest income59,037 57,131 
Provision for credit losses(3,263)(8,435)
Net interest income after provision for credit losses62,300 65,566 
Noninterest income  
Fees from other financial services5,587 5,073 
Fee income on deposit liabilities4,691 3,863 
Fee income on other financial products2,718 2,442 
Bank-owned life insurance681 2,561 
Mortgage banking income1,077 4,300 
Gain on sale of real estate1,002 — 
Gain on sale of investment securities, net— 528 
Other income, net372 272 
Total noninterest income16,128 19,039 
Noninterest expense  
Compensation and employee benefits27,215 28,037 
Occupancy5,952 4,969 
Data processing4,151 4,351 
Services2,439 2,862 
Equipment2,329 2,222 
Office supplies, printing and postage1,060 1,044 
Marketing1,018 648 
FDIC insurance808 816 
Other expense3,241 2,554 
Total noninterest expense48,213 47,503 
Income before income taxes30,215 37,102 
Income taxes6,345 7,546 
Net income23,870 29,556 
Other comprehensive loss, net of tax benefits(122,441)(45,754)
Comprehensive income (loss)$(98,571)$(16,198)

27

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)20222021
Interest and dividend income$59,989 $58,620 
Noninterest income16,128 19,039 
Less: Gain on sale of real estate1,002 — 
Less: Gain on sale of investment securities, net— 528 
*Revenues-Bank75,115 77,131 
Total interest expense952 1,489 
Provision for credit losses(3,263)(8,435)
Noninterest expense48,213 47,503 
Less: Gain on sale of real estate1,002 — 
Less: Retirement defined benefits credit—other than service costs(185)(1,278)
*Expenses-Bank45,085 41,835 
*Operating income-Bank30,030 35,296 
Add back: Retirement defined benefits credit—other than service costs(185)(1,278)
Add back: Gain on sale of investment securities, net— 528 
Income before income taxes$30,215 $37,102 


28

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
American Savings Bank, F.S.B.
Balance Sheets Data
(in thousands)March 31, 2021December 31, 2020
Assets    
Cash and due from banks $113,698  $178,422 
Interest-bearing deposits110,365 114,304 
Cash and cash equivalents224,063 292,726 
Investment securities
Available-for-sale, at fair value 2,305,257  1,970,417 
Held-to-maturity, at amortized cost (fair value of $285,599 and $229,963, respectively)295,046 226,947 
Stock in Federal Home Loan Bank, at cost 10,000  8,680 
Loans held for investment 5,310,081  5,333,843 
Allowance for credit losses (91,793) (101,201)
Net loans 5,218,288  5,232,642 
Loans held for sale, at lower of cost or fair value 23,637  28,275 
Other 559,543  554,656 
Goodwill 82,190  82,190 
Total assets $8,718,024  $8,396,533 
Liabilities and shareholder’s equity    
Deposit liabilities—noninterest-bearing $2,833,844  $2,598,500 
Deposit liabilities—interest-bearing 4,911,450  4,788,457 
Other borrowings 102,685  89,670 
Other 154,418  183,731 
Total liabilities 8,002,397  7,660,358 
Commitments and contingencies 0 0
Common stock 1  1 
Additional paid-in capital352,408 351,758 
Retained earnings 394,026  369,470 
Accumulated other comprehensive income (loss), net of taxes    
Net unrealized gains (losses) on securities$(25,791) $19,986 
Retirement benefit plans(5,017)(30,808)(5,040)14,946 
Total shareholder’s equity715,627  736,175 
Total liabilities and shareholder’s equity $8,718,024  8,396,533 
Other assets    
Bank-owned life insurance $162,821  $163,265 
Premises and equipment, net 206,247  206,134 
Accrued interest receivable 24,381  24,616 
Mortgage-servicing rights 10,685  10,020 
Low-income housing investments80,791 83,435 
Other 74,618  67,186 
  $559,543  $554,656 
Other liabilities    
Accrued expenses $55,073  $62,694 
Federal and state income taxes payable 1,709  6,582 
Cashier’s checks 29,363  38,011 
Advance payments by borrowers 5,863  10,207 
Other 62,410  66,237 
  $154,418  $183,731 
(in thousands)March 31, 2022December 31, 2021
Assets    
Cash and due from banks $114,249  $100,051 
Interest-bearing deposits155,279 151,189 
Cash and cash equivalents269,528 251,240 
Investment securities
Available-for-sale, at fair value 2,621,375  2,574,618 
Held-to-maturity, at amortized cost (fair value of $466,236 and $510,474, respectively)517,150 522,270 
Stock in Federal Home Loan Bank, at cost 10,000  10,000 
Loans held for investment 5,184,733  5,211,114 
Allowance for credit losses (67,211) (71,130)
Net loans 5,117,522  5,139,984 
Loans held for sale, at lower of cost or fair value 7,961  10,404 
Other 626,599  590,897 
Goodwill 82,190  82,190 
Total assets $9,252,325  $9,181,603 
Liabilities and shareholder’s equity    
Deposit liabilities—noninterest-bearing $3,016,520  $2,976,632 
Deposit liabilities—interest-bearing 5,272,752  5,195,580 
Other borrowings 137,385  88,305 
Other 210,681  193,268 
Total liabilities 8,637,338  8,453,785 
  
Common stock 1  1 
Additional paid-in capital354,635 353,895 
Retained earnings 420,574  411,704 
Accumulated other comprehensive loss, net of tax benefits    
Net unrealized losses on securities$(152,444) $(32,037)
Retirement benefit plans(7,779)(160,223)(5,745)(37,782)
Total shareholder’s equity614,987  727,818 
Total liabilities and shareholder’s equity $9,252,325  $9,181,603 
Other assets    
Bank-owned life insurance $176,301  $177,566 
Premises and equipment, net 199,949  202,299 
Accrued interest receivable 21,133  20,854 
Mortgage-servicing rights 10,024  9,950 
Low-income housing investments107,791 110,989 
Deferred tax asset51,720 7,699 
Other 59,681  61,540 
  $626,599  $590,897 
Other liabilities    
Accrued expenses $104,958  $87,905 
Federal and state income taxes payable 2,174  — 
Cashier’s checks 36,586  33,675 
Advance payments by borrowers 5,664  9,994 
Other 61,299  61,694 
  $210,681  $193,268 
    
2829

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 federal funds purchasedof $137.4 million and advances from the Federal Home Loan Bank (FHLB) of $102.7$88.3 million NaN and NaN, respectively, as ofat March 31, 20212022 and $89.7 million, NaN and NaN, respectively, as of December 31, 2020.2021, respectively.
Investment securities.  The major components of investment securities were as follows:
Amortized costGross unrealized gainsGross unrealized lossesEstimated fair
value		Gross unrealized losses Amortized costGross unrealized gainsGross unrealized lossesEstimated fair
value		Gross unrealized losses
Less than 12 months12 months or longer Less than 12 months12 months or longer
(dollars in thousands)(dollars in thousands)Number of issuesFair 
value		AmountNumber of issuesFair 
value		Amount(dollars in thousands)Number of issuesFair 
value		AmountNumber of issuesFair 
value		Amount
March 31, 2021        
March 31, 2022March 31, 2022        
Available-for-saleAvailable-for-saleAvailable-for-sale
U.S. Treasury and federal agency obligationsU.S. Treasury and federal agency obligations$55,969 $1,719 $(41)$57,647 1 $4,908 $(41)0 $0 $0 U.S. Treasury and federal agency obligations$109,343 $75 $(3,216)$106,202 16 $91,087 $(3,216)— $— $— 
Mortgage-backed securities*Mortgage-backed securities*2,239,311 15,404 (53,363)2,201,352 92 1,613,008 (53,344)1 958 (19)Mortgage-backed securities*2,660,506 277 (204,029)2,456,754 165 1,484,883 (97,460)64 904,628 (106,569)
Corporate bondsCorporate bonds29,781 1,050 0 30,831 0 0 0 0 0 0 Corporate bonds44,481 101 (1,459)43,123 3 34,014 (1,459)— — — 
Mortgage revenue bondsMortgage revenue bonds15,427 0 0 15,427 0 0 0 0 0 0 Mortgage revenue bonds15,296 — — 15,296 — — — — — — 
$2,340,488 $18,173 $(53,404)$2,305,257 93 $1,617,916 $(53,385)1 $958 $(19) $2,829,626 $453 $(208,704)$2,621,375 184 $1,609,984 $(102,135)64 $904,628 $(106,569)
Held-to-maturityHeld-to-maturityHeld-to-maturity
U.S. Treasury and Federal agency obligationsU.S. Treasury and Federal agency obligations$59,877 $— $(3,831)$56,046 3 $56,046 $(3,831)— $— $— 
Mortgage-backed securities*Mortgage-backed securities*$295,046 $2,812 $(12,259)$285,599 16 $220,908 $(12,259)0 $0 $0 Mortgage-backed securities*457,273 76 (47,159)410,190 23 246,986 (23,964)13 158,370 (23,195)
$295,046 $2,812 $(12,259)$285,599 16 $220,908 $(12,259)0 $0 $0  $517,150 $76 $(50,990)$466,236 26 $303,032 $(27,795)13 $158,370 $(23,195)
December 31, 2020
December 31, 2021December 31, 2021
Available-for-saleAvailable-for-saleAvailable-for-sale
U.S. Treasury and federal agency obligationsU.S. Treasury and federal agency obligations$60,260 $2,062 $0 $62,322 0 $0 $0 0 $0 $0 U.S. Treasury and federal agency obligations$89,714 $803 $(427)$90,090 4 $44,827 $(427)— $— $— 
Mortgage-backed securities*Mortgage-backed securities*1,825,893 26,817 (3,151)1,849,559 22 373,924 (3,151)0 0 0 Mortgage-backed securities*2,482,618 6,511 (51,206)2,437,923 120 1,845,243 (38,321)18 271,012 (12,885)
Corporate bondsCorporate bonds29,776 1,575 0 31,351 0 0 0 0 0 0 Corporate bonds30,625 655 (102)31,178 1 12,780 (102)— — — 
Mortgage revenue bondsMortgage revenue bonds27,185 0 0 27,185 0 0 0 0 0 0 Mortgage revenue bonds15,427 — — 15,427 — — — — — — 
$1,943,114 $30,454 $(3,151)$1,970,417 22 $373,924 $(3,151)0 $0 $0  $2,618,384 $7,969 $(51,735)$2,574,618 125 $1,902,850 $(38,850)18 $271,012 $(12,885)
Held-to-maturityHeld-to-maturityHeld-to-maturity
U.S. Treasury and Federal agency obligationsU.S. Treasury and Federal agency obligations$59,871 $168 $(170)$59,869 2 $39,594 $(170)— $— $— 
Mortgage-backed securities*Mortgage-backed securities*$226,947 $3,846 $(830)$229,963 7 $114,152 $(830)0 $0 $0 Mortgage-backed securities*462,399 1,480 (13,274)450,605 22 290,883 (7,665)7 106,483 (5,609)
$226,947 $3,846 $(830)$229,963 7 $114,152 $(830)0 $0 $0  $522,270 $1,648 $(13,444)$510,474 24 $330,477 $(7,835)7 $106,483 $(5,609)
* Issued or guaranteed by U.S. Government agencies or sponsored agencies
ASB does not believe that the investment securities that were in an unrealized loss position at March 31, 2022 and December 31, 2021, represent a credit loss. Total gross unrealized losses were primarily attributable to change in market conditions. On a quarterly basis the investment securities are evaluated for changes in financial condition of the issuer. Based upon ASB’s evaluation, all securities held within the investment portfolio continue to be investment grade by one or more agencies. The contractual cash flows of the U.S. Treasury, federal agency obligations and agency mortgage-backed securities are backed by the full faith and credit guaranty of the United States government or an agency of the government. 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’s investment securities portfolio did not require an allowance for credit losses at March 31, 20212022 and December 31, 2020.2021.
U.S. Treasury, federal agency obligations, corporate bonds, and mortgage revenue bonds have contractual terms to maturity. Mortgage-backed securities have contractual terms to maturity, but require periodic payments to reduce principal.
30

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
In addition, expected maturities will differ from contractual maturities because borrowers have the right to prepay the underlying mortgages.
The contractual maturities of investment securities were as follows:
March 31, 2022Amortized costFair value
(in thousands)  
Available-for-sale
Due in one year or less$15,821 $15,890 
Due after one year through five years81,524 79,931 
Due after five years through ten years71,775 68,800 
Due after ten years— — 
 169,120 164,621 
Mortgage-backed securities — issued or guaranteed by U.S. Government agencies or sponsored agencies2,660,506 2,456,754 
Total available-for-sale securities$2,829,626 $2,621,375 
Held-to-maturity
Due in one year or less$— $— 
Due after one year through five years— — 
Due after five years through ten years59,877 56,046 
Due after ten years— — 
59,877 56,046 
Mortgage-backed securities — issued or guaranteed by U.S. Government agencies or sponsored agencies457,273 410,190 
Total held-to-maturity securities$517,150 $466,236 
The proceeds, gross gains and losses from sales of available-for-sale securities were as follows:
Three months ended March 31
20222021
(in thousands)
Proceeds$— $197,354 
Gross gains— 974 
Gross losses— 446 
Tax expense on realized gains— 142 
The components of loans were summarized as follows:
March 31, 2022December 31, 2021
(in thousands)  
Real estate:  
Residential 1-4 family$2,279,671 $2,299,212 
Commercial real estate1,115,632 1,056,982 
Home equity line of credit845,271 835,663 
Residential land22,309 19,859 
Commercial construction90,332 91,080 
Residential construction15,508 11,138 
Total real estate4,368,723 4,313,934 
Commercial708,447 793,304 
Consumer116,090 113,966 
Total loans5,193,260 5,221,204 
Less: Deferred fees and discounts(8,527)(10,090)
Allowance for credit losses(67,211)(71,130)
Total loans, net$5,117,522 $5,139,984 
29
31

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
The contractual maturities of investment securities were as follows:
March 31, 2021Amortized costFair value
(in thousands)  
Available-for-sale
Due in one year or less$11,996 $12,011 
Due after one year through five years43,530 45,180 
Due after five years through ten years30,224 31,287 
Due after ten years15,427 15,427 
 101,177 103,905 
Mortgage-backed securities — issued or guaranteed by U.S. Government agencies or sponsored agencies2,239,311 2,201,352 
Total available-for-sale securities$2,340,488 $2,305,257 
Held-to-maturity
Mortgage-backed securities — issued or guaranteed by U.S. Government agencies or sponsored agencies$295,046 $285,599 
Total held-to-maturity securities$295,046 $285,599 
Proceeds from the sale of available-for-sale securities were $197.4 million and NaN, respectively, for the three months ended March 31, 2021 and 2020. Gross realized gains and losses for the three months ended March 31, 2021 were $1.0 million and $0.5 million, respectively. Gross realized gains and losses for the three months ended March 31, 2020 were NaN.
Loans. The components of loans were summarized as follows:
March 31, 2021December 31, 2020
(in thousands)  
Real estate:  
Residential 1-4 family$2,107,537 $2,144,239 
Commercial real estate1,012,968 983,865 
Home equity line of credit901,462 963,578 
Residential land17,468 15,617 
Commercial construction114,455 121,424 
Residential construction13,365 11,022 
Total real estate4,167,255 4,239,745 
Commercial1,010,004 936,748 
Consumer148,511 168,733 
Total loans5,325,770 5,345,226 
          Deferred fees and discounts(15,689)(11,383)
          Allowance for credit losses(91,793)(101,201)
Total loans, net$5,218,288 $5,232,642 
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 property purchases, the loan-to-value ratio may not exceed 75% of the lower of the appraised value or purchase price at origination.
30

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
Allowance for credit losses. The allowance for credit losses (balances and changes) by portfolio segment were as follows:
(in thousands)(in thousands)Residential
1-4 family		Commercial real
estate		Home
equity line of credit		Residential landCommercial constructionResidential constructionCommercial loansConsumer loansTotal(in thousands)Residential
1-4 family		Commercial real
estate		Home
equity line of credit		Residential landCommercial constructionResidential constructionCommercial loansConsumer loansTotal
Three months ended March 31, 2021        
Three months ended March 31, 2022Three months ended March 31, 2022        
Allowance for credit losses:Allowance for credit losses:         Allowance for credit losses:         
Beginning balanceBeginning balance$4,600 $35,607 $6,813 $609 $4,149 $11 $25,462 $23,950 $101,201 Beginning balance$6,545 $24,696 $5,657 $646 $2,186 $18 $15,798 $15,584 $71,130 
Charge-offsCharge-offs0 0 (50)0 0 0 (771)(2,860)(3,681)Charge-offs— — — — — — (76)(1,482)(1,558)
RecoveriesRecoveries3 0 15 10 0 0 273 1,007 1,308 Recoveries8 — 11 5 — — 353 1,025 1,402 
ProvisionProvision658 (1,262)(877)(46)(2,696)5 (460)(2,357)(7,035)Provision1,321 (4,520)(18)46 154 13 (1,761)1,002 (3,763)
Ending balanceEnding balance$5,261 $34,345 $5,901 $573 $1,453 $16 $24,504 $19,740 $91,793 Ending balance$7,874 $20,176 $5,650 $697 $2,340 $31 $14,314 $16,129 $67,211 
Three months ended March 31, 2020        
Three months ended March 31, 2021Three months ended March 31, 2021        
Allowance for credit losses:Allowance for credit losses:         Allowance for credit losses:         
Beginning balance, prior to adoption of ASU No. 2016-13
$2,380 $15,053 $6,922 $449 $2,097 $3 $10,245 $16,206 $53,355 
Impact of adopting ASU No. 2016-13
2,150 208 (541)(64)289 14 922 16,463 19,441 
Beginning balanceBeginning balance$4,600 $35,607 $6,813 $609 $4,149 $11 $25,462 $23,950 $101,201 
Charge-offsCharge-offs0 0 0 (8)0 0 (369)(6,254)(6,631)Charge-offs— — (50)— — — (771)(2,860)(3,681)
RecoveriesRecoveries53 0 6 9 0 0 186 764 1,018 Recoveries3 — 15 10 — — 273 1,007 1,308 
ProvisionProvision(107)1,326 (162)(34)1,060 (3)1,993 5,828 9,901 Provision658 (1,262)(877)(46)(2,696)5 (460)(2,357)(7,035)
Ending balanceEnding balance$4,476 $16,587 $6,225 $352 $3,446 $14 $12,977 $33,007 $77,084 Ending balance$5,261 $34,345 $5,901 $573 $1,453 $16 $24,504 $19,740 $91,793 

Allowance for loan commitments. The allowance for loan commitments by portfolio segment were as follows:
(in thousands)(in thousands)Home equity
 line of credit		Commercial constructionCommercial loansTotal(in thousands)Home equity
 line of credit		Commercial constructionCommercial loansTotal
Three months ended March 31, 2021
Three months ended March 31, 2022Three months ended March 31, 2022
Allowance for loan commitments:Allowance for loan commitments:Allowance for loan commitments:
Beginning balanceBeginning balance$300 $3,000 $1,000 $4,300 Beginning balance$400 $3,700 $800 $4,900 
ProvisionProvision100 (1,700)200 (1,400)Provision— (100)600 500 
Ending balanceEnding balance$400 $1,300 $1,200 $2,900 Ending balance$400 $3,600 $1,400 $5,400 
Three months ended March 31, 2020
Three months ended March 31, 2021Three months ended March 31, 2021
Allowance for loan commitments:Allowance for loan commitments:Allowance for loan commitments:
Beginning balance, prior to adoption of ASU No. 2016-13$392 $931 $418 $1,741 
Impact of adopting ASU No. 2016-13
(92)1,745 (94)1,559 
Beginning balanceBeginning balance$300 $3,000 $1,000 $4,300 
ProvisionProvision0 515 (15)500 Provision100 (1,700)200 (1,400)
Ending balanceEnding balance$300 $3,191 $309 $3,800 Ending balance$400 $1,300 $1,200 $2,900 
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 ASB 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.
3132

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
The credit risk profile by vintage date based on payment activity or internally assigned grade for loans was as follows:
Term Loans by Origination YearRevolving Loans
(in thousands)20212020201920182017PriorRevolvingConverted to term loansTotal
March 31, 2021
Residential 1-4 family
Current$150,713 $549,327 $184,339 $97,560 $179,131 $934,471 $0 $0 $2,095,541 
30-59 days past due0 280 0 0 0 2,081 0 0 2,361 
60-89 days past due0 0 3,018 431 0 1,954 0 0 5,403 
Greater than 89 days past due0 0 942 0 0 3,290 0 0 4,232 
150,713 549,607 188,299 97,991 179,131 941,796 0 0 2,107,537 
Home equity line of credit
Current0 0 0 0 0 0 861,116 36,792 897,908 
30-59 days past due0 0 0 0 0 0 659 473 1,132 
60-89 days past due0 0 0 0 0 0 261 73 334 
Greater than 89 days past due0 0 0 0 0 0 1,243 845 2,088 
0 0 0 0 0 0 863,279 38,183 901,462 
Residential land
Current2,794 8,354 2,884 1,290 855 292 0 0 16,469 
30-59 days past due0 0 0 0 0 699 0 0 699 
60-89 days past due0 0 0 0 0 0 0 0 0 
Greater than 89 days past due0 0 0 0 0 300 0 0 300 
2,794 8,354 2,884 1,290 855 1,291 0 0 17,468 
Residential construction
Current1,114 7,865 3,344 383 659 0 0 0 13,365 
30-59 days past due0 0 0 0 0 0 0 0 0 
60-89 days past due0 0 0 0 0 0 0 0 0 
Greater than 89 days past due0 0 0 0 0 0 0 0 0 
1,114 7,865 3,344 383 659 0 0 0 13,365 
Consumer
Current6,658 25,307 57,781 29,734 4,219 475 16,332 3,729 144,235 
30-59 days past due125 164 577 452 90 1 106 125 1,640 
60-89 days past due0 149 623 372 119 1 80 92 1,436 
Greater than 89 days past due0 218 356 280 56 1 199 90 1,200 
6,783 25,838 59,337 30,838 4,484 478 16,717 4,036 148,511 
Commercial real estate
Pass23,091 274,952 69,384 60,627 28,174 222,617 11,000 0 689,845 
Special Mention0 4,914 29,597 57,489 51,586 97,247 0 0 240,833 
Substandard0 0 14,647 4,170 1,877 61,596 0 0 82,290 
Doubtful0 0 0 0 0 0 0 0 0 
23,091 279,866 113,628 122,286 81,637 381,460 11,000 0 1,012,968 
Commercial construction
Pass0 21,414 39,513 26,990 0 2,917 20,972 0 111,806 
Special Mention245 2,404 0 0 0 0 0 0 2,649 
Substandard0 0 0 0 0 0 0 0 0 
Doubtful0 0 0 0 0 0 0 0 0 
245 23,818 39,513 26,990 0 2,917 20,972 0 114,455 
Commercial
Pass169,095 337,753 96,251 60,462 28,545 51,072 91,178 19,666 854,022 
Special Mention65 38,316 15,024 1,820 6,725 33,990 26,301 26 122,267 
Substandard0 275 7,921 2,004 3,765 11,276 6,665 1,809 33,715 
Doubtful0 0 0 0 0 0 0 0 0 
169,160 376,344 119,196 64,286 39,035 96,338 124,144 21,501 1,010,004 
Total loans$353,900 $1,271,692 $526,201 $344,064 $305,801 $1,424,280 $1,036,112 $63,720 $5,325,770 

Term Loans by Origination YearRevolving Loans
(in thousands)20222021202020192018PriorRevolvingConverted to term loansTotal
March 31, 2022
Residential 1-4 family
Current$77,374 $779,764 $448,738 $125,136 $58,967 $781,055 $— $— $2,271,034 
30-59 days past due— — — — — 1,920 — — 1,920 
60-89 days past due— — — — — 2,414 — — 2,414 
Greater than 89 days past due— — — — 809 3,494 — — 4,303 
77,374 779,764 448,738 125,136 59,776 788,883 — — 2,279,671 
Home equity line of credit
Current— — — — — — 803,515 39,683 843,198 
30-59 days past due— — — — — — 457 512 969 
60-89 days past due— — — — — — 64 — 64 
Greater than 89 days past due— — — — — — 745 295 1,040 
— — — — — — 804,781 40,490 845,271 
Residential land
Current2,703 10,550 6,725 958 530 446 — — 21,912 
30-59 days past due— — — — — — — — — 
60-89 days past due— — — — — — — — — 
Greater than 89 days past due— — — — — 397 — — 397 
2,703 10,550 6,725 958 530 843 — — 22,309 
Residential construction
Current2,423 10,493 2,336 — — 256 — — 15,508 
30-59 days past due— — — — — — — — — 
60-89 days past due— — — — — — — — — 
Greater than 89 days past due— — — — — — — — — 
2,423 10,493 2,336 — — 256 — — 15,508 
Consumer
Current22,938 32,765 12,643 22,292 6,434 318 11,886 4,163 113,439 
30-59 days past due185 187 126 377 170 2 96 35 1,178 
60-89 days past due— 56 115 278 97 4 23 48 621 
Greater than 89 days past due— 43 55 253 200 9 111 181 852 
23,123 33,051 12,939 23,200 6,901 333 12,116 4,427 116,090 
Commercial real estate
Pass72,390 171,541 292,533 53,006 61,639 296,669 4,235 — 952,013 
Special Mention— 19,600 3,508 41,925 14,250 43,372 — — 122,655 
Substandard— — 678 11,238 1,847 27,201 — — 40,964 
Doubtful— — — — — — — — — 
72,390 191,141 296,719 106,169 77,736 367,242 4,235 — 1,115,632 
Commercial construction
Pass119 22,614 32,846 — 11,341 — 23,412 — 90,332 
Special Mention— — — — — — — — — 
Substandard— — — — — — — — — 
Doubtful— — — — — — — — — 
119 22,614 32,846 — 11,341 — 23,412 — 90,332 
Commercial
Pass8,521 234,161 83,927 75,241 46,058 89,119 89,919 14,951 641,897 
Special Mention— 31 10,012 9,540 117 7,680 18,364 17 45,761 
Substandard— 423 173 3,110 1,686 6,759 7,326 1,312 20,789 
Doubtful— — — — — — — — — 
8,521 234,615 94,112 87,891 47,861 103,558 115,609 16,280 708,447 
Total loans$186,653 $1,282,228 $894,415 $343,354 $204,145 $1,261,115 $960,153 $61,197 $5,193,260 
3233

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
Term Loans by Origination YearRevolving LoansTerm Loans by Origination YearRevolving Loans
(in thousands)(in thousands)20202019201820172016PriorRevolvingConverted to term loansTotal(in thousands)20212020201920182017PriorRevolvingConverted to term loansTotal
December 31, 2020
December 31, 2021December 31, 2021
Residential 1-4 familyResidential 1-4 familyResidential 1-4 family
CurrentCurrent$567,282 $218,988 $111,243 $203,916 $184,888 $849,788 $0 $0 $2,136,105 Current$791,758 $461,683 $133,345 $64,421 $124,994 $712,452 $— $— $2,288,653 
30-59 days past due30-59 days past due0 0 0 0 0 2,629 0 0 2,629 30-59 days past due— — — 809 — 2,210 — — 3,019 
60-89 days past due60-89 days past due0 476 0 0 0 2,314 0 0 2,790 60-89 days past due— — — — — 1,468 — — 1,468 
Greater than 89 days past dueGreater than 89 days past due0 0 0 353 0 2,362 0 0 2,715 Greater than 89 days past due— — 2,987 — — 3,085 — — 6,072 
567,282 219,464 111,243 204,269 184,888 857,093 0 0 2,144,239 791,758 461,683 136,332 65,230 124,994 719,215 — — 2,299,212 
Home equity line of creditHome equity line of creditHome equity line of credit
CurrentCurrent0 0 0 0 0 0 927,106 33,228 960,334 Current— — — — — — 794,518 39,116 833,634 
30-59 days past due30-59 days past due0 0 0 0 0 0 552 298 850 30-59 days past due— — — — — — 296 313 609 
60-89 days past due60-89 days past due0 0 0 0 0 0 267 75 342 60-89 days past due— — — — — — 16 70 86 
Greater than 89 days past dueGreater than 89 days past due0 0 0 0 0 0 1,463 589 2,052 Greater than 89 days past due— — — — — — 838 496 1,334 
0 0 0 0 0 0 929,388 34,190 963,578 — — — — — — 795,668 39,995 835,663 
Residential landResidential landResidential land
CurrentCurrent8,357 3,427 1,598 939 22 272 0 0 14,615 Current10,572 6,794 1,116 532 267 181 — — 19,462 
30-59 days past due30-59 days past due0 0 0 0 0 702 0 0 702 30-59 days past due— — — — — — — — — 
60-89 days past due60-89 days past due0 0 0 0 0 0 0 0 0 60-89 days past due— — — — — — — — — 
Greater than 89 days past dueGreater than 89 days past due0 0 0 0 0 300 0 0 300 Greater than 89 days past due— — — — — 397 — — 397 
8,357 3,427 1,598 939 22 1,274 0 0 15,617 10,572 6,794 1,116 532 267 578 — — 19,859 
Residential constructionResidential constructionResidential construction
CurrentCurrent6,919 3,093 385 625 0 0 0 0 11,022 Current7,856 3,019 — — 263 — — — 11,138 
30-59 days past due30-59 days past due0 0 0 0 0 0 0 0 0 30-59 days past due— — — — — — — — — 
60-89 days past due60-89 days past due0 0 0 0 0 0 0 0 0 60-89 days past due— — — — — — — — — 
Greater than 89 days past dueGreater than 89 days past due0 0 0 0 0 0 0 0 0 Greater than 89 days past due— — — — — — — — — 
6,919 3,093 385 625 0 0 0 0 11,022 7,856 3,019 — — 263 — — — 11,138 
ConsumerConsumerConsumer
CurrentCurrent28,818 67,159 37,072 7,207 293 348 18,351 3,758 163,006 Current37,563 15,488 29,383 10,897 302 238 12,740 4,157 110,768 
30-59 days past due30-59 days past due406 1,085 727 155 4 0 138 90 2,605 30-59 days past due202 181 517 234 15 — 156 70 1,375 
60-89 days past due60-89 days past due191 549 427 165 3 0 97 59 1,491 60-89 days past due59 127 392 183 8 — 7 106 882 
Greater than 89 days past dueGreater than 89 days past due131 532 409 119 7 0 262 171 1,631 Greater than 89 days past due14 93 387 192 27 — 141 87 941 
29,546 69,325 38,635 7,646 307 348 18,848 4,078 168,733 37,838 15,889 30,679 11,506 352 238 13,044 4,420 113,966 
Commercial real estateCommercial real estateCommercial real estate
PassPass270,603 63,301 62,168 28,432 55,089 155,654 11,000 0 646,247 Pass173,794 275,242 49,317 56,490 33,581 259,583 11,602 — 859,609 
Special MentionSpecial Mention10,261 36,405 57,952 33,763 68,287 48,094 0 0 254,762 Special Mention19,600 3,529 42,935 30,870 20,788 32,824 — — 150,546 
SubstandardSubstandard0 14,720 4,181 1,892 4,423 57,640 0 0 82,856 Substandard— 684 13,936 1,859 1,805 28,543 — — 46,827 
DoubtfulDoubtful0 0 0 0 0 0 0 0 0 Doubtful— — — — — — — — — 
280,864 114,426 124,301 64,087 127,799 261,388 11,000 0 983,865 193,394 279,455 106,188 89,219 56,174 320,950 11,602 — 1,056,982 
Commercial constructionCommercial constructionCommercial construction
PassPass14,480 31,965 26,990 0 5,562 0 22,517 0 101,514 Pass17,140 43,261 — 11,342 — — 19,337 — 91,080 
Special MentionSpecial Mention1,910 0 0 18,000 0 0 0 0 19,910 Special Mention— — — — — — — — — 
SubstandardSubstandard0 0 0 0 0 0 0 0 0 Substandard— — — — — — — — — 
DoubtfulDoubtful0 0 0 0 0 0 0 0 0 Doubtful— — — — — — — — — 
16,390 31,965 26,990 18,000 5,562 0 22,517 0 121,424 17,140 43,261 — 11,342 — — 19,337 — 91,080 
CommercialCommercialCommercial
PassPass392,088 117,791 75,533 29,211 12,520 35,770 74,520 11,004 748,437 Pass266,087 96,963 79,329 56,497 31,019 66,570 96,673 15,510 708,648 
Special MentionSpecial Mention37,836 23,087 1,920 6,990 30,264 13,250 31,362 11,218 155,927 Special Mention40 27,336 10,071 202 439 8,966 15,303 18 62,375 
SubstandardSubstandard304 7,785 2,043 4,017 7,542 3,113 5,265 1,928 31,997 Substandard427 184 3,737 1,777 4,457 2,961 7,083 1,655 22,281 
DoubtfulDoubtful0 0 0 0 0 0 387 0 387 Doubtful— — — — — — — — — 
430,228 148,663 79,496 40,218 50,326 52,133 111,534 24,150 936,748 266,554 124,483 93,137 58,476 35,915 78,497 119,059 17,183 793,304 
Total loansTotal loans$1,339,586 $590,363 $382,648 $335,784 $368,904 $1,172,236 $1,093,287 $62,418 $5,345,226 Total loans$1,325,112 $934,584 $367,452 $236,305 $217,965 $1,119,478 $958,710 $61,598 $5,221,204 
3334

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
Revolving loans converted to term loans during the three months ended March 31, 20212022 in the commercial, home equity line of credit and consumer portfolios waswere $0.5 million, $6.2$4.4 million and $0.7$1.0 million, respectively. Revolving loans converted to term loans during the three months ended March 31, 20202021 in the commercial, home equity line of credit and consumer portfolios was $2.0were $0.5 million, $1.8$6.2 million and $1.0$0.7 million, respectively.
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		CurrentTotal
financing
receivables		Amortized cost>
90 days and
accruing
March 31, 2021       
Real estate:       
Residential 1-4 family$2,361 $5,403 $4,232 $11,996 $2,095,541 $2,107,537 $0 
Commercial real estate1,681 0 0 1,681 1,011,287 1,012,968 0 
Home equity line of credit1,132 334 2,088 3,554 897,908 901,462 0 
Residential land699 0 300 999 16,469 17,468 0 
Commercial construction0 0 0 0 114,455 114,455 0 
Residential construction0 0 0 0 13,365 13,365 0 
Commercial146 47 73 266 1,009,738 1,010,004 0 
Consumer1,640 1,436 1,200 4,276 144,235 148,511 0 
Total loans$7,659 $7,220 $7,893 $22,772 $5,302,998 $5,325,770 $0 
December 31, 2020       
Real estate:       
Residential 1-4 family$2,629 $2,790 $2,715 $8,134 $2,136,105 $2,144,239 $0 
Commercial real estate0 488 0 488 983,377 983,865 0 
Home equity line of credit850 342 2,052 3,244 960,334 963,578 0 
Residential land702 0 300 1,002 14,615 15,617 0 
Commercial construction0 0 0 0 121,424 121,424 0 
Residential construction0 0 0 0 11,022 11,022 0 
Commercial608 300 132 1,040 935,708 936,748 0 
Consumer2,605 1,491 1,631 5,727 163,006 168,733 0 
Total loans$7,394 $5,411 $6,830 $19,635 $5,325,591 $5,345,226 $0 
(in thousands)30-59
days
past due		60-89
days
past due		 
Greater than
90 days		Total
past due		CurrentTotal
financing
receivables		Amortized cost>
90 days and
accruing
March 31, 2022       
Real estate:       
Residential 1-4 family$1,920 $2,414 $4,303 $8,637 $2,271,034 $2,279,671 $— 
Commercial real estate— — — — 1,115,632 1,115,632 — 
Home equity line of credit969 64 1,040 2,073 843,198 845,271 — 
Residential land— — 397 397 21,912 22,309 — 
Commercial construction— — — — 90,332 90,332 — 
Residential construction— — — — 15,508 15,508 — 
Commercial200 139 40 379 708,068 708,447 — 
Consumer1,178 621 852 2,651 113,439 116,090 — 
Total loans$4,267 $3,238 $6,632 $14,137 $5,179,123 $5,193,260 $— 
December 31, 2021       
Real estate:       
Residential 1-4 family$3,019 $1,468 $6,072 $10,559 $2,288,653 $2,299,212 $— 
Commercial real estate— — — — 1,056,982 1,056,982 — 
Home equity line of credit609 86 1,334 2,029 833,634 835,663 — 
Residential land— — 397 397 19,462 19,859 — 
Commercial construction— — — — 91,080 91,080 — 
Residential construction— — — — 11,138 11,138 — 
Commercial700 313 48 1,061 792,243 793,304 — 
Consumer1,375 882 941 3,198 110,768 113,966 — 
Total loans$5,703 $2,749 $8,792 $17,244 $5,203,960 $5,221,204 $— 

The credit risk profile based on nonaccrual loans were as follows:
(in thousands)March 31, 2021December 31, 2020
With a Related ACLWithout a Related ACLTotalWith a Related ACLWithout a Related ACLTotal
Real estate:
Residential 1-4 family$16,945 $2,987 $19,932 $8,991 $2,835 $11,826 
Commercial real estate15,634 2,828 18,462 15,847 2,875 18,722 
Home equity line of credit5,075 1,587 6,662 5,791 1,567 7,358 
Residential land107 300 407 108 300 408 
Commercial construction0 0 0 0 0 0 
Residential construction0 0 0 0 0 0 
Commercial1,763 2,918 4,681 1,819 3,328 5,147 
Consumer3,192 0 3,192 3,935 0 3,935 
  Total$42,716 $10,620 $53,336 $36,491 $10,905 $47,396 
(in thousands)March 31, 2022December 31, 2021
With a Related ACLWithout a Related ACLTotalWith a Related ACLWithout a Related ACLTotal
Real estate:
Residential 1-4 family$12,583 $3,909 $16,492 $16,045 $3,703 $19,748 
Commercial real estate— 12,530 12,530 14,104 1,221 15,325 
Home equity line of credit3,371 1,054 4,425 4,227 1,294 5,521 
Residential land— 397 397 97 300 397 
Commercial construction— — — — — — 
Residential construction— — — — — — 
Commercial1,307 562 1,869 1,446 692 2,138 
Consumer1,555 — 1,555 1,845 — 1,845 
  Total$18,816 $18,452 $37,268 $37,764 $7,210 $44,974 

3435

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
The credit risk profile based on loans whose terms have been modified and accruing interest were as follows:
(in thousands)March 31, 2021December 31, 2020
Real estate:
Residential 1-4 family$7,453 $7,932 
Commercial real estate3,254 3,281 
Home equity line of credit7,727 8,148 
Residential land1,738 1,555 
Commercial construction0 0 
Residential construction0 0 
Commercial5,737 6,108 
Consumer54 54 
Total troubled debt restructured loans accruing interest$25,963 $27,078 

(in thousands)March 31, 2022December 31, 2021
Real estate:
Residential 1-4 family$7,296 $6,949 
Commercial real estate2,888 3,055 
Home equity line of credit5,437 6,021 
Residential land976 980 
Commercial construction— — 
Residential construction— — 
Commercial7,079 7,860 
Consumer52 52 
Total troubled debt restructured loans accruing interest$23,728 $24,917 
ASB did not recognize interest on nonaccrual loans for the three months ended March 31, 20212022 and 2020.2021.
Troubled debt restructurings.  A loan modification is deemed to be a TDR when the borrower is determined to be experiencing financial difficulties and ASB grants a concession it would not otherwise consider.
The allowance for credit losses on TDR loans that do not share risk characteristics are individually evaluated based on the present value of expected future cash flows discounted at the loan’s effective original contractual rate or based on the fair value of collateral less cost to sell. The financial impact of the estimated loss is an increase to the allowance associated with the modified loan. When available information confirms that specific loans or portions thereof are uncollectible (confirmed losses), these amounts are charged off against the allowance for credit losses.
There were no loan modifications that occurred during the three months ended March 31, 2022. Loan modifications that occurred during the first three months ofended March 31, 2021 and 2020 were as follows:
Loans modified as a TDRThree months ended March 31, 2021
(dollars in thousands)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 family12 $8,283 $298 
Commercial real estate1 482 0 
Home equity line of credit1 170 21 
Residential land1 271 11 
Commercial construction0 0 0 
Residential construction0 0 0 
Commercial2 59 19 
Consumer0 0 0 
 17 $9,265 $349 



35

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)

Three months ended March 31, 2020
(dollars in thousands)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 family1 $148 $8 
Commercial real estate2 16,584 4,281 
Home equity line of credit0 0 0 
Residential land0 0 0 
Commercial construction0 0 0 
Residential construction0 0 0 
Commercial4 756 278 
Consumer0 0 0 
 7 $17,488 $4,567 

Three months ended March 31, 2021
(dollars in thousands)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 family12 $8,283 $298 
Commercial real estate1 482 — 
Home equity line of credit1 170 21 
Residential land1 271 11 
Commercial construction— — — 
Residential construction— — — 
Commercial2 59 19 
Consumer— — — 
 17 $9,265 $349 
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.

There were no loans modified in TDRs that experienced a payment default of 90 days or more during the first three months of 20212022 and 2020.2021.
If a loan modified in a TDR subsequently defaults, ASB evaluates the loan for further impairment. Based on its evaluation, adjustments may be made in the allocation of the allowance or partial charge-offs may be taken to further write-down the carrying value of the loan. Commitments to lend additional funds to borrowers whose loan terms have been modified in a TDR totaled NaNnil at March 31, 20212022 and December 31, 2020.2021.
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provides that a financial institution may elect to suspend the requirements under GAAP for certain loan modifications that would otherwise be categorized as a TDR and any related impairment for accounting purposes.
36

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
In response to the COVID-19 pandemic, the Board of Governors of the FRB, the FDIC, the National Credit Union Administration, the OCC, and the Consumer Financial Protection Bureau, in consultation with the state financial regulators (collectively, the “agencies”) issued a joint interagency statement (issued March 22, 2020; revised statement issued April 7, 2020). Some of the provisions applicable to the Company include, but are not limited to accounting for loan modifications, past due reporting and nonaccrual status and charge-offs.
Loan modifications that do not meet the conditions of the CARES Act may still qualify as a modification that does not need to be accounted for as a TDR. The agencies confirmed with the FASB staff that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not TDRs. This includes short-term (e.g., six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or insignificant delays in payment. Financial institutions are not expected to designate loans with deferrals granted due to COVID-19 as past due because of the deferral. A loan’s payment date is governed by the due date stipulated in the legal agreement. If a financial institution agrees to a payment deferral, these loans would not be considered past due during the period of the deferral. Lastly, during short-term COVID-19 modifications, these loans generally should not be reported as nonaccrual or as classified.
36

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
Collateral-dependent loans. A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment of the loan is expected to be provided substantially through the operation or sale of the collateral. Loans considered collateral-dependent were as follows:
March 31, 2021December 31, 2020Amortized cost
(in thousands)(in thousands)Amortized costAmortized costCollateral type(in thousands)March 31, 2022December 31, 2021Collateral type
Real estate:Real estate:Real estate:
Residential 1-4 family Residential 1-4 family$2,782 $2,541  Residential real estate property Residential 1-4 family$4,500 $3,493  Residential real estate property
Commercial real estateCommercial real estate2,828 2,875  Commercial real estate propertyCommercial real estate1,200 1,221  Commercial real estate property
Home equity line of credit Home equity line of credit1,587 1,567  Residential real estate property Home equity line of credit1,034 1,294  Residential real estate property
Residential landResidential land300 300  Residential real estate propertyResidential land397 300  Residential real estate property
Total real estate Total real estate7,497 7,283  Total real estate7,131 6,308 
CommercialCommercial889 934  Business assetsCommercial562 692  Business assets
Total Total$8,386 $8,217  Total$7,693 $7,000 
ASB had $3.8$4.0 million and $3.4 million of mortgage loans collateralized by residential real estate property that were in the process of foreclosure at March 31, 20212022 and December 31, 2020.2021, respectively.
Mortgage servicing rights (MSRs). In its mortgage banking business, ASB sells residential mortgage loans to government-sponsored entities and other parties, who may issue securities backed by pools of such loans. ASB retains no beneficial interests in these loans other than the servicing rights of certain loans sold.
ASB received proceeds from the sale of residential mortgages of $170.9$75.6 million and $72.5$170.9 million for the three months ended March 31, 20212022 and 2020,2021, respectively, and recognized gains on such sales of $4.3$1.1 million and $2.0$4.3 million for the three months ended March 31, 20212022 and 2020,2021, respectively.
There were no repurchased mortgage loans for the three months ended March 31, 20212022 and 2020. The repurchase reserve was $0.1 million as of March 31, 2021 and 2020.2021.
Mortgage servicing fees, a component of other income, net, were $0.9 million and $0.8 million for both the three months ended March 31, 20212022 and 2020, respectively.2021.
Changes in the carrying value of MSRs were as follows:
(in thousands)
Gross
carrying amount1
Accumulated amortizationValuation allowanceNet
carrying amount
March 31, 2021$20,830 $(10,141)$(4)$10,685 
December 31, 202022,950 (12,670)(260)10,020 
(in thousands)Gross
carrying amount		Accumulated amortizationValuation allowanceNet
carrying amount
March 31, 2022$19,137 $(9,113)$— $10,024 
December 31, 202118,674 (8,724)— 9,950 
1
Reflects impact of loans paid in full
Changes related to MSRs were as follows:
Three months ended March 31
(in thousands)20212020
Mortgage servicing rights
Beginning balance$10,280 $9,101 
Amount capitalized1,547 636 
Amortization(1,138)(617)
Other-than-temporary impairment0 0 
Carrying amount before valuation allowance10,689 9,120 
Valuation allowance for mortgage servicing rights
Beginning balance260 0 
Provision(256)0 
Other-than-temporary impairment0 0 
Ending balance4 0 
Net carrying value of mortgage servicing rights$10,685 $9,120 
37

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
Changes related to MSRs were as follows:
Three months ended March 31
(in thousands)20222021
Mortgage servicing rights
Beginning balance$9,950 $10,280 
Amount capitalized719 1,547 
Amortization(645)(1,138)
Other-than-temporary impairment— — 
Carrying amount before valuation allowance10,024 10,689 
Valuation allowance for mortgage servicing rights
Beginning balance— 260 
Provision— (256)
Other-than-temporary impairment— — 
Ending balance— 4 
Net carrying value of mortgage servicing rights$10,024 $10,685 
ASB capitalizes MSRs acquired upon the sale of mortgage loans with servicing rights retained. On a monthly basis, ASB compares the net carrying value of the MSRs to its fair value to determine if there are any changes to the valuation allowance and/or other-than-temporary impairment for the MSRs.
ASB uses a present value cash flow model to estimate the fair value of MSRs. Impairment is recognized through a valuation allowance for each stratum when the carrying amount exceeds fair value, with any associated provision recorded as a component of loan servicing fees included in “Revenues - bank” in the condensed consolidated statements of income. A direct write-down is recorded when the recoverability of the valuation allowance is deemed to be unrecoverable.
Key assumptions used in estimating the fair value of ASB’s MSRs used in the impairment analysis were as follows:
(dollars in thousands)March 31, 2022December 31, 2021
Unpaid principal balance$1,488,591 $1,481,899 
Weighted average note rate3.34 %3.38 %
Weighted average discount rate9.25 %9.25 %
Weighted average prepayment speed7.06 %9.77 %
(dollars in thousands)March 31, 2021December 31, 2020
Unpaid principal balance$1,505,963 $1,450,312 
Weighted average note rate3.57 %3.68 %
Weighted average discount rate9.25 %9.25 %
Weighted average prepayment speed12.0 %17.7 %

The sensitivity analysis of fair value of MSRs to hypothetical adverse changes of 25 and 50 basis points in certain key assumptions was as follows:
(dollars in thousands)March 31, 2021December 31, 2020
Prepayment rate:
  25 basis points adverse rate change$(659)$(738)
  50 basis points adverse rate change(1,376)(1,445)
Discount rate:
  25 basis points adverse rate change(110)(68)
  50 basis points adverse rate change(218)(135)
(dollars in thousands)March 31, 2022December 31, 2021
Prepayment rate:
  25 basis points adverse rate change$(360)$(714)
  50 basis points adverse rate change(809)(1,608)
Discount rate:
  25 basis points adverse rate change(160)(129)
  50 basis points adverse rate change(318)(256)
The effect of a variation in certain assumptions on fair value is calculated without changing any other assumptions. This analysis typically cannot be extrapolated because the relationship of a change in one key assumption to the changes in the fair value of MSRs typically is not linear.
Other borrowings.  As of March 31, 20212022 and December 31, 2020,2021, ASB had no FHLB advances outstanding or federal funds purchased with the Federal Reserve Bank. ASB was in compliance with all Advances, Pledge and Security Agreement requirements as of March 31, 2021.2022.
Securities sold under agreements to repurchase are accounted for as financing transactions and the obligations to repurchase these securities are recorded as liabilities in the condensed consolidated balance sheets. ASB pledges investment securities as collateral for securities sold under agreements to repurchase. All such agreements are subject to master netting
38

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
arrangements, which provide for a conditional right of set-off in case of default by either party; however, ASB presents securities sold under agreements to repurchase on a gross basis in the balance sheet. The following tables present information about the securities sold under agreements to repurchase, including the related collateral received from or pledged to counterparties:
(in millions)Gross amount
 of recognized
 liabilities		Gross amount
 offset in the 
Balance Sheets		Net amount of
liabilities presented
in the Balance Sheets
Repurchase agreements   
March 31, 2022$137 $— $137 
December 31, 202188 — 88 
(in millions)Gross amount
 of recognized
 liabilities		Gross amount
 offset in the 
Balance Sheets		Net amount of
liabilities presented
in the Balance Sheets
Repurchase agreements   
March 31, 2021$103 $0 $103 
December 31, 202090 0 90 

 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, 2021$103 $122 $0 
December 31, 202090 92 0 
38

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
 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, 2022$137 $161 $— 
December 31, 202188 161 — 
The securities underlying the agreements to repurchase are book-entry securities and were delivered by appropriate entry into the counterparties’ accounts or into segregated tri-party custodial accounts at the FHLB. The securities underlying the agreements to repurchase continue to be reflected in ASB’s asset accounts.
Derivative financial instruments. ASB enters into interest rate lock commitments (IRLCs) with borrowers, and forward commitments to sell loans or to-be-announced mortgage-backed securities to investors to hedge against the inherent interest rate and pricing risks associated with selling loans.
ASB enters into IRLCs for residential mortgage loans, which commit ASB to lend funds to a potential borrower at a specific interest rate and within a specified period of time. IRLCs that relate to the origination of mortgage loans that will be held for sale are considered derivative financial instruments under applicable accounting guidance. Outstanding IRLCs expose ASB to the risk that the price of the mortgage loans underlying the commitments may decline due to increases in mortgage interest rates from inception of the rate lock to the funding of the loan. The IRLCs are free-standing derivatives which are carried at fair value with changes recorded in mortgage banking income.
ASB enters into forward commitments to hedge the interest rate risk for rate locked mortgage applications in process and closed mortgage loans held for sale. These commitments are primarily forward sales of to-be-announced mortgage backed securities. Generally, when mortgage loans are closed, the forward commitment is liquidated and replaced with a mandatory delivery forward sale of the mortgage to a secondary market investor. In some cases, a best-efforts forward sale agreement is utilized as the forward commitment. These commitments are free-standing derivatives which are carried at fair value with changes recorded in mortgage banking income.
Changes in the fair value of IRLCs and forward commitments subsequent to inception are based on changes in the fair value of the underlying loan resulting from the fulfillment of the commitment and changes in the probability that the loan will fund within the terms of the commitment, which is affected primarily by changes in interest rates and the passage of time.
The notional amount and fair value of ASB’s derivative financial instruments were as follows:
 March 31, 2022December 31, 2021
(in thousands)Notional amountFair valueNotional amountFair value
Interest rate lock commitments$12,342 $(18)$39,377 $638 
Forward commitments11,750 168 38,000 (11)
 March 31, 2021December 31, 2020
(in thousands)Notional amountFair valueNotional amountFair value
Interest rate lock commitments$49,316 $438 $120,980 $4,536 
Forward commitments49,500 340 100,500 (500)
39

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
ASB’s derivative financial instruments, their fair values and balance sheet location were as follows:
Derivative Financial Instruments Not Designated as Hedging Instruments 1
March 31, 2021December 31, 2020
(in thousands) Asset derivatives Liability
derivatives		 Asset derivatives Liability
derivatives
Interest rate lock commitments$456 $(18)$4,536 $0 
Forward commitments340 0 0 500 
 $796 $(18)$4,536 $500 
Derivative Financial Instruments Not Designated as Hedging Instruments 1
March 31, 2022December 31, 2021
(in thousands) Asset derivatives Liability
derivatives		 Asset derivatives Liability
derivatives
Interest rate lock commitments$40 $58 $638 $— 
Forward commitments168 — — 11 
 $208 $58 $638 $11 
1 Asset derivatives are included in other assets and liability derivatives are included in other liabilities in the balance sheets.
The following table presents ASB’s derivative financial instruments and the amount and location of the net gains or losses recognized in ASB’s statements of income:
Derivative Financial Instruments Not Designated as Hedging InstrumentsLocation of net gains (losses) recognized in the Statements of IncomeThree months ended March 31
(in thousands)20212020
Interest rate lock commitmentsMortgage banking income$(4,098)$1,555 
Forward commitmentsMortgage banking income840 (543)
 $(3,258)$1,012 
Derivative Financial Instruments Not Designated as Hedging InstrumentsLocation of net gains (losses) recognized in the Statements of IncomeThree months ended March 31
(in thousands)20222021
Interest rate lock commitmentsMortgage banking income$(655)$(4,098)
Forward commitmentsMortgage banking income178 840 
 $(477)$(3,258)
Low-Income Housing Tax Credit (LIHTC). ASB’s unfunded commitments to fund its LIHTC investment partnerships were $37.8 million and $41.0$62.8 million at March 31, 20212022 and December 31, 2020, respectively.2021. These unfunded commitments were unconditional and legally binding and are recorded in other liabilities with a corresponding increase in other assets. As of March 31, 2021,2022, ASB did not have any impairment losses resulting from forfeiture or ineligibility of tax credits or other circumstances related to its LIHTC investment partnerships.
39

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
Note 5 · Credit agreements
On May 14, 2021, HEI and Hawaiian Electric each entered into a separate agreement with a syndicate of 89 financial institutions (the HEI Facility and Hawaiian Electric Facility, respectively, and together, the Credit Facilities), effective July 3, 2017, to amend and restate their respective previously existing revolving unsecured credit agreements. The $150$175 million HEI Facility and $200 million Hawaiian Electric Facility both will terminate on June 30, 2022. NeitherMay 14, 2026. On February 18, 2022, the PUC approved Hawaiian Electric’s request to extend the term of the $200 million Hawaiian Electric Facility to May 14, 2026. In addition to extending the term, Hawaiian Electric also received PUC approval to exercise its options of 2 one-year extensions of the commitment termination date and to increase its aggregate revolving commitment amount from $200 million to $275 million, should there be a need.
None of the facilities are collateralized. As of March 31, 20212022 and December 31, 2020, 02021, no amounts were outstanding under the Credit Facilities.
The Credit Facilities will be maintained to support each company’s respective short-term commercial paper program, but may be drawn on to meet each company’s respective working capital needs and general corporate purposes.
Hawaiian Electric has a $75 million 364-day revolving credit agreement with 0 amount outstanding at March 31, 2021. On April 19, 2021, the revolving credit agreement terminated and was not renewed.
40

Note 6 · Shareholders’ equity
Accumulated other comprehensive income/(loss). Changes in the balances of each component of accumulated other comprehensive income/(loss) (AOCI) were as follows:
HEI ConsolidatedHawaiian Electric ConsolidatedHEI ConsolidatedHawaiian Electric Consolidated
(in thousands) (in thousands) Net unrealized gains (losses) on securities Unrealized gains (losses) on derivativesRetirement benefit plansAOCIAOCI-Retirement benefit plans (in thousands) Net unrealized gains (losses) on securities Unrealized gains (losses) on derivativesRetirement benefit plansAOCIAOCI-Retirement benefit plans
Balance, December 31, 2021Balance, December 31, 2021$(32,037)$(3,638)$(16,858)$(52,533)$(3,280)
Current period other comprehensive income (loss)Current period other comprehensive income (loss)(120,407)3,072 176 (117,159)51 
Balance, March 31, 2022Balance, March 31, 2022$(152,444)$(566)$(16,682)$(169,692)$(3,229)
Balance, December 31, 2020Balance, December 31, 2020$19,986 $(3,363)$(17,887)$(1,264)$(2,919)Balance, December 31, 2020$19,986 $(3,363)$(17,887)$(1,264)$(2,919)
Current period other comprehensive income (loss)Current period other comprehensive income (loss)(45,777)1,562 199 (44,016)34 Current period other comprehensive income (loss)(45,777)1,562 199 (44,016)34 
Balance, March 31, 2021Balance, March 31, 2021$(25,791)$(1,801)$(17,688)$(45,280)$(2,885)Balance, March 31, 2021$(25,791)$(1,801)$(17,688)$(45,280)$(2,885)
Balance, December 31, 2019$2,481 $(1,613)$(20,907)$(20,039)$(1,279)
Current period other comprehensive income (loss)19,448 (1,784)548 18,212 26 
Balance, March 31, 2020$21,929 $(3,397)$(20,359)$(1,827)$(1,253)

Reclassifications out of AOCI were as follows:
 Amount reclassified from AOCIAffected line item in the
 Statements of Income / Balance Sheets
Three months ended March 3120212020
(in thousands)
HEI consolidated
Net realized gains on securities included in net income$(387)$0 Gain on sale of investment securities, net
Retirement benefit plans:   
Amortization of prior service credit and net losses recognized during the period in net periodic benefit cost6,010 5,706 See Note 8 for additional details
Impact of D&Os of the PUC included in regulatory assets(5,811)(5,158)See Note 8 for additional details
Total reclassifications$(188)$548  
Hawaiian Electric consolidated
Retirement benefit plans:  
Amortization of prior service credit and net losses recognized during the period in net periodic benefit cost$5,845 $5,184 See Note 8 for additional details
Impact of D&Os of the PUC included in regulatory assets(5,811)(5,158)See Note 8 for additional details
Total reclassifications$34 $26  
 Amount reclassified from AOCIAffected line item in the
 Statements of Income / Balance Sheets
Three months ended March 31
(in thousands)20222021
HEI consolidated
Net realized gains on securities included in net income$— $(387)Gain on sale of investment securities, net
Net realized losses on derivatives qualifying as cash flow hedges55 — Interest expense
Retirement benefit plans:   
Amortization of prior service credit and net losses recognized during the period in net periodic benefit cost4,501 6,010 See Note 8 for additional details
Impact of D&Os of the PUC included in regulatory assets(4,325)(5,811)See Note 8 for additional details
Total reclassifications$231 $(188) 
Hawaiian Electric consolidated
Retirement benefit plans:  
Amortization of prior service credit and net losses recognized during the period in net periodic benefit cost$4,376 $5,845 See Note 8 for additional details
Impact of D&Os of the PUC included in regulatory assets(4,325)(5,811)See Note 8 for additional details
Total reclassifications$51 $34  

4041

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
Note 7 · Revenues
Revenue from contracts with customers. The following tables disaggregate revenues by major source, timing of revenue recognition, and segment:
Three months ended March 31, 2022
(in thousands) Electric  utilityBankOtherTotal
Revenues from contracts with customers
Electric energy sales - residential$224,574 $— $— $224,574 
Electric energy sales - commercial219,597 — — 219,597 
Electric energy sales - large light and power241,123 — — 241,123 
Electric energy sales - other1,426 — — 1,426 
Bank fees— 12,996 — 12,996 
Other sales— — 1,115 1,115 
Total revenues from contracts with customers686,720 12,996 1,115 700,831 
Revenues from other sources
Regulatory revenue$12,886 $— $— $12,886 
Bank interest and dividend income— 59,989 — 59,989 
Other bank noninterest income— 2,130 — 2,130 
Other9,186 — 46 9,232 
Total revenues from other sources22,072 62,119 46 84,237 
Total revenues$708,792 $75,115 $1,161 $785,068 
Timing of revenue recognition
Services/goods transferred at a point in time$— $12,996 $— $12,996 
Services/goods transferred over time686,720 — 1,115 687,835 
Total revenues from contracts with customers$686,720 $12,996 $1,115 $700,831 
Three months ended March 31, 2021
(in thousands) Electric utilityBankOtherTotal
Revenues from contracts with customers
Electric energy sales - residential$181,239 $0 $0 $181,239 
Electric energy sales - commercial168,465 0 0 168,465 
Electric energy sales - large light and power176,815 0 0 176,815 
Electric energy sales - other2,479 0 0 2,479 
Bank fees0 11,378 0 11,378 
Other sales0 0 924 924 
Total revenues from contracts with customers528,998 11,378 924 541,300 
Revenues from other sources
Regulatory revenue$28,429 $0 $0 $28,429 
Bank interest and dividend income0 58,620 0 58,620 
Other bank noninterest income0 7,133 0 7,133 
Other7,437 0 27 7,464 
Total revenues from other sources35,866 65,753 27 101,646 
Total revenues$564,864 $77,131 $951 $642,946 
Timing of revenue recognition
Services/goods transferred at a point in time$0 $11,378 $0 $11,378 
Services/goods transferred over time528,998 0 924 529,922 
Total revenues from contracts with customers$528,998 $11,378 $924 $541,300 

Three months ended March 31, 2020Three months ended March 31, 2021
(in thousands) (in thousands) Electric utilityBankOtherTotal(in thousands) Electric  utilityBankOtherTotal
Revenues from contracts with customersRevenues from contracts with customersRevenues from contracts with customers
Electric energy sales - residentialElectric energy sales - residential$190,266 $0 $0 $190,266 Electric energy sales - residential$181,239 $— $— $181,239 
Electric energy sales - commercialElectric energy sales - commercial197,105 0 0 197,105 Electric energy sales - commercial168,465 — — 168,465 
Electric energy sales - large light and powerElectric energy sales - large light and power216,220 0 0 216,220 Electric energy sales - large light and power176,815 — — 176,815 
Electric energy sales - otherElectric energy sales - other3,458 0 0 3,458 Electric energy sales - other2,479 — — 2,479 
Bank feesBank fees0 11,556 0 11,556 Bank fees— 11,378 — 11,378 
Other salesOther sales— — 924 924 
Total revenues from contracts with customersTotal revenues from contracts with customers607,049 11,556 0 618,605 Total revenues from contracts with customers528,998 11,378 924 541,300 
Revenues from other sourcesRevenues from other sourcesRevenues from other sources
Regulatory revenueRegulatory revenue(15,304)0 0 (15,304)Regulatory revenue28,429 — — 28,429 
Bank interest and dividend incomeBank interest and dividend income0 64,975 0 64,975 Bank interest and dividend income— 58,620 — 58,620 
Other bank noninterest incomeOther bank noninterest income0 3,207 0 3,207 Other bank noninterest income— 7,133 — 7,133 
OtherOther5,697 0 6 5,703 Other7,437 — 27 7,464 
Total revenues from other sourcesTotal revenues from other sources(9,607)68,182 6 58,581 Total revenues from other sources35,866 65,753 27 101,646 
Total revenuesTotal revenues$597,442 $79,738 $6 $677,186 Total revenues$564,864 $77,131 $951 $642,946 
Timing of revenue recognitionTiming of revenue recognitionTiming of revenue recognition
Services/goods transferred at a point in timeServices/goods transferred at a point in time$0 $11,556 $0 $11,556 Services/goods transferred at a point in time$— $11,378 $— $11,378 
Services/goods transferred over timeServices/goods transferred over time607,049 0 0 607,049 Services/goods transferred over time528,998 — 924 529,922 
Total revenues from contracts with customersTotal revenues from contracts with customers$607,049 $11,556 $0 $618,605 Total revenues from contracts with customers$528,998 $11,378 $924 $541,300 
There are no material contract assets or liabilities associated with revenues from contracts with customers existing at the beginning of the periodDecember 31, 2021 or as of March 31, 2021.2022. Accounts receivable and unbilled revenues related to contracts with customers represent an unconditional right to consideration since all performance obligations have been satisfied. These amounts are disclosed as accounts receivable and unbilled revenues, net on HEI’s condensed consolidated balance sheets and customer accounts receivable, net and accrued unbilled revenues, net on Hawaiian Electric’s condensed consolidated balance sheets.
4142

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
As of March 31, 2021,2022, the Company had no material remaining performance obligations due to the nature of the Company’s contracts with its customers. For the Utilities, performance obligations are fulfilled as electricity is delivered to customers. For ASB, fees are recognized when a transaction is completed.
Note 8 · Retirement benefits
Defined benefit pension and other postretirement benefit plans information.  For the first three months of 2021,2022, the Company contributed $9$10 million ($910 million by the Utilities) to its pension and other postretirement benefit plans, compared to $17$9 million ($179 million by the Utilities) in the first three months of 2020.2021. The Company’s current estimate of total contributions to its pension and other postretirement benefit plans in 20212022 is $41 million ($41 million by the Utilities), compared to $52 million ($51 million by the Utilities, $1 million by HEI and NaN by ASB), compared to $71 million ($70 million by the Utilities, $1 million by HEI and NaN by ASB)Utilities) in 2020.2021. In addition, the Company expects to pay directly $3 million ($1 million by the Utilities) of benefits in 2021,2022, compared to $2$1 million ($1 million by the Utilities) paid in 2020.2021.
The components of net periodic pension costs (NPPC) and net periodic benefit costs (NPBC) for HEI consolidated and Hawaiian Electric consolidated were as follows:
 Pension benefitsOther benefits
Three months ended March 312021202020212020
(in thousands)
HEI consolidated
Service cost$20,464 $18,363 $705 $631 
Interest cost18,801 20,163 1,569 1,855 
Expected return on plan assets(33,067)(28,466)(3,233)(3,038)
Amortization of net prior period (gain)/cost0 3 (383)(440)
Amortization of net actuarial losses1
1,556 8,057 254 50 
Net periodic pension/benefit cost (return)7,754 18,120 (1,088)(942)
Impact of PUC D&Os11,167 6,262 970 777 
Net periodic pension/benefit cost (adjusted for impact of PUC D&Os)$18,921 $24,382 $(118)$(165)
Hawaiian Electric consolidated
Service cost$19,994 $17,891 $699 $626 
Interest cost17,531 18,715 1,504 1,782 
Expected return on plan assets(31,368)(26,855)(3,182)(2,990)
Amortization of net prior period (gain)/cost0 2 (383)(440)
Amortization of net actuarial losses1
2,559 7,368 250 51 
Net periodic pension/benefit cost (return)8,716 17,121 (1,112)(971)
Impact of PUC D&Os11,167 6,262 970 777 
Net periodic pension/benefit cost (adjusted for impact of PUC D&Os)$19,883 $23,383 $(142)$(194)
Three months ended March 31
 Pension benefitsOther benefits
(in thousands)2022202120222021
HEI consolidated
Service cost$19,824 $20,464 $656 $705 
Interest cost19,811 18,801 1,637 1,569 
Expected return on plan assets(35,333)(33,067)(3,397)(3,233)
Amortization of net prior period gain— — (232)(383)
Amortization of net actuarial (gain)/losses1
6,297 1,556 (3)254 
Net periodic pension/benefit cost (return)10,599 7,754 (1,339)(1,088)
Impact of PUC D&Os9,551 11,167 1,219 970 
Net periodic pension/benefit cost (adjusted for impact of PUC D&Os)$20,150 $18,921 $(120)$(118)
Hawaiian Electric consolidated
Service cost$19,318 $19,994 $649 $699 
Interest cost18,462 17,531 1,573 1,504 
Expected return on plan assets(33,546)(31,368)(3,347)(3,182)
Amortization of net prior period gain— — (231)(383)
Amortization of net actuarial losses1
6,125 2,559 — 250 
Net periodic pension/benefit cost (return)10,359 8,716 (1,356)(1,112)
Impact of PUC D&Os9,551 11,167 1,219 970 
Net periodic pension/benefit cost (adjusted for impact of PUC D&Os)$19,910 $19,883 $(137)$(142)
1 Three months ended March 31, 2021 amounts include the one-time cumulative impact of the change in accounting principle for the plans’ fixed income securities from the calculated market-related value method to the fair value method, which was recorded in the first quarter of 2021.
HEI consolidated recorded retirement benefits expense of $12 million ($12 million by the Utilities) in the first three months of 2022 and $11 million ($12 million by the Utilities) in the first three months of 2021 and $15 million ($14 million by the Utilities) in the first three months of 2020 and charged the remaining net periodic benefit cost primarily to electric utility plant.
Effective January 1, 2021, the Company adopted a change in accounting principle for the plans’ fixed income securities from the calculated market-related value method to the fair value method in the calculation of the expected return on plan assets component of NPPC and NPBC. The remaining plan assets continue to use the calculated market-related value methodology. The Company considers the fair value approach to be preferable for its fixed-income securities portfolio because it results in a current reflection of the changes in the value of plan assets in a way similar to the obligations it is intended to hedge. The Company evaluated the effect of this change in accounting principle and deemed it to be immaterial to the historical financial statements of the Company and Hawaiian Electric and, therefore, did not account for the change retrospectively and recorded the cumulative effects from the change in accounting principle in earnings for non-Utility businesses in the first quarter of 2021.
42

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
Amounts related to the Utilities were reflected as adjustments to regulatory assets as appropriate, consistent with the expected regulatory treatment as described in the following paragraph.
The Utilities have implemented pension and OPEB tracking mechanisms under which all of their retirement benefit expenses (except for executive life and nonqualified pension plan expenses) determined in accordance with GAAP are recovered over time. Under the tracking mechanisms, any actual costs determined in accordance with GAAP that are over/under amounts allowed in rates are charged/credited to a regulatory asset/liability. The regulatory asset/liability for each utility will then be amortized over 5 years beginning with the respective utility’s next rate case.
Defined contribution plans information.  For the first three months of 20212022 and 2020,2021, the Company’s expenses for its defined contribution plans under the Hawaiian Electric Industries Retirement Savings Plan (HEIRSP) and the ASB 401(k) Plan were $1.7$2.0 million and $1.8$1.7 million, respectively, and cash contributions were $1.8$1.9 million and $3.2$1.8 million, respectively. For the first three months of 20212022 and 2020,2021, the Utilities’ expenses and cash contributions for its defined contribution plan under the HEIRSP were $0.8$0.9 million and $0.7$0.8 million, respectively.
43

Retirement benefit plan changes. On December 3, 2021, the Utilities’ union members ratified a new collective bargaining
agreement, which includes changes to retirement benefits for all new employees commencing employment on or
after January 1, 2022. The changes ratified in the collective bargaining agreement will apply to all employees of HEI and the
Utilities first hired on or after January 1, 2022 (New Employees). New Employees are not eligible to participate in the HEI
Pension Plan. Instead, New Employees will receive a non-elective employer contribution, equal to 10% of their annual
compensation, subject to a vesting schedule, to their account under the HEIRSP, the defined contribution plan for HEI and the
Utilities. Only New Employees are impacted by the retirement benefit plan changes. There are no retirement benefit plan
changes for employees hired on or before December 31, 2021.
Note 9 · Share-based compensation
Under the 2010 Equity and Incentive Plan, as amended, HEI can issue shares of common stock as incentive compensation to selected employees in the form of stock options, stock appreciation rights, restricted shares, restricted stock units, performance shares and other share-based and cash-based awards. The 2010 Equity and Incentive Plan (original EIP) was amended and restated effective March 1, 2014 (EIP) and an additional 1.5 million shares were added to the shares available for issuance under these programs.
As of March 31, 2021,2022, approximately 2.92.8 million shares remained available for future issuance under the terms of the EIP, assuming recycling of shares withheld to satisfy minimum statutory tax liabilities relating to EIP awards, including an estimated 0.90.6 million shares that could be issued upon the vesting of outstanding restricted stock units and the achievement of performance goals for awards outstanding under long-term incentive plans (assuming that such performance goals are achieved at maximum levels).
Under the 2011 Nonemployee Director Stock Plan (2011 Director Plan), HEI can issue shares of common stock as compensation to nonemployee directors of HEI, Hawaiian Electric and ASB. In June 2019, an additional 300,000 shares were made available for issuance under the 2011 Director Plan. As of March 31, 2021,2022, there were 274,163244,347 shares remaining available for future issuance under the 2011 Director Plan.
Share-based compensation expense and the related income tax benefit were as follows:
 Three months ended March 31
(in millions)20212020
HEI consolidated
Share-based compensation expense 1
$2.6 $1.7 
Income tax benefit0.4 0.3 
Hawaiian Electric consolidated
Share-based compensation expense 1
1.1 0.8 
Income tax benefit0.3 0.1 
 Three months ended March 31
(in millions)20222021
HEI consolidated
Share-based compensation expense 1
$2.1 $2.6 
Income tax benefit0.3 0.4 
Hawaiian Electric consolidated
Share-based compensation expense 1
0.6 1.1 
Income tax benefit0.1 0.3 
1    For the three months ended March 31, 20212022 and 2020,2021, the Company has not capitalized any share-based compensation.
Stock awards. HEI granted HEI common stockThere were no grants to nonemployee directors underfor the 2011 Director Plan as follows:
Three months ended March 31
(dollars in thousands)20212020
Shares granted0 468 
Fair value$0 $23 
Income tax benefit0 6 
The number of shares issued to each nonemployee director of HEI, Hawaiian Electricthree months ended March 31, 2022 and ASB is determined based on the closing price of HEI common stock on the grant date.
43

2021.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
Restricted stock units.  Information about HEI’s grants of restricted stock units was as follows:
Three months ended March 31Three months ended March 31
20212020 20222021
Shares(1)Shares(1)Shares(1)Shares(1)
Outstanding, beginning of periodOutstanding, beginning of period193,939  $40.89 207,641  $35.36 Outstanding, beginning of period233,448 $38.10 193,939 $40.89 
GrantedGranted127,598 33.98 77,679 48.11 Granted96,455 41.29 127,598 33.98 
VestedVested(78,988)38.51 (77,719)34.19 Vested(90,380)37.58 (78,988)38.51 
ForfeitedForfeited(6,358)42.20 (4,160)35.81 Forfeited(31,178)38.78 (6,358)42.20 
Outstanding, end of periodOutstanding, end of period236,191  $37.91 203,441  $40.67 Outstanding, end of period208,345 $39.71 236,191 $37.91 
Total weighted-average grant-date fair value of shares granted (in millions)Total weighted-average grant-date fair value of shares granted (in millions)$4.3 $3.7 Total weighted-average grant-date fair value of shares granted (in millions)$4.0 $4.3 
(1)    Weighted-average grant-date fair value per share based on the average price of HEI common stock on the date of grant.
For the three months ended March 31, 20212022 and 2020,2021, total restricted stock units and related dividends that vested had a fair value of $3.0$3.9 million and $4.2$3.0 million, respectively, and the related tax benefits were $0.6 million and $0.7$0.6 million, respectively.
44

As of March 31, 2021,2022, there was $8.3$7.6 million of total unrecognized compensation cost related to the nonvested restricted stock units. The cost is expected to be recognized over a weighted-average period of 2.62.3 years.
Long-term incentive plan payable in stock.  The 2019-2021, 2020-20222020-22, 2021-23 and 2021-20232022-24 long-term incentive plans (LTIP) provide for performance awards under the EIP of shares of HEI common stock based on the satisfaction of performance goals, including a market condition goal. The number of shares of HEI common stock that may be awarded is fixed on the date the grants are made, subject to the achievement of specified performance levels and calculated dividend equivalents. The potential payout varies from 0% to 200% of the number of target shares, depending on the achievement of the goals. The market condition goal is based on HEI’s total shareholder return (TSR) compared to the Edison Electric Institute Index over the relevant three-year period. The other performance condition goals relate to EPS growth, return on average common equity (ROACE), renewable portfolio standards, carbon emissions reduction, Hawaiian Electric’s net income growth, ASB’s efficiency ratio and strategic initiatives and Pacific Current’s EBITDA growth and return on average invested capital.
LTIP linked to TSR.  Information about HEI’s LTIP grants linked to TSR was as follows:
Three months ended March 31Three months ended March 31
20212020 20222021
Shares(1)Shares(1)Shares(1)Shares(1)
Outstanding, beginning of periodOutstanding, beginning of period89,222 $42.10 96,402 $39.62 Outstanding, beginning of period90,974 $42.86 89,222 $42.10 
GrantedGranted44,210 41.12 24,630 48.62 Granted26,079 54.92 44,210 41.12 
Vested (issued or unissued and cancelled)Vested (issued or unissued and cancelled)(32,355)38.20 (29,409)39.51 Vested (issued or unissued and cancelled)(29,042)41.07 (32,355)38.20 
ForfeitedForfeited(1,024)45.89 (1,007)41.72 Forfeited(11,671)42.60 (1,024)45.89 
Outstanding, end of periodOutstanding, end of period100,053 $42.89 90,616  $42.08 Outstanding, end of period76,340 $47.70 100,053 $42.89 
Total weighted-average grant-date fair value of shares granted (in millions)Total weighted-average grant-date fair value of shares granted (in millions)$1.8 $1.2 Total weighted-average grant-date fair value of shares granted (in millions)$1.4 $1.8 
(1)    Weighted-average grant-date fair value per share determined using a Monte Carlo simulation model.
The grant date fair values of the shares were determined using a Monte Carlo simulation model utilizing actual information for the common shares of HEI and its peers for the period from the beginning of the performance period to the grant date and estimated future stock volatility and dividends of HEI and its peers over the remaining three-year performance period. The expected stock volatility assumptions for HEI and its peer group were based on the three-year historic stock volatility,volatility. A dividend assumption is not required for the Monte Carlo simulation because the grant payout includes dividend equivalents and projected returns include the annual dividend yield assumptions were based on dividend yields calculated on the basisvalue of daily stock prices over the same three-year historical period.
44

reinvested dividends.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
The following table summarizes the assumptions used to determine the fair value of the LTIP awards linked to TSR and the resulting fair value of LTIP awards granted:
20212020
Risk-free interest rate0.19 %1.39 %
Expected life in years33
Expected volatility29.9 %13.1 %
Range of expected volatility for Peer Group25.6% to 102.9%13.6% to 95.4%
Grant date fair value (per share)$41.12$48.62
20222021
Risk-free interest rate1.71 %0.19 %
Expected life in years33
Expected volatility31.0 %29.9 %
Range of expected volatility for Peer Group25.4% to 76.7%25.6% to 102.9%
Grant date fair value (per share)$54.92$41.12
For the three months ended March 31, 20212022 and 2020,2021, total vested LTIP awards linked to TSR and related dividends had a fair value of $0.8 million and $2.6$0.8 million, respectively, and the related tax benefits were $0.2$0.1 million and $0.4$0.2 million, respectively.
As of March 31, 2021,2022, there was $2.6$2.2 million of total unrecognized compensation cost related to the nonvested performance awards payable in shares linked to TSR. The cost is expected to be recognized over a weighted-average period of 1.91.8 years.
45

LTIP awards linked to other performance conditions.  Information about HEI’s LTIP awards payable in shares linked to other performance conditions was as follows:
Three months ended March 31Three months ended March 31
2021202020222021
Shares(1)Shares(1) Shares(1)Shares(1)
Outstanding, beginning of periodOutstanding, beginning of period220,715 $41.03 403,768  $35.15 Outstanding, beginning of period306,342 $38.42 220,715 $41.03 
GrantedGranted176,844 33.98 98,522 48.10 Granted104,300 41.29 176,844 33.98 
VestedVested(43,155)34.12 (135,804) 33.48 Vested(71,807)37.68 (43,155)34.12 
Increase above target (cancelled)Increase above target (cancelled)(14,604)43.90 (26,111) 34.13 Increase above target (cancelled)— — (14,604)43.90 
ForfeitedForfeited(4,098)44.36 (4,031)39.67 Forfeited(46,684)36.77 (4,098)44.36 
Outstanding, end of periodOutstanding, end of period335,702 $38.04 336,344  $39.64 Outstanding, end of period292,151 $39.89 335,702 $38.04 
Total weighted-average grant-date fair value of shares granted (at target performance levels) (in millions)Total weighted-average grant-date fair value of shares granted (at target performance levels) (in millions)$6.0 $4.7 Total weighted-average grant-date fair value of shares granted (at target performance levels) (in millions)$4.3 $6.0 
(1)    Weighted-average grant-date fair value per share based on the average price of HEI common stock on the date of grant.
For the three months ended March 31, 20212022 and 2020,2021, total vested LTIP awards linked to other performance conditions and related dividends had a fair value of $1.7$3.2 million and $7.6$1.7 million, respectively, and the related tax benefits were $0.4 million and $1.2$0.4 million, respectively.
As of March 31, 2021,2022, there was $8.0$6.6 million of total unrecognized compensation cost related to the nonvested shares linked to performance conditions other than TSR. The cost is expected to be recognized over a weighted-average period of 2.01.9 years.

Note 10 · Income taxes
The Company’s and the Utilities’ effective tax rates (combined federal and state income tax rates) were 19%20% and 20%21%, respectively, for the three months ended March 31, 2021.2022. These rates differed from the combined statutory rates, due primarily to the Utilities’ amortization of excess deferred income taxes related to the provision in the Tax Act that lowered the federal income tax rate from 35% to 21%, the tax benefits derived from the low income housing tax credit investments and the non-taxability of the bank-owned life insurance income. The Company’s and the Utilities’ effective tax rates were 15%19% and 18%20%, respectively, for the three months ended March 31, 2020.2021.
In August 2020, the Internal Revenue Service notified the Company that its 2017 and 2018 income tax returns would be examined. The Company was previously audited every year through 2011, at which time the IRS changed their internal policies regarding audit frequency. The audit is still in progress and the Company has received several initialresponded to all information requests for general tax return information andreceived. The Company has responded or is in the processnot been notified of respondingany material audit adjustments to such requests.date.

4546

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
Note 11 · Cash flows
Three months ended March 31Three months ended March 3120212020Three months ended March 3120222021
(in millions)(in millions)  (in millions)  
Supplemental disclosures of cash flow informationSupplemental disclosures of cash flow information  Supplemental disclosures of cash flow information  
HEI consolidatedHEI consolidatedHEI consolidated
Interest paid to non-affiliates, net of amounts capitalizedInterest paid to non-affiliates, net of amounts capitalized$15 $18 Interest paid to non-affiliates, net of amounts capitalized$10 $15 
Income taxes paid (including refundable credits)0 0 
Income taxes refunded (including refundable credits)0 0 
Hawaiian Electric consolidatedHawaiian Electric consolidatedHawaiian Electric consolidated
Interest paid to non-affiliatesInterest paid to non-affiliates9 9 Interest paid to non-affiliates6 9 
Income taxes paid (including refundable credits)0 0 
Income taxes refunded (including refundable credits)0 0 
Supplemental disclosures of noncash activitiesSupplemental disclosures of noncash activities  Supplemental disclosures of noncash activities  
HEI consolidatedHEI consolidatedHEI consolidated
Property, plant and equipmentProperty, plant and equipment
Unpaid invoices and accruals for capital expenditures, balance, end of period (investing) Unpaid invoices and accruals for capital expenditures, balance, end of period (investing)24 28 
Increase related to an acquisition (investing) Increase related to an acquisition (investing)15 — 
Property, plant and equipment unpaid invoices and accruals for capital expenditures, balance, end of period (investing)28 32 
Reduction of long-term debt from funds previously transferred for repayment (financing)0 82 
Right-of-use assets obtained in exchange for operating lease obligations (investing)Right-of-use assets obtained in exchange for operating lease obligations (investing)28 19 Right-of-use assets obtained in exchange for operating lease obligations (investing)35 28 
Common stock issued (gross) for director and executive/management compensation (financing)1
Common stock issued (gross) for director and executive/management compensation (financing)1
6 14 
Common stock issued (gross) for director and executive/management compensation (financing)1
8 6 
Unsettled trades to purchase investment securities (investing)Unsettled trades to purchase investment securities (investing)25 — 
Other receivable related to pending sales proceeds from the sale of an equity-method investment (investing)Other receivable related to pending sales proceeds from the sale of an equity-method investment (investing)9 — 
Hawaiian Electric consolidatedHawaiian Electric consolidated
Electric utility property, plant and equipmentElectric utility property, plant and equipment
Hawaiian Electric consolidated
Unpaid invoices and accruals for capital expenditures, balance, end of period (investing) Unpaid invoices and accruals for capital expenditures, balance, end of period (investing)21 24 
Increase related to an acquisition (investing) Increase related to an acquisition (investing)15 — 
Electric utility property, plant and equipment unpaid invoices and accruals for capital expenditures, balance, end of period (investing)24 27 
Reduction of long-term debt from funds previously transferred for repayment (financing)0 82 
Right-of-use assets obtained in exchange for operating lease obligations (investing)Right-of-use assets obtained in exchange for operating lease obligations (investing)28 16 Right-of-use assets obtained in exchange for operating lease obligations (investing)32 28 
1 The amounts shown represent the market value of common stock issued for director and executive/management compensation and withheld to satisfy statutory tax liabilities.

Note 12 · Fair value measurements
Fair value measurement and disclosure valuation methodology. The following are descriptions of the valuation methodologies used for assets and liabilities recorded at fair value and for estimating fair value for financial instruments not carried at fair value:
Short-term borrowings—other than bank.  The carrying amount of short-term borrowings approximated fair value because of the short maturity of these instruments.
Investment securities. The fair value of ASB’s investment securities is determined quarterly through pricing obtained from independent third-party pricing services or from brokers not affiliated with the trade. Non-binding broker quotes are infrequent and generally occur for new securities that are settled close to the month-end pricing date. The third-party pricing vendors ASB uses for pricing its securities are reputable firms that provide pricing services on a global basis and have processes in place to ensure quality and control. The third-party pricing services use a variety of methods to determine the fair value of securities that fall under Level 2 of ASB’s fair value measurement hierarchy. Among the considerations are quoted prices for similar securities in an active market, yield spreads for similar trades, adjustments for liquidity, size, collateral characteristics, historic and generic prepayment speeds, and other observable market factors.
To enhance the robustness of the pricing process, ASB will on a quarterly basis compare its standard third-party vendor’s price with that of another third-party vendor. If the prices are within an acceptable tolerance range, the price of the standard vendor will be accepted. If the variance is beyond the tolerance range, an evaluation will be conducted by ASB and a challenge to the price may be made. Fair value in such cases will be based on the value that best reflects the data and observable characteristics of the security. In all cases, the fair value used will have been independently determined by a third-party pricing vendor or non-affiliated broker.
The fair value of the mortgage revenue bonds is estimated using a discounted cash flow model to calculate the present value of future principal and interest payments and, therefore is classified within Level 3 of the valuation hierarchy.
4647

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
Loans held for sale. Residential and commercial loans are carried at the lower of cost or market and are valued using market observable pricing inputs, which are derived from third party loan sales and, therefore, are classified within Level 2 of the valuation hierarchy.
Loans held for investment. Fair value of loans held for investment is derived using a discounted cash flow approach which includes an evaluation of the underlying loan characteristics. The valuation model uses loan characteristics which includes product type, maturity dates and the underlying interest rate of the portfolio. This information is input into the valuation models along with various forecast valuation assumptions including prepayment forecasts, to determine the discount rate. These assumptions are derived from internal and third party sources. Since the valuation is derived from model-based techniques, ASB includes loans held for investment within Level 3 of the valuation hierarchy.
Collateral dependent loans. Collateral dependent loans have been adjusted to fair value. When a loan is identified as collateral dependent, the Company measures the impairment using the current fair value of the collateral, less selling costs. Depending on the characteristics of a loan, the fair value of collateral is generally estimated by obtaining external appraisals, but in some cases, the value of the collateral may be estimated as having little or no value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. If it is determined that the value of the collateral dependent loan is less than its recorded investment, the Company recognizes this impairment and adjusts the carrying value of the loan to fair value through the allowance for credit losses.
Real estate acquired in settlement of loans. Foreclosed assets are carried at fair value (less estimated costs to sell) and are generally based upon appraisals or independent market prices that are periodically updated subsequent to classification as real estate owned. Such adjustments typically result in a Level 3 classification of the inputs for determining fair value. ASB estimates the fair value of collateral-dependent loans and real estate owned using the sales comparison approach.
Mortgage servicing rights. MSRs are capitalized at fair value based on market data at the time of sale and accounted for in subsequent periods at the lower of amortized cost or fair value. MSRs are evaluated for impairment at each reporting date. ASB's MSRs are stratified based on predominant risk characteristics of the underlying loans including loan type and note rate. For each stratum, fair value is calculated by discounting expected net income streams using discount rates that reflect industry pricing for similar assets. Expected net income streams are estimated based on industry assumptions regarding prepayment expectations and income and expenses associated with servicing residential mortgage loans for others. Impairment is recognized through a valuation allowance for each stratum when the carrying amount exceeds fair value, with any associated provision recorded as a component of loan servicing fees included in "Revenues - bank" in the consolidated statements of income. A direct write-down is recorded when the recoverability of the valuation allowance is deemed to be unrecoverable. ASB compares the fair value of MSRs to an estimated value calculated by an independent third-party. The third-party relies on both published and unpublished sources of market related assumptions and its own experience and expertise to arrive at a value. ASB uses the third-party value only to assess the reasonableness of its own estimate. ASB includes MSRs within Level 3 of the valuation hierarchy.
Time deposits. The fair value of fixed-maturity certificates of deposit was estimated by discounting the future cash flows using the rates currently offered for FHLB advances of similar remaining maturities. Deposit liabilities are classified in Level 2 of the valuation hierarchy.
Other borrowings. For advances and repurchase agreements, fair value is estimated using quantitative discounted cash flow models that require the use of interest rate inputs that are currently offered for advances and repurchase agreements of similar remaining maturities. The majority of market inputs are actively quoted and can be validated through external sources, including broker market transactions and third party pricing services.
Long-term debt—other than bank.  Fair value of fixed-rate long-term debt—other than bank was obtained from third-party financial services providers based on the current rates offered for debt of the same or similar remaining maturities and from discounting the future cash flows using the current rates offered for debt of the same or similar risks, terms, and remaining maturities. The carrying amount of floating rate long-term debt—other than bank approximated fair value because of the short-term interest reset periods. Long-term debt—other than bank is classified in Level 2 of the valuation hierarchy.
Interest rate lock commitments (IRLCs). The estimated fair value of commitments to originate residential mortgage loans for sale is based on quoted prices for similar loans in active markets. IRLCs are classified as Level 2 measurements.
Forward sales commitments. To be announced (TBA) mortgage-backed securities forward commitments are classified as Level 1, and consist of publicly-traded debt securities for which identical fair values can be obtained through quoted market prices in active exchange markets. The fair values of ASB’s best efforts and mandatory delivery loan sale commitments are determined using quoted prices in the market place that are observable and are classified as Level 2 measurements.
4748

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
The following table presents the carrying or notional amount, fair value and placement in the fair value hierarchy of the Company’s financial instruments.
Estimated fair value
(in thousands)Carrying or notional amountQuoted prices in
active markets
for identical assets
 (Level 1)		Significant
 other observable
 inputs
 (Level 2)		Significant
unobservable
inputs
 (Level 3)		Total
March 31, 2021     
Financial assets     
HEI consolidated
Available-for-sale investment securities$2,305,257 $0 $2,289,830 $15,427 $2,305,257 
Held-to-maturity investment securities295,046 0 285,599 0 285,599 
Loans, net5,241,925 0 23,637 5,352,496 5,376,133 
Mortgage servicing rights10,685 0 0 13,659 13,659 
Derivative assets103,077 340 745 0 1,085 
Financial liabilities    
HEI consolidated
Deposit liabilities514,303 0 516,524 0 516,524 
Short-term borrowings—other than bank100,242 0 100,242 0 100,242 
Other bank borrowings102,685 0 102,684 0 102,684 
Long-term debt, net—other than bank2,229,738 0 2,492,539 0 2,492,539 
   Derivative liabilities32,739 0 2,834 0 2,834 
Hawaiian Electric consolidated
Long-term debt, net1,675,863 0 1,904,613 0 1,904,613 
December 31, 2020     
Financial assets     
HEI consolidated
Available-for-sale investment securities$1,970,417 $0 $1,943,232 $27,185 $1,970,417 
Held-to-maturity investment securities226,947 0 229,963 0 229,963 
Loans, net5,260,917 0 28,354 5,410,976 5,439,330 
Mortgage servicing rights10,020 0 0 10,705 10,705 
Derivative assets120,980 0 4,536 0 4,536 
Financial liabilities    
HEI consolidated
Deposit liabilities548,830 0 552,800 0 552,800 
Short-term borrowings—other than bank129,379 0 129,379 0 129,379 
Other bank borrowings89,670 0 89,669 0 89,669 
Long-term debt, net—other than bank2,119,129 0 2,487,790 0 2,487,790 
Derivative liabilities137,500 500 4,530 0 5,030 
Hawaiian Electric consolidated
Short-term borrowings49,979 0 49,979 0 49,979 
Long-term debt, net1,561,302 0 1,890,490 0 1,890,490 
Estimated fair value
(in thousands)Carrying or notional amountQuoted prices in
active markets
for identical assets
 (Level 1)		Significant
 other observable
 inputs
 (Level 2)		Significant
unobservable
inputs
 (Level 3)		Total
March 31, 2022     
Financial assets     
HEI consolidated
Available-for-sale investment securities$2,621,375 $— $2,606,079 $15,296 $2,621,375 
Held-to-maturity investment securities517,150 — 466,236 — 466,236 
Loans, net5,125,483 — 7,932 5,014,000 5,021,932 
Mortgage servicing rights10,024 — — 16,274 16,274 
Derivative assets30,043 168 824 — 992 
Financial liabilities    
HEI consolidated
Deposit liabilities394,015 — 386,547 — 386,547 
Short-term borrowings—other than bank71,491 — 71,491 — 71,491 
Other bank borrowings137,385 — 137,383 — 137,383 
Long-term debt, net—other than bank2,316,046 — 2,390,702 — 2,390,702 
  Derivative liabilities31,049 — 1,704 — 1,704 
Hawaiian Electric consolidated
Short-term borrowings6,000 — 6,000 — 6,000 
Long-term debt, net1,676,581 — 1,765,004 — 1,765,004 
December 31, 2021     
Financial assets     
HEI consolidated
Available-for-sale investment securities$2,574,618 $— $2,559,191 $15,427 $2,574,618 
Held-to-maturity investment securities522,270 — 510,474 — 510,474 
Loans, net5,150,388 — 10,403 5,218,121 5,228,524 
Mortgage servicing rights9,950 — — 14,480 14,480 
Derivative assets57,377 — 909 — 909 
Financial liabilities    
HEI consolidated
Deposit liabilities423,976 — 442,361 — 442,361 
Short-term borrowings—other than bank53,998 — 53,998 — 53,998 
Other bank borrowings88,305 — 88,304 — 88,304 
Long-term debt, net—other than bank2,321,937 — 2,624,130 — 2,624,130 
Derivative liabilities57,000 11 5,271 — 5,282 
Hawaiian Electric consolidated
Long-term debt, net1,676,402 — 1,955,710 — 1,955,710 
4849

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
Fair value measurements on a recurring basis.  Assets and liabilities measured at fair value on a recurring basis were as follows:
March 31, 2021December 31, 2020March 31, 2022December 31, 2021
Fair value measurements usingFair value measurements using Fair value measurements usingFair value measurements using
(in thousands)(in thousands)Level 1Level 2Level 3Level 1Level 2Level 3(in thousands)Level 1Level 2Level 3Level 1Level 2Level 3
Available-for-sale investment securities (bank segment)Available-for-sale investment securities (bank segment)      Available-for-sale investment securities (bank segment)      
Mortgage-backed securities — issued or guaranteed by U.S. Government agencies or sponsored agenciesMortgage-backed securities — issued or guaranteed by U.S. Government agencies or sponsored agencies$0 $2,201,352 $0 $0 $1,849,559 $0 Mortgage-backed securities — issued or guaranteed by U.S. Government agencies or sponsored agencies$— $2,456,754 $— $— $2,437,923 $— 
U.S. Treasury and federal agency obligationsU.S. Treasury and federal agency obligations0 57,647 0 0 62,322 0 U.S. Treasury and federal agency obligations— 106,202 — — 90,090 — 
Corporate bondsCorporate bonds0 30,831 0 0 31,351 0 Corporate bonds— 43,123 — — 31,178 — 
Mortgage revenue bondsMortgage revenue bonds0 0 15,427 0 0 27,185 Mortgage revenue bonds— — 15,296 — — 15,427 
$0 $2,289,830 $15,427 $0 $1,943,232 $27,185  $— $2,606,079 $15,296 $— $2,559,191 $15,427 
Derivative assetsDerivative assets     Derivative assets     
Interest rate lock commitments (bank segment)1
Interest rate lock commitments (bank segment)1
$0 $456 $0 $0 $4,536 $0 
Interest rate lock commitments (bank segment)1
$— $40 $— $— $638 $— 
Forward commitments (bank segment)1
Forward commitments (bank segment)1
340 0 0 0 0 0 
Forward commitments (bank segment)1
168 — — — — — 
Interest rate swap (Other segment)2
Interest rate swap (Other segment)2
0 289 0 0 0 0 
Interest rate swap (Other segment)2
— 784 — — 271 — 
$340 $745 $0 $0 $4,536 $0  $168 $824 $— $— $909 $— 
Derivative liabilitiesDerivative liabilitiesDerivative liabilities
Interest rate lock commitments (bank segment)1
Interest rate lock commitments (bank segment)1
$0 $18 $0 $0 $0 $0 
Interest rate lock commitments (bank segment)1
$— $58 $— $— $— $— 
Forward commitments (bank segment)1
Forward commitments (bank segment)1
0 0 0 500 0 0 
Forward commitments (bank segment)1
— — — 11 — — 
Interest rate swap (Other segment)2
Interest rate swap (Other segment)2
0 2,816 0 0 4,530 0 
Interest rate swap (Other segment)2
— 1,646 — — 5,271 — 
$0 $2,834 $0 $500 $4,530 $0 $— $1,704 $— $11 $5,271 $— 
1     Derivatives are carried at fair value in other assets or other liabilities in the balance sheets with changes in value included in mortgage banking income.
2     Derivatives are included in other assets and other liabilities in the balance sheets.
The changes in Level 3 assets and liabilities measured at fair value on a recurring basis were as follows:
Three months ended March 31
Mortgage revenue bonds20212020
(in thousands)
Beginning balance$27,185 $28,597 
Principal payments received(11,758)0 
Purchases0 129 
Unrealized gain (loss) included in other comprehensive income0 0 
Ending balance$15,427 $28,726 
Three months ended March 31
Mortgage revenue bonds20222021
(in thousands)
Beginning balance$15,427 $27,185 
Principal payments received(131)(11,758)
Purchases— — 
Unrealized gain (loss) included in other comprehensive income— — 
Ending balance$15,296 $15,427 
Mortgage revenue bonds are issued by the Department of Budget and Finance of the State of Hawaii. The Company estimates the fair value by using a discounted cash flow model to calculate the present value of estimated future principal and interest payments. The unobservable input used in the fair value measurement is the weighted average discount rate. As of March 31, 2021,2022, the weighted average discount rate was 2.07%2.27%, which was derived by incorporating a credit spread over the one month LIBOR rate. Significant increases (decreases) in the weighted average discount rate could result in a significantly lower (higher) fair value measurement.
49

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - continued (Unaudited)
Fair value measurements on a nonrecurring basis.  Certain assets and liabilities are measured at fair value on a nonrecurring basis and therefore are not included in the tables above. These measurements primarily result from assets carried at the lower of cost or fair value or from impairment of individual assets. The carrying valueAs of assetsMarch 31, 2022 and December 31, 2021, there were no financial instruments measured at fair value on a nonrecurring basis were as follows:
  Fair value measurements using
(in thousands) BalanceLevel 1Level 2Level 3
March 31, 2021
Loans$69 $0 $0 $69 
   Mortgage servicing rights61 0 0 61 
December 31, 2020
Loans387 0 0 387 
Mortgage servicing rights3,001 0 0 3,001 
basis. For the three months ended March 31, 20212022 and 2020,2021, there were 0no adjustments to fair value for ASB’s loans held for sale.
The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring basis:
Significant unobservable
 input value (1)
($ in thousands)Fair valueValuation techniqueSignificant unobservable inputRangeWeighted
Average
March 31, 2021
Home equity lines of credit$69 Fair value of collateralAppraised value less selling costN/A (2)N/A (2)
Mortgage servicing rights61 Discounted cash flowPrepayment speed17% - 24%17 %
Discount rate9.3 %
December 31, 2020
Commercial loan$387 Fair value of collateralAppraised value less selling costN/A (2)N/A (2)
Mortgage servicing rights3,001 Discounted cash flowPrepayment speed15% - 22%22 %
Discount rate9.3 %
(1) Represents percent of outstanding principal balance.
(2) N/A - Not applicable. There is one asset in each fair value measurement type.
Significant increases (decreases) in any of those inputs in isolation would result in significantly higher (lower) fair value measurements.
50

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion updates “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in HEI’s and Hawaiian Electric’s 20202021 Form 10-K and should be read in conjunction with such discussion and the 20202021 annual consolidated financial statements of HEI and Hawaiian Electric and notes thereto included in HEI’s and Hawaiian Electric’s 20202021 Form 10-K, as well as the quarterly (as of and for the three months ended March 31, 2021)2022) condensed consolidated financial statements and notes thereto included in this Form 10-Q.
HEI consolidated
Recent developments—COVID-19.
In 2020, the Company made significant progress on a number of strategic initiatives despite the ongoing impact of COVID-19 on the community, customers, and employees, including advancing the state’s renewable energy transition through Hawaii’s largest-ever renewable energy and storage procurements, preparing for and implementing the new PBR framework to facilitate the renewable energy transition and align the regulatory framework with customer interests and policy goals, and accelerating the Bank’s digital Anytime, Anywhere Banking model.
In 2021, while economic conditions have improved, the Company’s top priority remains unchanged, which is to ensure the continued safety and well-being of customers, employees, their families and the community. The Company’s mandatory work-from-home policy remains in effect through July 30, 2021 for certain employees and this policy has not impaired the Company’s ability to maintain effective internal controls over financial reporting. For personnel that cannot perform their work remotely, the Company has maintained safety protocols and policies to keep employees safe, while at the same time ensuring the reliability and resilience of its operations.
New COVID-19 cases in Hawaii have remained at a relatively low level, approximately 777-day average daily COVID-19 case counts have receded from the high of 4,610 reached in January 2022 and recently the 7-day average for new cases in the last seven days per 100,000 residentswas 436 as of April 27, 2021,25, 2022. In March 2022, the state ended the Safe Travels program for domestic U.S. travelers and new cases have been on a downtrend since early April.the indoor mask mandate. Hawaii vaccinations have steadily increased at a rapid pace, with approximately 37%over 77% of the state’s population fully vaccinated as of April 27, 2021. On April 19, 2022 and 39% of those fully vaccinated received a third shot.
Tourism numbers remain below pre-pandemic levels, primarily due to a delayed recovery in international travel. However, domestic travel has recovered significantly and recently exceeded pre-pandemic levels, with March 2022 total domestic passenger counts at approximately 112% of March 2019 (pre-pandemic) total domestic passenger counts. Although the City & County of Honolulu opened vaccinations to all persons age 16Hawaii economy experienced a temporary setback with the Delta and older, whichOmicron variants, the Hawaii economy is expected to further acceleratecontinue its improvement in 2022 with the pacelifting of restrictions and proportiongradual return of the population vaccinated.international travel.
In lightthe first quarter of the ongoing global COVID-19 vaccination effort and the gradual reopening of economies, the Company expects that the Hawaii economy will begin to improve at an increasing pace. However, in2022, Utility kWh sales remained below pre-pandemic levels, but were 2.5% higher than the first quarter of 2021 kWh sales continuedue to be impactedincreased economic activity following the loosening of restrictions and decreased 4.8% compared to the first quarter of 2020 as the demand for electricity continues to remain lower than pre-pandemic levels.an increase in tourism. While the decrease inlevel of kWh sales does not affect Utility revenues due to decoupling, it may increase or decrease the price per kWh paid by customers. See “Current Decoupling”“Decoupling” in Note 3 of the Condensed Consolidated Financial Statements for a discussion of decoupling. the decoupling mechanism.
At the Bank, lower net charge offs, improveddue to favorable credit quality astrends and continued improvement in the economic environment, ASB recorded a result of an overall strengthening of the Hawaii economy, and$3.3 million negative provision for credit upgrades within the commercial loan portfolio resulted in a $8.4 million provision reversallosses in the first quarter of 20212022 compared to reduce the allowancea negative provision for credit losses. losses of $8.4 million in the first quarter of 2021. Net interest income increased $1.9 million to $59.0 million in the first quarter of 2022 due to growth in the investment securities portfolio that was principally funded by the growth in deposits, as well as lower amortization of premiums in the investment portfolio. The higher net interest income from the investment portfolio was partly offset by the impact of a decrease in loan portfolio balances and lower loan portfolio yields as a result of the low interest rate environment and lower PPP fees.
For further discussion of the impact of the COVID-19 pandemic on our subsidiariesthe Utilities and the Bank, see “Recent Developments—COVID-19” in the Electric Utility and Bank sections below. There has been no material impact on the “Other” segment and Pacific Current as a result of the COVID-19 pandemic as the primary businesses of Pacific Current are supported by PPAs that provide for contractual cash flows with credit-worthy counterparties.
For a discussion regarding the impact of the economic conditions caused by the COVID-19 pandemic on the Company’s liquidity and capital resources, see discussion under “Financial Condition–Liquidity and capital resources,” contained in each of the “HEI Consolidated,” “Electric utility” and “Bank” sections of this MD&A.
Environmental, Social & Governance.
At HEI, environmental, social and governance (ESG) principles and sustainability have long been fundamental values embedded within all aspects of the Company’s activities.activities and integral to the Company’s efforts to create value for all of its stakeholders. With all of its operations isolated in the middle of the Pacific Ocean, the Company’s long-term health and ability to deliver sustainable value for all stakeholders—including shareholders—financial performance is inextricably linked towith the well-beingstrength of the Hawaii economy, its employees, communities, economy, and the environment. That is why long-term shareholder and broader stakeholder value are both served by the Company sees itsCompany’s mission of beingto be a catalyst for a better Hawaii as advancingHawaii.
In 2021, the Company identified a number of priorities that reflect the essential connection between the health of Hawaii’s environment, economy and communities and HEI’s long-term success. The key ESG priorities the Company is working to advance include:
•decarbonizing the Company’s long-term financial sustainability. operations and the broader Hawaii economy;
•promoting Hawaii’s economic health and improving affordability for all residents;
•ensuring reliability and resilience as the Company navigates the clean energy transition and adapts to a changing climate;
•advancing digitalization of the Company’s operations to better serve customers and increase efficiency while protecting against cyber-security challenges;
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•promoting diversity, equity and inclusion both within the Company and in the ways the Company interacts with and impacts external stakeholders;
•increasing employee engagement; and
•identifying and integrating climate-related risks and opportunities throughout the Company’s planning and decision-making.
The Company has also focused on ensuring that ESG considerations are appropriately integrated into its governance structures, strategies and risk management. This includes:
•Integration of Board oversight of important ESG matters into its existing governance structures and processes. This includes full Board review of ESG-related strategies, Audit & Risk Committee oversight of ESG risks, Compensation & Human Capital Management Committee responsibility for ESG-related compensation matters and human capital management and Nominating &and Corporate Governance Committee responsibility for human capital management and for ensuring an appropriate board governance framework is in place with respect to ESG.
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•Robust ESG expertise among board members, including directors with direct experience in renewable energy, climate change policy and strategy, environmental management and sustainable investing.
•Expanded ESG goals as part of HEI and utilityUtility executive incentive compensation.
•ESG considerations explicitly woven into strategic planning efforts and enterprise risk management processes.
The Company is committed to transparency and providing information to allow customers, community leaders, investors and other stakeholders understand how the Company’s strategies and operations advance ESG objectives and contribute to long-term stakeholder value creation.
The Company issued its first ESG report in September 2020. The report encompassed ESG policies, principles and results reported during 2019 across the Company’s two primary operating subsidiaries, Hawaiian Electric and ASB, and was aligned with Sustainability Accounting Standards Board (SASB) guidance—using the electric utilities standard for Hawaiian Electric, and the commercial banks, commercial finance, and mortgage finance standards for ASB. On April 22, 2021, the Company issued its second ESG report. This report continues to include SASB disclosures for Hawaiian Electric and ASB and incorporates disclosures regarding risks and opportunities related to climate change, as well as associated risk management and governance processes, based on recommendations from the Task Force on Climate-related Financial Disclosures. It also outlines key impacts for the Company under two climate scenarios, including a scenario targeted to limit global temperature rise to 2 degrees Celsius or lower. On April 12, 2022, the Company issued its third and most comprehensive ESG report. The report includes HEI's first enterprise-wide greenhouse gas (GHG) emissions inventory, which will further guide the company's ESG strategies and provide greater transparency around its progress on climate issues. Net enterprise-wide GHG emissions in measured categories have decreased over time, driven largely by reductions in the utility's generation-related emissions The Company’s ESG reports can be found at www.hei.com/esg.

RESULTS OF OPERATIONS

Three months ended March 31%Three months ended March 31%
(in thousands)(in thousands)20212020changePrimary reason(s)*(in thousands)20222021changePrimary reason(s)*
RevenuesRevenues$642,946 $677,186 (5)Decrease for the electric utility and bank segmentsRevenues$785,068 $642,946 22 Primarily increase for the electric utility segment
Operating incomeOperating income98,031 59,702 64 Increase for the electric utility and bank segments, partly offset by higher operating losses at the other segmentOperating income99,276 98,031 1 Increase for the electric utility segment and lower losses for the “other” segment, partly offset by decrease for bank segment
Net income for common stockNet income for common stock64,358 33,420 93 Increase due to higher net income at the electric utility and bank segments, partly offset by higher net loss at the other segment. See below for effective tax rate explanationNet income for common stock69,167 64,358 7 Higher net income at the electric utility segment and lower net loss for the “other” segment, partly offset by lower net income at the bank segment. See below for effective tax rate explanation.
*     Also, see segment discussions which follow.
The Company’s effective tax rates for the first three months of 2022 and 2021 were comparable at 20% and 2020 were 19% and 15%, respectively. The effective tax rates were higher for the three months ended March 31, 2021 compared to the same period in 2020 due primarily to higher excess tax benefits related to vesting of share-based awards in 2020.
Economic conditions.
Note: The statistical data in this section is from public third-party sources that management believes to be reliable (e.g., Department of Business, Economic Development and Tourism (DBEDT), University of Hawaii Economic Research Organization (UHERO), Department of Health of the State of Hawaii , U.S. Bureau of Labor Statistics, Department of Labor
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and Industrial Relations (DLIR), Hawaii Tourism Authority (HTA), Honolulu Board of REALTORS® and national and local news media).
The CARES Act was passed by Congress and signed into law onAt the end of March 27, 2020. The economic relief package totals more than $2 trillion and provides direct economic support to businesses and individuals. On December 27, 2020,2022, the President signed into law the $900 billion economic stimulus package that provides, among others, direct payments to qualifying individuals, extended unemployment benefits, and additional small business aid. On March 11, 2021, the President signed into law the $1.9 trillion coronavirus relief package. The plan will send direct payments of up to $1,400 to most Americans. The bill will also extend a $300 per week unemployment insurance boost until September 6 and expand the child tax credit for a year. It will also put nearly $20 billion into COVID-19 vaccinations, $25 billion into rental and utility assistance, and $350 billion into state, local and tribal relief. Hawaii has received a significant amount of funds through these various federal assistance programs that will help attenuate the impact to Hawaii’s economy.
In September 2020, the City and County of Honolulu announced a framework for reducing the spread of COVID-19 on Oahu, which tracks metrics that dictate the extent of restrictions on businesses and activities. There are four tiers with Tier 1 being the most restrictive. The minimum amount of time spent in each tier is four weeks. In order to move to the next higher tier, the last two weeks of a tier must meet the higher tier’s criteria. If a lower tier’s average daily case count is realized for two weeks in a row, the county will move back to the lower tier for a minimum of four weeks. On February 25, 2021, the county of Honolulu moved from Tier 2 to Tier 3, which allows greater density for business and other social activities. Since that time,
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case counts have increased modestly such that the 7-day average new case counts have fallen between 50-100, which is consistent with the Tier 2 level, but the governor and mayor agreed to remain in Tier 3 for the next four weeks as vaccinations are more widely administered. As of April 27, 2021, approximately 37% of the state’s population have been fully vaccinated.
See “Recent Developments—COVID-19” in the “Electric utility” and “Bank” sections below for further discussion of the economic impact caused by the pandemic.
Hawaii’s tourism industry, a significant driver of Hawaii’s economy, suffered dramatically with a 73.8% reduction in total visitor arrivals in 2020 compared with 2019. Starting October 15, 2020, the state launched its Safe Travels Program, that allows travelerswhich required proof of vaccination or a negative COVID test for travel to avoidHawaii, ended following a significant reduction in case counts in recent months. In addition, lower case counts across most states also led to stronger demand for travel to Hawaii in the mandatory 14-day quarantine if they test negative for COVID-19 within 72 hoursfirst quarter of departure. Since the launch of the program,2022, resulting in the average daily passenger arrivals have gradually improved, but remain below pre-pandemic levels. For the first quarter of 2021, passenger counts were 56.2% lowercount 122.7% higher than the comparable period in the prior year, which included pre-pandemic travel activity, and averaged 11,018 passengers per day. However, with the ongoing vaccination efforts across the nation and the implementation of the Safe Travels Program, average dailybut still 16.8% below 2019. The recovery in total passenger counts have steadily increased throughoutfrom the quarter,low levels in 2020 thus far has been driven by domestic travelers, with international travelers remaining at low levels due to higher restrictions for international travelers, depending on country of origin. In March 2022, domestic passenger counts 117% above Januarywere up 10.8% compared to 2019 pre-COVID-19 levels, while international passenger counts and a new 2021 year-to-date high of 22,913 daily visitor arrivals was achieved on April 3, 2021.were down 87% compared to 2019 pre-COVID-19 levels.
Due to the effects of the measures to contain the COVID-19 pandemic, Hawaii’s seasonally adjusted unemployment rate in March 20212022 was 9.0%4.1%, which was substantially higherlower compared to the March 20202021 rate of 2.1%6.6%. The national unemployment rate in March 20212022 was 6.0%3.6% compared to 4.4%6.0% in March 2020.2021. Hawaii’s unemployment rate is expected to graduallycontinue to improve now that restrictions on travel have been reduced significantly and vaccine distribution has progressed.lifted.
Hawaii real estate activity through March 2021,2022, as indicated by Oahu’s home resale market, drove an increase in the median sales price of 5.8%12.1% for condominiums and 17.3%20.2% for single familysingle-family homes compared to the same period in 2020.2021, with the March median single-family home price reaching a record $1,150,000 set in March. The number of closed sales was up 32.5%16.8% for condominiums and up 11.9%down 2.6% for single familysingle-family residential homes for the first three monthsquarter of 20212022 compared the same period in 2020.to 2021.
Hawaii’s petroleum product prices reflect supply and demand in the Asia-Pacific region and the price of crude oil in international markets. The price of crude oil gradually increased during the 4th quarter of last yearthroughout 2021 but decreased in January 2022 and the trend has continued during the first two months of this year.increased significantly in February 2022.
At its March 17, 202115, 2022 meeting, the Federal Open Market Committee (FOMC) decided to maintainraise the federal funds rate target range of 0%-0.25%0.25%-0.5%. The FOMC plans to continue to maintain an accommodative stance of monetary policy to achieve maximum employment and inflation at the rate of 2 percent over the long run. The Federal Reserve stated that it will increasebegin to reduce its holdings of Treasury securities and agency mortgage-backed securities at least at the current pace to sustain smooth market functioning and help foster accommodative financial conditions, thereby supporting the flow of credit to households and businesses.securities.
The most recent interim forecast by UHERO, which was issued on March 5, 2021,6, 2022, forecasts full year 20212022 real GDP growth of 3.7%3.8%, increase in total visitor arrivals of 81.8%29.1%, decrease in real personal income of -1.1%4.7%, and an unemployment rate of 7.1%5.1%. This forecast reflects an accelerationimprovement of the pace of the recovery of the HawaiiHawaii’s economy as comparedafter experiencing a downturn due to the prior forecast, butDelta and Omicron variants of COVID-19 in 2021. The international market is still anticipated to gradually return in late summer of 2022. However, a full economic recovery is still forecasted to be several years out.out and dependent on the ability to adapt to new COVID-19 threats, the global economic fallout from Russia’s invasion of Ukraine, increasing federal interest rates, and the return of international visitors.

The Company expects that ifeconomic conditions to improve going forward; however, it is difficult to predict the future path of the pandemic. If economic conditions worsen from current levels or remain depressed for an extended period of time, it could have a material unfavorable impact on the Company’s net revenuesfinancial position or income from continuingresults of operations in 2021.2022.
See also “Recent Developments—COVID-19” in the “Electric utility” and “Bank” sections below for further discussion of the economic impact caused by the pandemic.
“Other” segment.
 Three months ended March 31
(in thousands)20212020Primary reason(s)
Revenues$951 $6 Increase in other sales at Pacific Current subsidiaries.
Operating loss(6,379)(3,659)
The operating income for the first three months of 2021 from Pacific Current1 was comparable to the same period in 2020. Corporate expenses for the first three months of 2021 was $2.5 million higher than the same period in 2020, primarily due to higher charitable donations and incentive compensation.
Net loss(8,556)(6,246)The net loss for the first three months of 2021 was higher than the net loss for the first three months of 2020 due to the same factors cited for the change in operating loss.
 Three months ended March 31
(in thousands)20222021Primary reason(s)
Revenues$1,161 $951 Increase in other sales at Pacific Current subsidiaries.
Operating loss(4,349)(6,379)
The first three months of 2022 and 2021 include $0.8 million and $0.7 million, respectively, of operating income from Pacific Current1. Corporate expenses for the first three months of 2022 was $1.9 million lower than the same period in 2021, primarily due to lower charitable donations, due to timing of contributions.
Gain on sale of equity-method investment8,123 — Gain on sale of an equity-method investment at Pacific Current.
Net loss(1,112)(8,556)The net loss for the first three months of 2022 was lower than the net loss for the first three months of 2021 due to the gain on sale of an equity-method investment by Pacific Current and the same factors cited for the change in operating loss.
1     Hamakua Energy’s sales to Hawaii Electric Light (a regulated affiliate) are eliminated in consolidation.

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The “other” business segment loss includes results of the stand-alone corporate operations of HEI (including eliminations of intercompany transactions) and ASB Hawaii, Inc. (ASB Hawaii), as well as the results of Pacific Current, a direct subsidiary of HEI focused on investing in clean energy and sustainable infrastructure projects; Pacific Current’s indirect subsidiary, Hamakua Energy, which owns a 60-MW combined cycle power plant that provides electricity to Hawaii Electric Light; Pacific Current’s subsidiaries, Mauo, LLC (Mauo), which owns solar-plus-storage projects totaling 8.6 MW on five University of Hawaii campuses; andcampuses, Alenuihaha Developments, LLC, which owns a collection of renewable energy assets, Ka‘ie‘ie Waho Company, LLC, which owns a 6 MW solar photovoltaic system that provides renewable energy to Kauai Island Utility Cooperative;Cooperative, and Ka‘aipua‘a, LLC, which is constructing a wastewater treatment and energy recovery facility on Hawaii island; as well as eliminations of intercompany transactions.

FINANCIAL CONDITION
Liquidity and capital resources.  As of March 31, 2021,2022, there was no balance on HEI’s revolving credit facility or Hawaiian Electric’s revolving credit facilitiesfacility and the available committed capacitycapacities under the facilities was $150were $175 million and $275$200 million, respectively. On April 19, 2021, Hawaiian Electric’s $75 million 364-day revolving credit agreement terminated and was not renewed. At the end of the quarter, HEI and Hawaiian Electric had approximately $100$66 million and nil$6 million of commercial paper outstanding, respectively. As of March 31, 2021,2022, ASB’s unused FHLB borrowing capacity was approximately $2.0$2.1 billion and ASB had unpledged investment securities of $2.0 billion.$2.8 billion that were available to be used as collateral for additional borrowing capacity.
As of March 31, 2022 and December 31, 2021, the total amount of available borrowing capacity (net of commercial paper outstanding) under the Company’s committed lines of credit was approximately $304 million and $321 million, respectively.
The Company believes that its cash and cash equivalents, expected operating cash flow from subsidiaries, existing credit facilities, and access to the capital markets will be sufficient to meet the Company’s cash requirements over the next twelve months and beyond based on its current business plans. However, the Company expects that its liquidity will continue to be moderately impacted at the Utilities due to COVID-19.higher working capital requirements due to lingering COVID-19 impacts to the local economy. For the Utilities, the high leveleconomic impact of unemployment in the state and the moratoriumpandemic on customer disconnections (which moratorium is currently in place through May 31, 2021) are expected to resultcustomers have resulted in higher accounts receivable balances and bad debt expense and write-offs. Additionally,may result in higher write-offs in the future. As of March 31, 2022, approximately $38 million of the Utilities’ accounts receivables were 30 days past due. Of the over 30 days past due amounts, approximately 23% were on payment plans. The Company commenced its disconnection process on a tiered basis, starting in the third quarter of 2021, targeting the oldest and largest balances first, which is expected to reduce delinquent accounts receivable balances over time as payments are made. In addition to the cash flow impact from delayed collection of accounts receivable, lower kWh sales relative to the level of kWh sales approved in the last rate case generally result in delayed timing of cash flows, resulting in higher working capital requirements (see “Recent“Recent Developments—COVID-19” in the Electric utility section below). At this time, the delay in customer cash collections has not significantly affected the Company’s liquidity. The Company is prepared to address, if needed, the potential financing requirement related to the delayed timing of customer collections.
At ASB, liquidity remains at satisfactory levels largely due to U.S. economic stimulus programs implemented as a result of COVID-19 that led to a substantial increase in customer deposits. ASB’s cash and cash equivalents was $224$270 million as of March 31, 2021,2022, compared to $293$251 million as of December 31, 2020.2021. ASB remains well above the “well capitalized” level under the FDIC Improvement Act prompt correction action capital category, and while the economic outlook has improved and is expected to continue to improve, there continues to beare still COVID-19 risks, such as new variants, that could create ongoing uncertainty regarding COVID-19’s impact on loan performance and the allowance for credit losses (see “Recent Developments — COVID-19” in the Bank section below).
On January 14, 2021, the Utilities received $115 million of proceeds using a delayed draw feature under a private placement executed on October 29, 2020 and used the funds to financeHEI material cash requirements.HEI’s material cash requirements include: capital expenditures, labor and reimburse funds used forbenefit costs, O&M expenses, fuel and purchase power costs, and debt and interest payments at the payment of capital expenditures.
On January 28, 2021,Utilities; investments in loans and investment securities at the Bank; labor and benefits costs, shareholder dividends and debt and interest payments at HEI; and HEI received $46 million of proceeds using a delayed draw feature under a private placement executed on November 17, 2020. The proceeds were usedequity contributions to repay the remaining balance of $15 million on HEI’s $65 million 364-day term loan, with the remainder used to pay down commercial paper balances and prefund maturing debt. The second tranche of $29 million was drawn on April 16, 2021 and was used to pay down HEI’s commercial paper balances.
As of March 31, 2021 and December 31, 2020, the total amount of available borrowing capacity (net of commercial paper outstanding) under the Company’s committed lines of credit was approximately $325 million and $360 million, respectively.support Pacific Current’s sustainable infrastructure investments.
The Company believes that its ability to generate cash, both internally from electric utility and banking operations and externally from issuances of equity and debt securities, as well as bank borrowings, is adequate to maintain sufficient liquidity to fund its contractual obligations and commercial commitments, its forecasted capital expenditures and investments, its expected retirement benefit plan contributions and other short-term and long-term material cash requirements. However, the COVID-19 pandemic iscontinues to be an evolving situation, and the Company cannot predict the extent or duration of the outbreak,outbreaks from new variants, the future effects that it will have on the global, national or local economy, including the impact on the Company’s cost of capital and its ability to access additional capital, or the future impacts on the Company’s financial position, results of operations, and cash flows. See Item 1A. “Risk Factors” in Part II for further discussion of risks and uncertainties.
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The consolidated capital structure of HEI (excluding deposit liabilities and other bank borrowings) was as follows:
(dollars in millions)March 31, 2021December 31, 2020
Short-term borrowings—other than bank$100 2 %$129 3 %
Long-term debt, net—other than bank2,230 48 2,119 46 
Preferred stock of subsidiaries34 1 34 1 
Common stock equity2,321 49 2,338 50 
 $4,685 100 %$4,620 100 %
(dollars in millions)March 31, 2022December 31, 2021
Short-term borrowings—other than bank$71 1 %$54 1 %
Long-term debt, net—other than bank2,316 49 2,322 48 
Preferred stock of subsidiaries34 1 34 1 
Common stock equity2,304 49 2,391 50 
 $4,725 100 %$4,801 100 %

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HEI’s commercial paper borrowings and line of credit facility were as follows:
 Average balanceBalance
(in millions) Three months ended March 31, 2021March 31, 2021December 31, 2020
Commercial paper$47 $100 $65 
Line of credit draws— — — 
Undrawn capacity under HEI’s line of credit facility150 150 
 Average balanceBalance
(in millions) Three months ended March 31, 2022March 31, 2022December 31, 2021
Commercial paper$51 $66 $54 
Line of credit draws on revolving credit facility— — — 
Note: This table does not include Hawaiian Electric’s separate commercial paper issuances and line of credit facilities and draws, which are disclosed below under “Electric utility—Financial Condition—Liquidity and capital resources.” The maximum amount of HEI’s short-term commercial paper borrowings during the first three months of 20212022 was $100$66 million.
On As of March 17, 2021, Standard & Poor’s (S&P) revised31, 2022, available committed capacity under HEI’s outlook to stable from positive and affirmed the “BBB-” issuer credit rating and “A-3” short-term and commercial paper ratings. On April 20, 2021, Moody’s Investor Service’s (Moody’s) upgraded HEI’s short-term rating for commercial paper to “P-2” from “P-3” and revised the outlook to stable from positive.
HEI has a $150 million line of credit facility with no amounts outstanding at March 31, 2021. See Note 5 of the Condensed Consolidated Financial Statements.was $175 million.
There were no new issuances of common stock through the HEI Dividend Reinvestment and Stock Purchase Plan (DRIP), HEIRSP or the ASB 401(k) Plan in the three months ended March 31, 20212022 and 20202021 and HEI satisfied the share purchase requirements of the DRIP, HEIRSP and ASB 401(k) Plan through open market purchases of its common stock.
For the first three months of 2021,2022, net cash provided by operating activities of HEI consolidated was $42$93 million. Net cash used by investing activities for the same period was $518$228 million, primarily due to capital expenditures, ASB’s purchases of available-for-sale and held-to maturity investment securities, partly offset by ASB’s receipt of investment security repayments from investment securities, proceeds from the sale of investment securitiesand maturities and net decrease in loans. Net cash provided by financing activities during this period was $409$131 million as a result of several factors, including net increases in ASB’s deposit liabilities and other bank borrowings, the issuances of long-term debt and net increases in short-term borrowings, partly offset by repayment of short-term and long-term debt and payment of common stock dividends. During the first three months of 2021,2022, Hawaiian Electric and ASB (through ASB Hawaii) paid cash dividends to HEI of $28$31 million and $5$15 million, respectively.
Dividends.  The payout ratios for the first three months of 20212022 and full year 20202021 were 58%55% and 64%60%, respectively. On February 9, 2021,11, 2022, the HEI Board of Directors approved a 1 cent increase in the quarterly dividend from $0.33$0.34 per share to $0.34$0.35 per share, starting with the dividend in the first quarter of 2021.2022. HEI currently expects to maintain its dividend at its present level; however, the HEI Board of Directors evaluates the dividend quarterly and considers many factors in the evaluation including, but not limited to, the Company’s results of operations, the long-term prospects for the Company, and current and expected future economic conditions, including impacts from the COVID-19 pandemic.pandemic, and capital investment alternatives.
MATERIAL ESTIMATES AND CRITICAL ACCOUNTING POLICIESFINANCIAL CONDITION
In preparing financial statements, management is required to make estimatesLiquidity and assumptions that affect the reported amountscapital resources.  As of assets and liabilities, the disclosure of contingent assets and liabilitiesMarch 31, 2022, there was no balance on HEI’s revolving credit facility or Hawaiian Electric’s revolving credit facility and the reported amounts of revenuesavailable committed capacities under the facilities were $175 million and expenses. Actual results could differ significantly from those estimates.
In accordance with SEC Release No. 33-8040, “Cautionary Advice Regarding Disclosure About Critical Accounting Policies,” management has identified the accounting policies it believes to be the most critical to the Company’s financial statements—that is, management believes that these policies are both the most important to the portrayal of the Company’s results of operations and financial condition, and currently require management’s most difficult, subjective or complex judgments.
For information about these material estimates and critical accounting policies, in addition to the critical policy discussed below, see pages 42 to 44, 58 to 59, and 72 to 74 of HEI’s MD&A included in Part II, Item 7 of HEI’s 2020 Form 10-K.
Following are discussions of the results of operations, liquidity and capital resources of the electric utility and bank segments.
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Electric utility
Recent developments—COVID-19
See also Recent developments—COVID-19 in HEI’s MD&A.
Economic conditions in Hawaii have begun to improve in 2021 as vaccination efforts advance and businesses are allowed to operate with fewer restrictions. Statewide daily passenger counts have improved dramatically, reaching a year-to-date high of 22,913 passengers per day on April 3, 2021, but still 28% below the comparable Saturday in 2019.$200 million, respectively. At the end of the quarter, HEI and Hawaiian Electric had approximately $66 million and $6 million of commercial paper outstanding, respectively. As of March statewide unemployment improved31, 2022, ASB’s unused FHLB borrowing capacity was approximately $2.1 billion and ASB had unpledged investment securities of $2.8 billion that were available to 9%be used as collateral for additional borrowing capacity.
As of March 31, 2022 and December 31, 2021, the total amount of available borrowing capacity (net of commercial paper outstanding) under the Company’s committed lines of credit was approximately $304 million and $321 million, respectively.
The Company believes that its cash and cash equivalents, expected operating cash flow from 10.3%subsidiaries, existing credit facilities, and access to the capital markets will be sufficient to meet the Company’s cash requirements over the next twelve months and beyond based on its current business plans. However, the Company expects that its liquidity will continue to be moderately impacted at the endUtilities due to higher working capital requirements due to lingering COVID-19 impacts to the local economy. For the Utilities, the economic impact of the year. While economic activity has increased,pandemic on customers have resulted in higher accounts receivable balances and bad debt expense and may result in higher write-offs in the demand for electricity remains lower than pre-pandemic levels. Infuture. As of March 31, 2022, approximately $38 million of the firstUtilities’ accounts receivables were 30 days past due. Of the over 30 days past due amounts, approximately 23% were on payment plans. The Company commenced its disconnection process on a tiered basis, starting in the third quarter of 2021, targeting the oldest and largest balances first, which is expected to reduce delinquent accounts receivable balances over time as payments are made. In addition to the cash flow impact from delayed collection of accounts receivable, lower kWh sales were down 4.8% compared with the same quarter in 2020. The Utilities expect kWh salesrelative to gradually improve throughout 2021 as the COVID-19 vaccine is more widely distributed and administered, which would allow the economy in Hawaii to fully reopen.
While the Utilities’ electric energy revenues have not been significantly impacted due to the decoupling mechanism, which allows recovery of the difference between PUC approved target revenues and recorded adjusted revenues regardless of the level of kWh sales the timing of customer collections would be delayed (or accelerated) if the level of kWh sales decreases below (or increases above) the estimated kWh sales. See “Current Decoupling”approved in Note 3 of the Condensed Consolidated Financial Statements for a discussion of decoupling. Annually, the Utilities submit a decoupling filing to the PUC, which requests recovery by the utility (or refund to customers) of the difference between recorded adjusted revenues and target revenues under the RBA. The difference is collected or refunded through an adjustment to customer rates in the following year based on estimated sales, starting on June 1st of that following year, which has an impact on the timing of the Utilities’ cash flow. Additionally, although the Utilities’ decoupling mechanism allows for collection under the RBA, the RBA balance accrues interest only at the short-term debt rate from the last rate case (2.5% for Hawaiian Electric, 3.75% for Hawaii Electric Light and 3.0% for Maui Electric). Asgenerally result in delayed timing of cash flows, resulting in higher working capital requirements (see “Recent DevelopmentsMarch 31, 2021—, the RBA balance related to decoupling revenues was approximately $25.9 million, compared to $7.6 million as of December 31, 2020. The billed accounts receivable balances, net of allowance for doubtful accounts, of $142 million and as of March 31, 2021 is 4.2% lower than the billed accounts receivable balances as of December 31, 2020, primarily driven by an improvement in economic conditions from reopening, application of available assistance from various government and community programs, including the Hawaii Utility Bill Assistance Program, which was launchedCOVID-19” in the first quarter of 2021 and provided fundingElectric utility section below). At this time, the delay in customer cash collections has not significantly affected the Company’s liquidity. The Company is prepared to Hawaiian Electric customers and other utility companies. The past due accounts receivable balance has decreased by $8 million or 15% since December 31, 2020 with a corresponding decrease inaddress, if needed, the number of accounts past due by approximately 10% for the same period. While the moratorium on customer disconnections is currently in place through May 31, 2021, efforts are ongoing to continue working with customers on payment plans and other bill assistance for customers through funding from non-profit organizations, as well as state and county relief programs. To address thepotential financing requirement related to the delayed timing of cash flows collected under the decoupling mechanism through the RBA and the modest slowing or reduction in accounts receivable collections from customers, the Utilities have completed a number of steps in 2020 to enhance theircustomer collections.
At ASB, liquidity position. See “Financial Condition—Liquidity and capital resources” for additional information.
The Utilities provide an essential service to the State of Hawaii, and have continued to operate to protect the health and safety of employees and customers and to ensure system reliability, and have been following the Governor’s directive that the Utilities take necessary measures to ensure they can operate in the normal course. The Utilities have also implemented certain aspects of their business continuity plans, which includes the activation of its Incident Management Team to closely manage the response to the pandemic and have implemented practices related to employee and facilities hygiene in order to ensure the reliability and resilience of their operations.
In the second quarter of 2020, the PUC approved the deferral of certain COVID-19 related costs, such as higher bad debt expense, higher financing costs, non-collection of late payment fees, increased personal protective equipment costs, and sequestration costs for mission-critical employees. As of March 31, 2021, these costs, which have been deferred and recorded as a regulatory asset, totaled approximately $22.2 million (see also discussion under Item 1A. “Risk Factors” and “Regulatory assets for COVID-19 related costs” in Note 3 of the Condensed Consolidated Financial Statements). Looking forward, while the distribution and administration of the COVID vaccine is expected to hasten the reopening of the Hawaii economy, the prolonged impact of COVID-19 could adversely affect the ability of the Utilities’ contractors, suppliers, IPPs, and other business partners to perform or fulfill their obligations, or require modifications to existing contracts, which could adversely affect the Utilities’ business, increase expenses, and impact the Utilities’ ability to achieve their RPS goals. Additionally, while the state’s aggressive response to the pandemic has dramatically reduced the spread of the coronavirus, the measures taken have had a severe economic impact on the state’s businesses and residents, which may influence the PUC’s actions regarding future rate increases. See “Item 1A. Risk Factors” in Part II for additional discussion of risks.
For a discussion regarding the impact of the economic conditions caused by the COVID-19 pandemic on the Utilities’ liquidity and capital resources, see discussion under “Financial Condition–Liquidity and capital resources.”
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RESULTS OF OPERATIONS
Three months ended March 31Increase 
20212020(decrease)(dollars in millions, except per barrel amounts)
$565 $597 $(33)
Revenues. Net decrease largely due to:
$(51)
lower fuel oil prices and lower kWh generated1
7 higher revenues from annual RAM adjustments
6 increase related solely to a change in the timing for revenue recognition within the year, which eliminates seasonality in recognizing target revenues and results in recognizing revenues evenly throughout the year with target revenues recognized on an annual basis remaining unchanged
2 
higher PPAC revenue2
2 lower ERP system implementation benefits to be passed on to customers in future rates
1 
higher kWh purchased2
127 173 (46)
Fuel oil expense1. Decrease largely due to lower fuel oil prices and lower kWh generated
142 140 2 
Purchased power expense1 ,2. Net increase largely due to higher kWh purchased and higher minimum charges
115 128 (13)
Operation and maintenance expenses. Net decrease largely due to:
(3)lower labor due to lower staffing and reduction in overtime
(2)higher bad debt expense in the first quarter of 2020 related to the economic impact of COVID-19 pandemic on customers (PUC’s approval of deferral to regulatory asset started in the second quarter of 2020)
(2)fewer generating facility overhauls due to timing but to be performed later in 2021
(2)lower pension service cost due to reset of pension cost included in rates as part of Hawaiian Electric final rate case decision
(2)lower outside service costs
(1)increase in Pearl Harbor environmental reserves in 2020
(1)lower medical premium costs due to lower staffing
111 113 (2)
Other expenses. Decrease due to lower revenue taxes offset in part by higher depreciation expense in 2021 for plant investment in 2020
69 44 25 
Operating income. Increase due to lower operation and maintenance expenses coupled with higher electric rates, offset in part by higher depreciation expense
55 30 25 
Income before income taxes. Increase due to lower operation and maintenance expense, higher electric rates, and lower pension non-service costs, offset by higher interest expense related to new long term debt issued in May 2020 and January 2021 and higher depreciation expense
43 24 19 
Net income for common stock. Increase due to lower operating expenses, coupled with higher electric rates
1,909 2,006 (97)
Kilowatthour sales (millions)3
$63.87 $80.78 $(16.91)Average fuel oil cost per barrel
468,745 465,787 2,958 Customer accounts (end of period)
1The rate schedules of the electric utilities currently contain ECRCs through which changes in fuel oil prices and certain components of purchased energy costs are passed on to customers.
2The rate schedules of the electric utilities currently contain PPACs through which changes in purchased power expenses (except purchased energy costs) are passed on to customers.
3 kWh sales were lower when compared to the same periods last yearremains at satisfactory levels largely due to the effectsU.S. economic stimulus programs implemented as a result of the COVID-19 pandemic. The reduction to visitor arrivals due to the Safe Travels requirements significantly impacted the tourism industry. This combined with restrictions on business and activities,that led to high unemployment,a substantial increase in customer deposits. ASB’s cash and shuttered many businesses and hotels. As restrictions are eased, vaccination rates increase and more visitors arrive, sales are expected to slowly rebound but remain lower than pre-pandemic levels.

The Utilities’ effective tax rates for the first three months of 2021 and 2020 were at 20% and 18%, respectively. The effective tax ratecash equivalents was higher for the three months ended March 31, 2021 compared to the same period in 2020 due primarily to higher excess tax benefits related to vesting of share-based awards in 2020.
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Hawaiian Electric’s consolidated ROACE was 9.0% and 7.4% for the twelve months ended March 31, 2021 and March 31, 2020, respectively.
The net book value (cost less accumulated depreciation) of utility property, plant and equipment (PPE)$270 million as of March 31, 2021 amounted2022, compared to $4.7 billion,$251 million as of which approximately 27% relatedDecember 31, 2021. ASB remains well above the “well capitalized” level under the FDIC Improvement Act prompt correction action capital category, and while the economic outlook has improved and is expected to generation PPE, 64% relatedcontinue to transmissionimprove, there are still COVID-19 risks, such as new variants, that could create ongoing uncertainty regarding COVID-19’s impact on loan performance and distribution PPE, and 9% related to other PPE. Approximately 9% of the total net book value relates to generation PPE that has been deactivated or that the Utilities plan to deactivate or decommission. 
See “Economic conditions”allowance for credit losses (see “Recent Developments — COVID-19” in the “HEI Consolidated”Bank section above.below).
Executive overviewHEI material cash requirements.HEI’s material cash requirements include: capital expenditures, labor and strategy. The Utilities provide electricity on allbenefit costs, O&M expenses, fuel and purchase power costs, and debt and interest payments at the principal islandsUtilities; investments in loans and investment securities at the state, other than Kauai,Bank; labor and benefits costs, shareholder dividends and debt and interest payments at HEI; and HEI equity contributions to approximately 95% of the state’s population and operate five separate grids. The Utilities’ mission is to provide innovative energy leadership for Hawaii, to meet the needs and expectations of customers and communities, and to empower them with affordable, reliable and clean energy. The goal is to create a modern, resilient, flexible and dynamic electric grid that enables an optimal mix of distributed energy resources, such as private rooftop solar, demand response and grid-scale resources to enable the creation of smart,support Pacific Current’s sustainable resilient communities and achieve the statutory goal of 100% renewable energy by 2045.
Performance-based regulations. On December 23, 2020, the PUC issued a D&O (PBR D&O) approving a new performance-based regulation framework (PBR Framework). See “Regulatory proceedings” under “Commitments and contingencies” in Note 3 of the Condensed Consolidated Financial Statements.
Transition to renewable energy. The Utilities are fully committed to a 100 percent renewable energy future for Hawaii and are partnering with the State of Hawaii in achieving their Renewable Portfolio Standard goal of 100% renewable energy by 2045. Hawaii’s RPS law requires electric utilities to meet an RPS of 30%, 40%, 70% and 100% by December 31, 2020, 2030, 2040 and 2045, respectively.infrastructure investments.
The UtilitiesCompany believes that its ability to generate cash, both internally from electric utility and banking operations and externally from issuances of equity and debt securities, as well as bank borrowings, is adequate to maintain sufficient liquidity to fund its contractual obligations and commercial commitments, its forecasted capital expenditures and investments, its expected retirement benefit plan contributions and other short-term and long-term material cash requirements. However, the COVID-19 pandemic continues to be an evolving situation, and the Company cannot predict the extent or duration of outbreaks from new variants, the future effects that it will have made significant progress on the path to clean energy and have been successful in adding significant amounts of renewable energy resources to their electric systems and exceededglobal, national or local economy, including the 2015 RPS goal two years early. The Utilities’ RPS for 2020 was 34.5%, which was in excess of the statutory goal of 30%. The Utilities will continue to actively procure additional renewable energy post-2020 and expect to meet or exceed the next statutory RPS goal of 40% in advance of the 2030 compliance year. (See “Developments in renewable energy efforts” below).
If the Utilities are not successful in meeting the RPS targets as mandated by law, the PUC could assess a penalty of $20 for every MWh that an electric utility is deficient. Basedimpact on the levelCompany’s cost of electricity sales in 2020, a 1% shortfall in meetingcapital and its ability to access additional capital, or the 2030 RPS requirementfuture impacts on the Company’s financial position, results of 40% would translate into a penalty of approximately $1.6 million. The PUC has the discretion to reduce the penalty due to events or circumstances that are outside an electric utility’s reasonable control, to the extent the event or circumstance could not be reasonably foreseenoperations, and ameliorated. In addition to penalties under the RPS law, failure to meet the mandated RPS targets would be expected to result in a higher proportion of fossil fuel-based generation than if the RPS target had been achieved, which in turn would be expected to subject the Utilities to limited commodity fossil fuel price exposure under a fuel cost risk-sharing mechanism. The fuel cost risk-sharing mechanism apportions 2% of the fuel cost risk to the utilities (and 98% to ratepayers) and has a maximum exposure (or benefit) of $3.7 million.
The Utilities are fully aligned with, and supportive of, state policy to achieve a 100% renewable energy future and have made significant progress in its transformation. This alignment with state policy is reflected in management compensation programs and the Utilities’ long-range plans, which include aspirational targets in order to catalyze action and accelerate the transition away from fossil fuels at a pace more rapid than dictated by current law. The long-range plans, including aspirational targets, serve as guiding principles in the Utilities’ continued transformation, and are updated regularly to adapt to changing technology, costs and other factors. While there is no financial penalty for failure to achieve the Utilities’ long-range aspirational objectives, the Utilities recognize that there is an environmental and social cost from the continued use of fossil fuels.
The State of Hawaii’s policy is supported by the regulatory framework and includes a number of mechanisms designed to maintain the Utilities’ financial stability during the transition toward the State’s 100% renewable energy future. Under the sales decoupling mechanism, the Utilities are allowed to recover from customers, target test year revenues, independent of the level of kWh sales, which have generally declined (with the exception of 2019 and the first quarter of 2020), as privately-owned distributed energy resources have been added to the grid and energy efficiency measures have been put into place. Other regulatory mechanisms reduce regulatory lag, such as the rate adjustment mechanism to provide revenues for escalation in certain O&M expenses and rate base changes between rate cases, and the major project interim recovery mechanism, which allow the Utilities to recover and earn on certain approved major capital projects placed into service in between rate cases. Certain mechanisms were replaced or modified under the new PBR framework. See “Regulatory proceedings” under “Commitments and contingencies” and “Current Decoupling” in Note 3 of the Condensed Consolidated Financial Statements.cash flows.
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Integrated Grid PlanningThe consolidated capital structure of HEI (excluding deposit liabilities and other bank borrowings) was as follows:
(dollars in millions)March 31, 2022December 31, 2021
Short-term borrowings—other than bank$71 1 %$54 1 %
Long-term debt, net—other than bank2,316 49 2,322 48 
Preferred stock of subsidiaries34 1 34 1 
Common stock equity2,304 49 2,391 50 
 $4,725 100 %$4,801 100 %
HEI’s commercial paper borrowings and line of credit facility were as follows:
 Average balanceBalance
(in millions) Three months ended March 31, 2022March 31, 2022December 31, 2021
Commercial paper$51 $66 $54 
Line of credit draws on revolving credit facility— — — 
Note:. Achieving 100% renewable energy will require modernizingThis table does not include Hawaiian Electric’s separate commercial paper issuances and line of credit facilities and draws, which are disclosed below under “Electric utility—Financial Condition—Liquidity and capital resources.” The maximum amount of HEI’s short-term commercial paper borrowings during the gridfirst three months of 2022 was $66 million. As of March 31, 2022, available committed capacity under HEI’s line of credit facility was $175 million.
There were no new issuances of common stock through coordinated energy system planningthe HEI Dividend Reinvestment and Stock Purchase Plan (DRIP), HEIRSP or the ASB 401(k) Plan in partnership with local communitiesthe three months ended March 31, 2022 and stakeholders. To accomplish2021 and HEI satisfied the share purchase requirements of the DRIP, HEIRSP and ASB 401(k) Plan through open market purchases of its common stock.
For the first three months of 2022, net cash provided by operating activities of HEI consolidated was $93 million. Net cash used by investing activities for the same period was $228 million, primarily due to capital expenditures, ASB’s purchases of available-for-sale investment securities, partly offset by ASB’sreceipt of investment security repayments and maturities and net decrease in loans. Net cash provided by financing activities during this period was $131 million as a result of several factors, including net increases in ASB’s deposit liabilities and other bank borrowings, the Utilities filed their Integrated Grid Planning (IGP) Reportissuances of long-term debt and net increases in short-term borrowings, partly offset by repayment of long-term debt and payment of common stock dividends. During the first three months of 2022, Hawaiian Electric and ASB (through ASB Hawaii) paid cash dividends to HEI of $31 million and $15 million, respectively.
Dividends.  The payout ratios for the first three months of 2022 and full year 2021 were 55% and 60%, respectively. On February 11, 2022, the HEI Board of Directors approved a 1 cent increase in the quarterly dividend from $0.34 per share to $0.35 per share, starting with the PUC on March 1, 2018, which provides an innovative systems approach to energy planning intended to yield the most cost-effective renewable energy pathways that incorporates customer and stakeholder input.
In March 2019, the PUC accepted the Utilities’ IGP Work plan submitted on December 14, 2018, which describes the timing and scope of major activities that will occur in the IGP process. The IGP utilizes an inclusive and transparent Stakeholder Engagement model to provide an avenue for interested parties to engage with the Utilities and contribute meaningful input throughout the IGP process. The IGP Stakeholder Council, Technical Advisory Panel and Working groups have been established and meet regularly to provide feedback and input on specific issues and process steps in the IGP. In March 2020, the Utilities launched a broad public engagement program, which consisted of a combination of in-person and online engagement. This provided customers opportunities to connect with the IGP team. The Utilities submitted an updated IGP work plan to the PUC in January 2021, marking the significant progress made through the stakeholder engagement phase of the IGP process. The Utilities will use the stakeholder feedback and input as it enters the next phase of the process which includes the development of long-range integrated grid plans and the acquisition of new resources.
Demand response programs. Pursuant to PUC orders, the Utilities are developing an integrated Demand Response (DR) Portfolio Plan that will enhance system operations and reduce costs to customers. The reduction in cost for the customer will take the form of either rates or incentive-based programs that will compensate customers for their participation individually, or by way of engagements with turnkey service providers that contract with the Utilities to aggregate and deliver various grid services on behalf of participating customers and their distributed assets.
In October 2017, the PUC approved the Utilities’ request made in December 2015 to defer and recover certain computer software and software development costs for a DR Management System in an amount not to exceed $3.9 million, exclusive of allowance for funds used during construction, through the REIP Surcharge. The Utilities placed the DR Management System in servicedividend in the first quarter of 2019. On October 30, 2019,2022. HEI currently expects to maintain its dividend at its present level; however, the Utilities filedHEI Board of Directors evaluates the final cost report, reflecting total project costs of $3.7 million. On February 27, 2020,dividend quarterly and considers many factors in the PUC approved the Utilities’ request to recover deferred and other related costs of the DR Management System through the REIP Surcharge effective March 1, 2020 until such costs are included in determining base rates. On June 26, 2020, the Utilities submitted an updated REIP rate effective August 1, 2020evaluation including, but not limited to, the PUC.
On January 25, 2018,Company’s results of operations, the PUC approved the Utilities’ revised DR Portfolio tariff structure. The PUC supported the approach of working with aggregators to implement the DR portfolio. In 2019, the Utilities signed a multi-year Grid Services Purchase Agreement (GSPA) with a third party aggregator. These contracts pay service providers to aggregate grid-supporting capabilities from customer-sited Distributed Energy Resources. The first of these five-year contracts has been executed (PUC approval obtained on August 9, 2019) and is expected to deliver not only benefits through efficient grid operations, but also avoided fuel costs over that 5-year period. The Utilities selected the next set of aggregators in the first quarter of 2020, commenced GSPA contract negotiations, and filed two executed contracts on July 9, 2020. This complements the Utilities’ transformation and supports customer choice. The GSPA contracts were approved by the PUC on December 31, 2020.
Grid modernization. The overall goal of the Grid Modernization Strategy is to deploy modern grid investments at an appropriate priority, sequence and pace to cost-effectively maximize flexibility, minimize the risk of redundancy and obsolescence, deliver customer benefits and enable greater distributed energy resources and renewable energy integration. Under the Grid Modernization Strategy, the Utilities expect that new technology will help increase adoption of private rooftop solar and make use of rapidly evolving products, including storage and advanced inverters. The Utilities have begun work to implement the Grid Modernization Strategy Phase 1, which received PUC approval on March 25, 2019. The estimated cost for this initial phase is approximately $86 million and is expected to be incurred over five years. As of March 31, 2021, approximately $18 million has been incurred to date under Phase 1. The Utilities submitted a proportional advanced meter opt-out deployment filing on September 30, 2020 in an effort toward broader and faster deployment, which was approved by the PUC on March 4, 2021.
The Utilities filed an application with the PUC on September 30, 2019 for an Advanced Distribution Management System (ADMS) as part of the second phase of their Grid Modernization Strategy implementation. However, on December 30, 2019, the PUC suspended the Utilities’ applicationlong-term prospects for the Advanced Distribution Management System pending the Utilities’ filing of a supplemental application for the broad deployment of field devices. This supplementCompany, current and update to the Grid Mod Phase 2 field devices application was filed on March 31, 2021. The estimated cost for the implementation over five years of the ADMS and field devices, which includes capital, deferred and O&M costs, is $105 million. A PUC order resuming the proceeding is pending.
Community-based renewable energy. In December 2017, the PUC adopted a community-based renewable energy (CBRE) program framework which allows customers who cannot, or chose not to, take advantage of private rooftop solar to receive the
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benefits of renewable energy to help offset their monthly electric bills and support clean energy for Hawaii. The program has two phases.
The first phase, which commenced in July 2018, totals 8 MW of solar photovoltaic (PV) only with one credit rate for each island, closed on April 9, 2020.
By PUC order, CBRE Phase 2 commenced on April 9, 2020 with the goal to develop a robust CBRE market with competitive pricing anticipating that clean energy projects and programs, such as CBRE, can meaningfully contribute to the State’s recoveryexpected future economic conditions, including impacts from the COVID-19 emergency. CBRE Phase 2 capacity is substantially larger than Phase 1pandemic, and allows up to 235 MW across all Hawaiian Electric service territories in two tranches. The capacities are allocated by island and allow for small (under 250 kW) and large system sizes to encourage a variety of system sizes. In addition to the first-come, first-served process offered in Phase 1, the majority of the 235 MW will be awarded to projects selected through a competitive process. To provide opportunities for low- to moderate-income (LMI) customers to participate in the program, separate project proposals may be submitted specifically targeting LMI customers.
Eight RFPs were required by order: one each for Oahu, Maui, Hawaii Island, Molokai, and Lanai, and LMI-specific RFPs for Oahu, Maui, and Hawaii Island. Draft RFPs for the three LMI RFPs and the RFPs for Molokai, and Lanai were filed on July 9, 2020, along with a revised tariff and associated contract models. LMI projects do not have a size cap nor do they decrease the 235 MW capacity available to other projects. In addition to its administrative role, the Utilities and their affiliates are eligible to participate in the solicitations, with the exception of the LMI-specific RFPs, where the PUC will only consider a utility self-build option if there are no successful competitive bids for an LMI project on one island or more. The Utilities will also have opportunities to earn based on shared savings mechanisms for specific solicitations. Comments were received during and after a Technical Conference hosted by the PUC on July 28, 2020. Proposed final drafts of the LMI RFPs, Molokai and Lanai RFPs tariff, and contracts were filed on September 8, 2020.
For Lanai, the Utilities proposed to combine the previously issued Variable Renewable Dispatchable Generation Paired with Energy Storage RFP and the CBRE RFP to optimize the benefits of procuring renewable energy, spurring development and increasing the likelihood of success of the CBRE Program on Lanai. As proposed, the Lanai CBRE RFP allows the Utilities to continue collaborating with the majority landowner, Pulama Lanai, who has designated a new larger predetermined site to facilitate expeditious development of a renewable energy project that meets the objectives of both RFPs, while reducing the cost of a project by leveraging economies of scale and coordinating interconnection to the grid. On February 10, 2021, Pulama Lanai filed a letter requesting that the Final RFP be issued for Lanai, or, in the alternative, that separate proposals be allowed for CBRE and non-CBRE portions. On February 17, 2021, the Utilities filed comments in response requesting the PUC’s support of the combined RFP.
Drafts of the remaining RFPs on Oahu, Maui, and Hawaii Island were filed on October 9, 2020. A technical conference was held on October 28, 2020 and proposed final drafts were filed on December 1, 2020.
For small CBRE projects less than 250 kW in size, the Utilities are planning to accept projects over a four-month period on a first-come, first served basis as soon as the PUC approves the Utilities’ final tariff and contracts, filed on September 8, 2020. The PUC reserved 30 MW as well as a small amount of unallocated capacity from Phase 1 for small projects in Phase 2 on Oahu, Maui and Hawaii Island. If applications exceed the program capacity for that island, then a reverse auction process called Competitive Credit Rate Procurement will be triggered to allocate project capacity and determine the credit rate. The Utilities have developed a CBRE Portal where customers can subscribe to a project once the Subscriber Organization has added their project to the portal.
In January 2021, the PUC directed the Utilities to collaborate with the parties to develop recommended improvements to the interconnection process and certain other elements of the CBRE program within sixty days, or by March 30, 2021. Prior to this Order, the Utilities were already working on interconnection improvements and proposed several ways to potentially improve the time and cost of interconnection during the development of the CBRE Phase 2 tariff and RFPs. As directed by the Order, the Utilities increased their focus and attention on this area and worked with the parties, including the CBRE Independent Observer, to make the interconnection process more transparent, predictable and standardized, including interconnection costs, timelines and requirements in order to reduce costs and accelerate schedules. In addition, the Utilities researched interconnection solutions in other jurisdictions, and worked with the parties to identify additional improvements. The Utilities solicited from the parties a list of recommended improvements, and consolidated and adopted nearly all the near-term and continuous improvement recommendations from the parties. The Utilities filed these recommendations and associated updates to the previously filed RFPs, tariff, and contracts on March 30, 2021. These documents are pending review and approval by the PUC.
Microgrid services tariff proceeding. In July 2018, the PUC opened a proceeding to investigate establishment of a microgrid services tariff, pursuant to Act 200 of 2018. There are currently five intervenors in the docket, although initially there were eight. In August 2019, the PUC issued an order focusing for the remainder of the docket is to facilitate the ability ofcapital investment alternatives.
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microgrids to disconnect from the grid and provide backup power to customers and critical energy uses during contingency events.
Two Working Groups were formed: (1) a Market Facilitation Working Group to recommend draft tariff language for the Microgrid Services Tariff; and (2) an Interconnection Standards Working Group to develop a new section of Rule 14H specific to interconnection and islanding/reconnection of microgrids. The Utilities filed a Draft Microgrid Services Tariff and updated language for various distributed energy resources Rules on March 30, 2020.Parties to the docket filed comments on and proposed revisions to the Draft Tariff on April 27, 2020.
On November 30, 2020, the PUC held a technical conference to present its proposed redlines to Utilities’ Draft Microgrid Services Tariff and related documents. On February 1, 2021, the Working Group filed its Draft Microgrid Tariff. Members of the Working Group separately filed their positions on areas of disagreements and later commented on other parties’ positions on areas of disagreements on February 10, 2021 and February 17, 2021, respectively. This matter is pending a PUC decision and or guidance on how to proceed.
Decoupling. See "Current Decoupling" in Note 3 of the Condensed Consolidated Financial Statements for a discussion of decoupling.
As part of decoupling, the Utilities also track their rate-making ROACEs as calculated under the earnings sharing mechanism, which includes only items considered in establishing rates. At year-end, each utility’s rate-making ROACE is compared against its ROACE allowed by the PUC to determine whether earnings sharing has been triggered. The D&O in the PBR proceeding modified the earnings sharing mechanism to a symmetric arrangement. Effective with annual earnings for 2021, the earnings sharing will be triggered for actual ROACE outside of a 300 basis points dead band above and below a target ROE of 9.5%, which is the current authorized ROE for each of the Utilities. Earnings sharing credits or recoveries will be included in the annual decoupling filing for the following year. Results for 2020, 2019 and 2018 did not trigger the earnings sharing mechanism for the Utilities.
Regulated returns. Actual and PUC-allowed returns, as of March 31, 2021, were as follows:
%Rate-making Return on rate base (RORB)*ROACE**Rate-making ROACE***
Twelve months ended 
March 31, 2021
Hawaiian ElectricHawaii Electric LightMaui ElectricHawaiian ElectricHawaii Electric LightMaui ElectricHawaiian ElectricHawaii Electric LightMaui Electric
Utility returns7.65 7.27 6.48 9.24 9.05 7.65 10.20 9.80 8.04 
PUC-allowed returns7.37 7.52 7.43 9.50 9.50 9.50 9.50 9.50 9.50 
Difference0.28 (0.25)(0.95)(0.26)(0.45)(1.85)0.70 0.30 (1.46)
*      Based on recorded operating income and average rate base, both adjusted for items not included in determining electric rates.
**    Recorded net income divided by average common equity.
***  ROACE adjusted to remove items not included by the PUC in establishing rates, such as incentive compensation.
The factors contributing to the difference between PUC-allowed ROACEs and the ROACEs actually achieved include the exclusion of certain expenses from rates (for example, incentive compensation and charitable contributions), the recognition of annual RAM revenues on June 1 annually rather than on January 1, and return on capital additions since the last rate case in excess of indexed escalations. For Hawaiian Electric and Hawaii Electric Light, the twelve months ended March 31, 2021 rate-making ROACEs reflect higher earnings due to timing differences in the first quarter of 2021, including overhaul expenses, and a change in the timing of the recognition of target revenues relative to 2020.
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Most recent rate proceedings.  As of March 31, 2021, the status of ongoing rate case for each utility was as follows:
Test year
(dollars in millions)		DateAmount% over 
rates in 
effect		ROACE
(%)		RORB
(%)		Rate
 base		Common
equity
%		Stipulated agreement 
reached with
Consumer Advocate
Hawaiian Electric        
2020 1
Request8/21/19$77.6 4.1 10.50 7.97 $2,477 57.15 Yes
Final Decision and Order10/22/200.00.09.507.37NA57.15
Hawaii Electric Light        
2019 2
Request12/14/18$13.4 3.4 10.50 8.30 $537 56.91 Yes
Interim Decision and Order11/13/190.00.09.507.5253456.83
Final Decision and Order7/28/200.00.09.507.5253456.83
Note:  The “Request” date reflects the application filing date for the rate proceeding. The date of “Interim Decision and Order” or “Final Decision and Order” reflects the issuance date of the PUC order.
1 A final D&O issued on October 22, 2020 ordered final rates for the 2020 test year to remain at current effective rates, which provides for no increase to base rates. Hawaiian Electric’s proposed RBA provision tariff and ECRC tariff submitted on November 6, 2020 were approved by the PUC on December 11, 2020. The proposed RBA provision tariff and ECRC tariff took effect on January 1, 2021.
2 A final D&O issued on July 28, 2020 ordered final rates for the 2019 test year to remain at current effective rates, such that there is a zero increase in rates. The proposed final tariffs and PIM tariffs took effect on November 1, 2020, and the ECRC tariff became effective on January 1, 2021.
See also “Most recent rate proceedings” in Note 3 of the Condensed Consolidated Financial Statements.
On December 23, 2020, the PBR D&O was issued, establishing a new PBR Framework. The PBR Framework implemented a five-year multi-year rate period (MRP), during which there will be no general rate case applications. In the fourth year of the MRP, the PUC will comprehensively review the PBR Framework to determine if any modifications or revisions are appropriate.
Developments in renewable energy efforts.  Developments in the Utilities’ efforts to further their renewable energy strategy include renewable energy projects discussed in Note 3 of the Condensed Consolidated Financial Statements and the following:
New renewable PPAs.
•In December 2014, the PUC approved a PPA for Renewable As-Available Energy dated October 3, 2013 between Hawaiian Electric and Na Pua Makani Power Partners, LLC (NPM) for a proposed 24-MW wind farm on Oahu. In August 2020, the project was energized and commissioning of all wind turbines was completed. However, the project was paused due to a conductor deficiency. Hawaiian Electric reconductored the 46kV circuit and in December 2020, the project reached commercial operation.
NPM received its Incidental Take Permit from the Department of Fish and Wildlife Service on September 7, 2018. Keep the North Shore Country (KNSC) has appealed this decision and the case has been transferred to the Hawaii Supreme Court. On June 17, 2020, KNSC filed a Motion for Stay Upon Appeal. On August 10, 2020, KNSC’s Motion for Stay Upon Appeal was denied. KNSC and Kahuku Community Association (KCA) have also petitioned to appeal NPM’s Conditional Use Permits. On August 6, 2020, the Zoning Board of Appeals (ZBA) granted NPM’s Motions to Dismiss the Appeal Petitions of KNSC and KCA.
Life of the Land (LOL) filed a Motion for Relief to argue the PUC’s approval for NPM PPA was invalid and should be revised. Hawaiian Electric and the Consumer Advocate filed an opposition to this motion for relief. A hearing on the motion for relief was held on November 22, 2019. On April 16, 2020, the PUC issued an order denying LOL’s Motion for Relief. On April 27, 2020, LOL filed a Notice of Appeal of the PUC’s order with the Supreme Court of the State of Hawaii. Hawaiian Electric filed its Answering Brief with the Supreme Court of the State of Hawaii on November 12, 2020. Oral argument was held on May 7, 2021.
•On December 31, 2019, Hawaii Electric Light and PGV entered into an Amended and Restated Power Purchase Agreement (ARPPA), subject to approval by the PUC. The ARPPA extends the term of the existing PPA by 25 years to 2052, expands the firm capacity of the facility to 46 MW and delinks the pricing for energy delivered from the facility from fossil fuel prices to reduce cost to customers. The PUC suspended the docket pending the completion of a supplemental environmental review. On April 12, 2021, Hawaii Electric Light filed a motion for reconsideration and clarification in the proceeding.
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Tariffed renewable resources.
•As of March 31, 2021, there were approximately 523 MW, 111 MW and 125 MW of installed distributed renewable energy technologies (mainly PV) at Hawaiian Electric, Hawaii Electric Light and Maui Electric, respectively, for tariff-based private customer generation programs, namely Standard Interconnection Agreement, Net Energy Metering, Net Energy Metering Plus, Customer Grid Supply, Customer Self Supply, Customer Grid Supply Plus and Interim Smart Export. As of March 31, 2021, an estimated 31% of single family homes on the islands of Oahu, Hawaii and Maui have installed private rooftop solar systems, and approximately 19% of the Utilities’ total customers have solar systems.   
•The Utilities began accepting energy from feed-in tariff projects in 2011. As of March 31, 2021, there were 43 MW, 2 MW and 5 MW of installed feed-in tariff capacity from renewable energy technologies at Hawaiian Electric, Hawaii Electric Light and Maui Electric, respectively.
Biofuel sources.
•In July 2018, the PUC approved Hawaiian Electric’s three-year biodiesel supply contract with Pacific Biodiesel Technologies, LLC (PBT) to supply 2 million to 4 million gallons of biodiesel at Hawaiian Electric’s Schofield Generating Station and the Honolulu International Airport Emergency Power Facility (HIA Facility) and any other generating unit on Oahu, as necessary. The PBT contract became effective on November 1, 2018 and has been extended for one year through December 2022. Hawaiian Electric also has a spot buy contract with PBT to purchase additional quantities of biodiesel at or below the price of diesel. Some purchases of “at parity” biodiesel have been made under the spot purchase contract, which was extended through June 2022.
•Hawaiian Electric has a contingency supply contract with REG Marketing & Logistics Group, LLC to also supply biodiesel to any generating unit on Oahu in the event PBT is not able to supply necessary quantities. This contingency contract has been extended to November 2022, and will continue with no volume purchase requirements.
Requests for renewable proposals, expressions of interest, and information.
•Under a request for proposal process governed by the PUC and monitored by independent observers, in February 2018, the Utilities issued RFPs for 220 MW of renewable generation on Oahu, 50 MW of renewable generation on Hawaii Island, and 60 MW of renewable generation on Maui. As of March 31, 2021, summarized information for a total of 8 PPAs is as follows:
UtilitiesNumber of contractsTotal photovoltaic size (MW)BESS Size (MW/MWh)Guaranteed commercial operation datesContract term (years)Total projected annual payment (in millions)
Hawaiian Electric4139.5139.5/5589/30/21 & 12/31/2120 & 25$30.9 
Hawaii Electric Light26060/2407/20/21 & 6/30/222514.1 
Maui Electric27575/3007/20/21 & 6/30/222517.6 
Total8274.5274.5/1,098$62.6 
The Utilities have received PUC approvals to recover the total projected annual payment of $62.6 million for the eight PPAs through the PPAC to the extent such costs are not included in base rates.
•In continuation of their February 2018 request for proposal process, the Utilities issued their Stage 2 Renewable RFPs for Oahu, Maui and Hawaii Island and Grid Services RFP on August 22, 2019. This procurement plan sought approximately 900 MW of renewable energy, including 594 MW on Oahu, 135 MW on Maui and a range between 32 to 203 MW on Hawaii Island. This second phase, as approved by the PUC, was open to all renewable and storage resources, including efforts to add more renewable generation, renewable plus storage, standalone storage and grid services. The scope of these RFPs has been expanded to accelerate renewable energy procurement beyond the remainder of the 2022 targets identified in Stage 1 to include the energy requirement associated with the planned retirement of the Kahului Power Plant on Maui and the upcoming expiration of the agreement for the AES Hawaii facility on Oahu. For the Grid Services RFP, the targets had been expanded in alignment with the Renewable RFPs Utility proposals were submitted on November 4, 2019. Proposals from third parties for these RFPs were submitted on November 5, 2019. Final awards for the renewable projects were made on May 8, 2020. Final awards for the grid services projects were made starting in January 2020. On Oahu, seven solar-plus-storage projects and one standalone storage project totaling approximately 281 MW of generation and 1.8 GWh of storage were selected. On Maui Island, three solar-plus-storage projects and one standalone storage project totaling approximately 100 MW of generation and 560 MWh of storage were selected. On Hawaii Island, two solar-plus-storage projects and one standalone storage project totaling approximately 72 MW of generation and 492 MWh of storage were selected. Two Utility Self-Build projects were among those selected; a 40-MW, 160-MWh standalone energy storage system on Maui and a 12-MW,
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12-MWh storage system on Hawaii Island. Since selection, three renewable plus storage projects have voluntarily withdrawn from the process for various reasons, including change in circumstances for the developer and a misunderstanding of contract requirements. To date, the Utilities have filed 10 PPAs, 2 grid services purchase agreements (GSPA) and 2 applications for commitments of funds for capital expenditures for approval of the utility self-build projects with the PUC.
A summary of the 10 PPAs that were filed with the PUC, is as follows:
UtilitiesNumber of contractsTotal photovoltaic size (MW)BESS Size (MW/MWh)Guaranteed commercial operation datesContract term (years)Total projected annual payment (in millions)
Hawaiian Electric5232232/1,0555/31/22, 5/17/23, 10/30/23, 12/29/23 & 12/31/2320 & 25$62.0 
Hawaiian Electric1*N/A185/5656/1/222024.0 
Hawaii Electric Light16060/2409/30/232515.5 
Maui Electric3100100/4004/30/23 & 12/29/232528.2 
Total10392577/2,260$129.7 

* See further discussion under “Review of Interconnection Process and Kapolei Energy Storage Power Purchase Agreement” below.
As of March 31, 2021, the PUC approved four solar-plus-storage PPAs for a total of 217 MW. On April 14, 2021, the PUC approved another solar-plus-storage PPA adding 40 MW. The total projected annual payment of $68 million for these PPAs will be recovered through the PPAC to the extent such costs are not included in base rates.
A summary of the GSPAs that were approved by PUC in December 2020 is as follows:
UtilitiesFast Frequency Response - 1
(MW)		Fast Frequency Response - 2
(MW)		Capacity -
Load Build
(MW)		Capacity -
Load Reduction
(MW)
Hawaiian Electric—26.714.519.4
Hawaii Electric Light6.0—3.24.0
Maui Electric6.1—1.94.7
Total12.126.719.628.1

A summary of the utility self-build projects that are pending PUC approval is as follows:
UtilitiesNumber of contractsBESS Size (MW/MWh)Guaranteed commercial operation dates
Hawaii Electric Light112/1212/30/22
Maui Electric140/1604/28/23
Total252/172

•On November 27, 2019, the Utilities issued RFPs for renewable generation paired with energy storage on the islands of Lanai and Molokai. The Utilities were seeking PV paired with storage or small wind (specified as 100 kW turbines or smaller) on Molokai and PV paired with storage on Lanai. Proposals for the Molokai RFP were received on February 14, 2020. The Lanai RFP was temporarily postponed, while the Utilities reevaluated the system needs. The Utilities filed an update to the Lanai RFP on March 10, 2020. In light of a PUC order issued on April 9, 2020 in the CBRE docket, the Utilities proposed in their July 9, 2020 filing to combine the previously issued Lanai RFP with the CBRE RFP described in the order to optimize the benefits of procuring renewable energy, spurring development and increasing the likelihood of success of the CBRE program on Lanai. The proposed combined Lanai RFP is before the PUC for approval. On October 15, 2020, the Utilities selected one project from the Molokai RFP for a total of 4.5 MW of solar and 24 MWh of storage. The developer, however, declined to accept the award. The Utilities are currently evaluating next steps.
Review of Interconnection Process and Kapolei Energy Storage Power Purchase Agreement.
•In February 2021, the PUC initiated a docket for the purposes of reviewing the status and interconnection progress of various utility-related renewable projects (i.e. Stage 1 and Stage 2 RFP PPAs and CBRE) and the Utilities’ transition plans for the expiration of the AES power purchase agreement, the retirement of the Kahului Power Plant, and other
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fossil fuel power plant transition plans, as needed. The Utilities filed initial status updates on the project timelines, steps needed for each of the renewable projects to achieve commercial operation and steps the Utilities are taking to address projected extensions of guaranteed commercial operation dates (GCOD) for renewable projects under development, which are due to a variety of factors, including those outside of the control of the Utilities. The PUC subsequently held status conferences on the Utilities’ updates. In April 2021, the PUC issued an Order directing the Utilities to establish regulatory liabilities for the difference between the on-peak avoided cost and the unit price included in the applications for approval of the renewable project PPAs, effective with the GCOD included in the applications (the earliest GCOD included in the applications is July 2021) or from the date of the Order for CBRE Phase 1 projects. The amount of regulatory liabilities to be recorded in future periods are not determinable at this time and would be affected by a number of factors, including the length of the GCOD extension period, the monthly on-peak avoided cost, as well as the factors described above. The Utilities filed a Motion for Reconsideration of the entire Order, or in the alternative to clarify that at most the PUC is directing the Utilities to track the information and not record the information at this time. The Utilities further requested a Stay of the Order pending resolution of the Motion. The Utilities maintain that extensions of GCODs are allowed under the PUC-approved contracts and that the Order has the unintended consequence of imposing penalties against the Utilities without due process. The full text of the Order, Motion for Reconsideration and request for a Stay of the Order can be found on the PUC website at dms.puc.hawaii.gov/dms (Docket No. 2021-0024).
•Also in April 2021, the PUC approved the Kapolei Energy Storage (KES) PPA (one of the PPAs as a result of the Stage 2 Renewable RFP process) (KES Decision and Order), subject to nine conditions, including the Utilities forgoing the second portion of the PIM rewards amounting up to $1.7 million for the Stage 1 RFP PPAs, removing grid constraints for the Utilities’ CBRE Phase 2 projects and for existing and new distributed energy programs, financial retirement of Hawaiian Electric generating units by specified dates and adjusting target revenues at the retirement dates for such retirements, and a requirement to charge the batteries in the project using significant levels of renewable energy generation. The financial retirement of the generating units described in the KES Decision and Order is contrary to the intent of Hawaii Revised Statutes §269-6(d), which encourages the recovery of stranded costs for the retirement of fossil fuel generation, and contrary to the regulatory compact under which in return for agreeing to commit capital necessary to allow utilities to meet their obligation to serve, utilities are assured recovery of their investment and a fair opportunity to earn a reasonable return on the capital prudently committed to the business. The undepreciated amount of the six generating units at the retirement dates noted in the KES Decision and Order is currently estimated to be approximately $55 million, and excludes certain asset retirement obligation costs, which are not determinable at this time. Hawaiian Electric plans to file a Motion for Reconsideration and Stay of the Decision and Order due to potentially significant financial and operational impacts. Depending on the PUC’s ruling on that motion, Hawaiian Electric would have the option of proceeding with the Decision and Order as may be amended, filing an appeal, or considering declaring the contract with KES null and void. The full text of the KES Decision and Order and, when filed, the Motion for Reconsideration and Stay with respect thereto, can be found on the PUC website at dms.puc.hawaii.gov/dms (Docket No. 2020-0136).
Legislation and regulation. Congress and the Hawaii legislature periodically consider legislation that could have positive or negative effects on the Utilities and their customers. Also see “Environmental regulation” in Note 3 of the Condensed Consolidated Financial Statements.
Fuel contracts. The fuel contract entered into in January 2019, by the Utilities and PAR Hawaii Refining, LLC (PAR Hawaii), for the Utilities’ low sulfur fuel oil (LSFO), high sulfur fuel oil (HSFO), No. 2 diesel, and ultra-low sulfur diesel (ULSD) requirements was approved by the PUC, and became effective on April 28, 2019 and terminates on December 31, 2022. This contract is a requirement contract with no minimum purchases. If PAR Hawaii is unable to provide LSFO, HSFO, diesel and/or ULSD the contract allows the Utilities to purchase LSFO, HSFO, diesel and/or ULSD from another supplier. The contract will automatically renew upon the conclusion of the original term for successive terms of 1 year beginning on January 1, 2023 unless a party gives written termination notice at least 120 days before the beginning of an extension. The costs incurred under the contract with PAR Hawaii are recovered in the Utilities’ respective ECRCs.
On June 9, 2020, the Utilities and PAR Hawaii entered into a First Amendment to the fuel contract. The First Amendment amends only the pricing to create a two-tiered structure based on volume, with all tier-1 LSFO up to the tier-1 maximum to be purchased exclusively from PAR Hawaii at the established pricing, and purchases in excess of that volume (tier-2) either from PAR Hawaii at the established pricing, or from an alternative supplier. On August 4, 2020, the PUC approved the First Amendment, which has an effective date of July 15, 2020, on an interim basis. The PUC’s approval order allows the recovery of such costs associated with the First Amendment through the ECRC to the extent that the costs are not recovered in base rates. The PUC intends to review whether the First Amendment is reasonable and in the public interest in the final decision, but it will not subject the recovery of the costs between the interim decision and the final decision to retroactive disallowances.
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FINANCIAL CONDITION
Liquidity and capital resources.As of March 31, 2021, there were no amounts outstanding on Hawaiian Electric’s revolving credit facilities and no commercial paper borrowings by the Utilities.
On January 14, 2021, the Utilities received $115 million of proceeds using a delayed draw feature under a private placement executed on October 29, 2020. The proceeds were used to finance capital expenditures and reimburse funds used for the payment of capital expenditures.
The Utilities believe that their ability to generate cash, both internally from operations and externally from issuances of equity and debt securities, as well as bank borrowings, is adequate to maintain sufficient liquidity to fund their contractual obligations and commercial commitments, their forecasted capital expenditures and investments, their expected retirement benefit plan contributions and other cash requirements. However, the COVID-19 pandemic is an evolving situation, and the Utilities cannot predict the extent or duration of the outbreak, the future effects that it will have on the global, national or local economy, including the impacts on the Utilities’ ability, as well as the cost, to access additional capital, or the future impacts on the Utilities’ financial position, results of operations, and cash flows. See Item 1A. “Risk Factors” in Part II for further discussion of risks and uncertainties.
Hawaiian Electric’s consolidated capital structure was as follows:
(dollars in millions)March 31, 2021December 31, 2020
Short-term borrowings$— — %$50 1 %
Long-term debt, net1,676 43 1,561 41 
Preferred stock34 1 34 1 
Common stock equity2,157 56 2,142 57 
$3,867 100 %$3,787 100 %
Information about Hawaiian Electric’s commercial paper borrowings, borrowings from HEI and line of credit facility were as follows:
 Average balanceBalance
(in millions)Three months ended March 31, 2021March 31, 2021December 31, 2020
Short-term borrowings1
   
Commercial paper$— $— $— 
Borrowings from HEI— — — 
Line of credit draws— — — 
Undrawn capacity under line of credit facilities— 275 275 
1   The maximum amount of external short-term borrowings by Hawaiian Electric during the first three months of 2021 was approximately $50 million. As of March 31, 2021, Hawaii Electric Light and Maui Electric had no short-term borrowings from Hawaiian Electric. In addition to the short-term borrowings above, on January 15, 2021, Hawaiian Electric paid off and terminated the $50 million term loan facility dated as of May 19, 2020.
Hawaiian Electric has a $200 million line of credit facility and a $75 million 364-day revolving credit facility with no amounts outstanding at March 31, 2021. On April 19, 2021, Hawaiian Electric’s $75 million 364-day revolving credit agreement terminated and was not renewed. See Note 5 of the Condensed Consolidated Financial Statements.
Bank loans. On January 15, 2021, Hawaiian Electric paid off and terminated the $50 million term loan credit agreement dated as of May 19, 2020.
Credit ratings. On March 17, 2021, S&P upgraded Hawaiian Electric’s issuer credit rating to “BBB” from “BBB-”, upgraded the short-term and commercial paper ratings to “A-2” from “A-3” and revised the outlook to stable from positive. The rating upgrade was primarily based on Hawaiian Electric’s strong financial measures, strength of the cumulative value of the regulatory protections, and S&P’s assessment of its stand-alone credit profile as sufficient to rate Hawaiian Electric higher than HEI.
On April 20, 2021, Moody’s upgraded Hawaiian Electric’s senior unsecured rating and issuer rating to “Baa1” from “Baa2” and revised the outlook to stable from positive. The rating upgrade reflects Hawaiian Electric's considerable progress in adding renewable resources to its energy supply mix and the improving regulatory relationship with the PUC.
SPRBs. Special purpose revenue bonds (SPRBs) have been issued by the Department of Budget and Finance of the State of Hawaii (DBF) to finance (and refinance) capital improvement projects of Hawaiian Electric and its subsidiaries, but the
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sources of their repayment are the non-collateralized obligations of Hawaiian Electric and its subsidiaries under loan agreements and notes issued to the DBF, including Hawaiian Electric’s guarantees of its subsidiaries’ obligations.
On May 24, 2019, the PUC approved the Utilities’ request to issue SPRBs in the amounts of up to $70 million, $2.5 million and $7.5 million for Hawaiian Electric, Hawaii Electric Light and Maui Electric, respectively, prior to June 30, 2020, to finance the Utilities’ capital improvement programs. Pursuant to this approval, on October 10, 2019, the DBF issued, at par, Series 2019 SPRBs in the aggregate principal amount of $80 million with a maturity of October 1, 2049. As of March 31, 2021, Hawaiian Electric had $12 million of undrawn funds remaining with the trustee. Hawaii Electric Light and Maui Electric had no undrawn funds as of March 31, 2021.
On June 10, 2019, the Hawaii legislature authorized the issuance of up to $700 million of SPRBs ($400 million for Hawaiian Electric, $150 million for Hawaii Electric Light and $150 million for Maui Electric), with PUC approval, prior to June 30, 2024, to finance the Utilities’ multi-project capital improvement programs (2019 Legislative Authorization).
On February 9, 2021, the PUC approved the Utilities’ request to issue SPRBs (up to $100 million, $35 million and $45 million for Hawaiian Electric, Hawaii Electric Light and Maui Electric, respectively) through 2022, with the proceeds to be used to finance the Utilities’ multi-project capital improvement programs. The PUC also approved the use of the expedited approval procedure to request the issuance and sale of the remaining/unused amount of SPRBs authorized by the 2019 Legislative Authorization (i.e., total not to exceed up to $400 million for Hawaiian Electric, up to $150 million for Hawaii Electric Light, and up to $150 million for Maui Electric) during the period January 1, 2023 through June 30, 2024.
Taxable debt. On January 31, 2019, the Utilities received PUC approval (January 2019 Approval) to issue the remaining authorized amounts under the PUC approval received in April 2018 (April 2018 Approval) in 2019 through 2020 (Hawaiian Electric up to $205 million and Hawaii Electric Light up to $15 million of taxable debt), as well as a supplemental increase to authorize the issuance of additional taxable debt to finance capital expenditures, repay long-term and/or short term debt used to finance or refinance capital expenditures, and/or to reimburse funds used for payment of capital expenditures, and to refinance the Utilities’ 2004 junior subordinated deferrable interest debentures (QUIDS) prior to maturity. In addition, the January 2019 Approval authorized the Utilities to extend the period to issue additional taxable debt from December 31, 2021 to December 31, 2022. The new total “up to” amounts of taxable debt requested to be issued through December 31, 2022 are $410 million, $150 million and $130 million for Hawaiian Electric, Hawaii Electric Light and Maui Electric, respectively.
As of March 31, 2021, Hawaiian Electric, Hawaii Electric Light, and Maui Electric have $135 million, $85 million, and $45 million, respectively, of remaining taxable debt to issue prior to December 31, 2022. See summary table below.
(in millions)Hawaiian ElectricHawaii Electric LightMaui Electric
Total “up to” amounts of taxable debt authorized through 2022$410 $150 $130 
Less:
Taxable debt authorized and issued in 2018 under April 2018 Approval75 15 10 
Taxable debt issuance to refinance the 2004 QUIDS in 201930 10 10 
Taxable debt issuance in May 2020110 10 40 
Taxable debt executed in October 2020, but issued on January 14, 202160 30 25 
Remaining authorized amounts$135 $85 $45 

Equity. In October 2018, the Utilities received PUC approval for the supplemental increase to issue and sell additional common stock in the amounts of up to $280 million for Hawaiian Electric and up to $100 million each for Hawaii Electric Light and Maui Electric, with the new total “up to” amounts of $430 million for Hawaiian Electric and $110 million each for Hawaii Electric Light and Maui Electric, and to extend the period authorized by the PUC to issue and sell common stock from December 31, 2021 to December 31, 2022. As of March 31, 2021, Hawaiian Electric, Hawaii Electric Light, and Maui Electric have $275.8 million, $102.5 million, and $87.8, respectively, of remaining common stock to issue prior to December 31, 2022. See summary table below.
(in millions)Hawaiian ElectricHawaii Electric LightMaui Electric
Total “up to” amounts of common stock authorized to issue and sell through 2021$150.0 $10.0 $10.0 
Supplemental increase authorized280.0 100.0 100.0 
Total “up to” amounts of common stock authorized to issue and sell through 2022430.0 110.0 110.0 
Common stock authorized and issued in 2017, 2018, 2019 and 2020154.2 7.5 22.2 
Remaining authorized amounts$275.8 $102.5 $87.8 

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Cash flows. The following table reflects the changes in cash flows for the three months ended March 31, 2021 compared to the three months ended March 31, 2020:
Three months ended March 31
(in thousands)20212020Change
Net cash provided by operating activities$31,961 $39,141 $(7,180)
Net cash used in investing activities(68,498)(116,431)47,933 
Net cash provided by financing activities36,460 78,707 (42,247)

Net cash provided by operating activities. The decrease in net cash provided by operating activities was primarily driven by an increase in fuel oil stock due to less consumption.
Net cash used in investing activities. The decrease in net cash used in investing activities was primarily driven by a decrease in capital expenditures related to construction activities.
Net cash provided by financing activities. The decrease in net cash provided by financing activities was primarily driven by repayment of short-term debt.
Forecast capital expenditures. For the three-year period 2021 through 2023, the Utilities forecast up to $1.2 billion of net capital expenditures, which could change over time based upon external factors such as the timing and scope of environmental regulations and/or unforeseen delays in permitting and timing of PUC decisions. Proceeds from the issuance of equity and long-term debt, cash flows from operating activities, temporary increases in short-term borrowings and existing cash and cash equivalents are expected to provide the funds needed for the net capital expenditures, to pay down commercial paper or other short-term borrowings, as well as to fund any unanticipated expenditures not included in the 2021 to 2023 forecast (such as increases in the costs or acceleration of capital projects, or unanticipated capital expenditures that may be required by new environmental laws and regulations).
Management periodically reviews capital expenditure estimates and the timing of construction projects. These estimates may change significantly as a result of many considerations, including changes in economic conditions, changes in forecasts of kWh sales and peak load, the availability of purchased power and changes in expectations concerning the construction and ownership of future generation units, the availability of generating sites and transmission and distribution corridors, the need for fuel infrastructure investments, the ability to obtain adequate and timely rate increases, escalation in construction costs, the effects of opposition to proposed construction projects and requirements of environmental and other regulatory and permitting authorities.
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Bank
Recent Developments—COVID-19
See also Recent developments—COVID-19 in HEI’s MD&A.
In the first quarter of 2021, economic conditions in Hawaii began to improve following the rollout of stimulus programs and the loosening of business restrictions, both of which boosted economic activity. Continued efforts to vaccinate a high proportion of the population quickly and the potential implementation of a “vaccine passport” is expected to further accelerate the economic recovery. With increased optimism regarding an acceleration of an economic recovery, long-term rates increased during the quarter. However, interest rates across the curve remain at relatively low levels, and continue to negatively impact net interest margin as new loan origination rates remain below existing portfolio yields. In the first quarter of 2021, the bank’s net interest margin was 2.95% compared to 3.12% and 3.72% for the quarters ended December 31, 2020 and March 31, 2020, respectively.
In response to COVID-19, ASB made short-term loan modifications to borrowers who were generally payment current at the time of relief. As of March 31, 2021, approximately $9 million of loans remained in their active deferral period. For the loans that have completed their short-term payment deferral period, approximately $17 million of loans required further assistance through repayment modifications and ASB reflected these loans as troubled debt restructured loans as of March 31, 2021. Approximately $13 million of loans were not able to resume their contractual payments and were considered delinquent as of March 31, 2021. As a result of an overall strengthening of the Hawaii economy and a corresponding improvement in the credit outlook in the first quarter of 2021, as reflected in upgrades in the commercial loan portfolio and overall lower net charge offs, ASB recorded an $8.4 million recovery of the provision for credit losses to reduce the allowance for credit losses. The provision for credit losses in future quarters will be dependent on future economic conditions and changes to borrower credit quality at that time.
In 2020, ASB temporarily closed 15 of its 49 branches and reduced banking hours at the branches that remained open in an effort to reduce social gathering and protect employees and customers. The bank has since reopened five of the branches that were temporarily closed and permanently closed eight branches. The reduction in ASB’s branch network should not have a significant impact to the bank’s customers as there are other branches nearby and other channels such as online and mobile banking. ASB continues to evaluate its branch network to determine whether further changes may be appropriate given its customers’ use of other banking channels.
ASB’s senior management team continues to meet on a regular basis to manage the response to the pandemic and discuss key focus areas such as the safety of the bank’s employees and customers as well as any impacts to the operations of the bank. Senior management also continues to meet regularly with ASB’s board of directors to keep them apprised of the impacts of the COVID-19 pandemic.
The CARES Act was signed into law on March 27, 2020. The CARES Act provided over $2 trillion in economic assistance for American workers, families, and small businesses, and job preservation for American industries. The PPP was established under the CARES Act and implemented by the United States Small Business Administration (SBA) to provide a direct incentive for small businesses to keep their workers on the payroll as a result of the COVID-19 crisis. The Paycheck Protection Program Flexibility Act was signed into law on June 5, 2020 and the Economic Aid Act was signed into law on December 27, 2020, which amended some of the prior rules and guidelines of the CARES Act. The Economic Aid Act established a second round of PPP, reopening the PPP for first-time borrowers and allowing for a second draw for businesses that meet more restrictive eligibility criteria to target businesses hardest hit by the pandemic. Loans issued through the PPP are 100% federally guaranteed and have a maturity of 2-5 years, depending on when the loan was made, at a fixed interest rate of 1%. Loan payments will be deferred until the earlier of (a) the date that the forgiven amount is remitted to the lender by the SBA; or (b) 10 months from the date the covered period ends. The SBA will forgive all loan amounts to a particular small business if such small business is compliant with the terms and conditions of the PPP. Small businesses had the earlier of 24 weeks from disbursement of the loan or December 31, 2020 to incur allowable expenses such as payroll costs, interest on mortgages, rent and utility expenses that would be covered by the loan forgiveness rules, with 60% of the loan forgiveness needing to be for payroll costs. There is a partial forgiveness if less than 60% of the loan disbursement was spent on payroll costs. Employers had until December 31, 2020 to restore their workforce. Lenders processed and approved the PPP loans under delegated authority of the SBA. As an existing SBA certified lender, ASB worked with a number of small businesses, both customers and non-customers, to complete the loan application forms so that these businesses could participate in the program. During the first round of PPP, the Bank secured more than $370 million in PPP loans for approximately 4,100 small businesses that supported over 40,000 jobs, ASB received processing fees totaling approximately $13 million and started recognizing these fees over the life of the loans. The Bank is participating in the second round of PPP which opened for submission by banks on January 19, 2021. As of April 7, 2021, ASB secured more than $160 million for approximately 2,000 small businesses that supported more than 18,000 jobs.
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Other provisions of the CARES Act provides that a financial institution may elect to suspend the requirements under GAAP for certain loan modifications that would otherwise be categorized as a TDR and any related impairment for accounting purposes. See Note 4 of the Condensed Consolidated Financial Statements and “Economic conditions” in the “HEI Consolidated” section above.
ASB continues to maintain its low-risk profile, strong balance sheet and straightforward community banking business model.
 Three months ended March 31Increase 
(in millions)20212020(decrease)Primary reason(s)
Interest income$59 $65 $(6)
Average loan portfolio yields 57 basis points lower—impacted by the continued low interest rate environment as adjustable rate loans have repriced lower during the past year and new loan production yields continue to originate below their portfolio yields.
Average loan portfolio balances increased $207 million - commercial and commercial real estate loan portfolio balances increased by $275 million and $211 million, respectively. Home equity lines of credit and consumer loan portfolios decreased $162 million and $91 million, respectively - strategic decision to reduce production of these loans in the current economic environment.
Average investment securities portfolio balance increased $983 million—excess liquidity from strong deposit growth invested in agency securities.
Average investment securities yields 119 basis points lower—impacted by the continued low interest rate environment as the amortization of premiums on investment securities have increased with faster prepayment assumptions and new investment security purchase yields continue to be lower than the investment security portfolio yields.
Noninterest income19 15 4 
Higher mortgage banking income due to higher residential loan sale volume.
Higher bank-owned life insurance income primarily due to proceeds from a death claim and higher fair market value adjustment on bank owned life insurance assets.
Less: gain on sale of investment securities, net(1)— (1)Gain on sale of investment securities, net, which is included in Noninterest income above and in the Bank’s statements of income and comprehensive income in Note 4, is classified as gain on sale of investment securities, net in the condensed consolidated statements of income, and accordingly, is reflected after operating income as a separate line item and excluded from Revenues.
Revenues77 80 (3)The decrease in revenues for the three months ended March 31, 2021 compared to the same period in 2020 was primarily due to lower interest income, partly offset by higher noninterest income.
Interest expense1 4 (3)
Lower interest expense on deposits—lower term certificate balances due to runoff of government term certificates and lower deposit yields as a result of the continued low interest rate environment.
Average core deposit balances increased $1.4 billion; average term certificate balances decreased $230 million.
Average deposit yields decreased from 15 basis points to 8 basis points.
Lower interest expense on other borrowings—primarily due to lower repurchase agreement yields as a result of the continued low interest rate environment.
Provision for credit losses(8)10 (18)
Negative provision for credit losses reflects improvement in economic outlook, strong credit results including lower net charge-offs and credit upgrades in commercial real estate and commercial loan portfolios.
Negative provision for credit losses also due to lower personal unsecured loan portfolio balances which had higher credit loss rates.
Delinquency rates have decreased—from 0.48% at March 31, 2020 to 0.43% at March 31, 2021.
Net charge-off to average loans have decreased—from 0.44% at March 31, 2020 to 0.18% at March 31, 2021 due to lower personal unsecured loan portfolio net charge-offs.
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 Three months ended March 31Increase 
(in millions)20212020(decrease)Primary reason(s)
Noninterest expense48 46 2 
Higher compensation and benefits expenses—increase in incentive compensation payout for commission based employees.
One-time adjustment for change in accounting for ASB retirement plan.
Expenses41 60 (19)The decrease in expenses for the three months ended March 31, 2021 compared to the same period in 2020 was due to lower provision for credit losses and lower interest expense, partly offset by higher noninterest expenses.
Operating income36 19 17 The increase in operating income for the three months ended March 31, 2021 compared to the same period in 2020 was primarily due to lower provision for credit losses, lower interest expense and higher noninterest income, partly offset by lower interest income and higher noninterest expenses.
Gain on sale of investment securities, net1 — 1 
Net income30 16 14 Net income for the three months ended March 31, 2021 was higher than the same period in 2020 due to higher operating income, partly offset by higher income tax expense.
ASB’s return on average assets, return on average equity and net interest margin were as follows:
Three months ended March 31
(%)20212020
Return on average assets1.40 0.87 
Return on average equity16.04 9.15 
Net interest margin2.95 3.72 

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Three months ended March 31
20212020
(dollars in thousands)Average
balance		Interest
income/
expense		Yield/
rate (%)		Average
balance
Interest
 income/
expense
Yield/
rate (%)
Assets:      
Interest-earning deposits$47,080 $12 0.10 $26,654 $92 1.36 
FHLB stock9,929 81 3.29 9,375 78 3.37 
Investment securities
Taxable2,352,570 8,366 1.42 1,388,466 9,019 2.60 
Non-taxable47,599 271 2.28 28,683 305 4.20 
Total investment securities2,400,169 8,637 1.44 1,417,149 9,324 2.63 
Loans   
Residential 1-4 family2,149,788 19,588 3.64 2,178,480 21,922 4.03 
Commercial real estate1,108,851 9,005 3.26 898,162 9,509 4.21 
Home equity line of credit937,942 7,265 3.14 1,099,694 9,220 3.37 
Residential land16,457 210 5.11 14,050 197 5.60 
Commercial962,198 8,912 3.73 687,303 6,730 3.91 
Consumer158,930 4,987 12.72 249,917 7,989 12.86 
Total loans 1,2
5,334,166 49,967 3.77 5,127,606 55,567 4.34 
Total interest-earning assets 3
7,791,344 58,697 3.03 6,580,784 65,061 3.96 
Allowance for credit losses(101,712)  (72,501)  
Noninterest-earning assets766,844   722,233   
Total assets$8,456,476   $7,230,516   
Liabilities and shareholder’s equity:      
Savings$2,901,661 $191 0.03 $2,395,751 $540 0.09 
Interest-bearing checking1,180,049 57 0.02 1,049,010 230 0.09 
Money market178,275 37 0.09 147,776 250 0.68 
Time certificates540,461 1,177 0.88 770,350 2,567 1.34 
Total interest-bearing deposits4,800,446 1,462 0.12 4,362,887 3,587 0.33 
Advances from Federal Home Loan Bank30,126 23 0.30 23,195 90 1.56 
Securities sold under agreements to repurchase and federal funds purchased75,332 4 0.02 96,013 223 0.93 
Total interest-bearing liabilities4,905,904 1,489 0.12 4,482,095 3,900 0.35 
Noninterest bearing liabilities:      
Deposits2,645,636   1,914,774   
Other168,067   144,609   
Shareholder’s equity736,869   689,038   
Total liabilities and shareholder’s equity$8,456,476   $7,230,516   
Net interest income $57,208   $61,161  
Net interest margin (%) 4
  2.95   3.72 

1   Includes loans held for sale, at lower of cost or fair value.
2   Includes recognition of net deferred loan fees of $2.8 million and nil for the three months ended March 31, 2021 and 2020, respectively,
together with interest accrued prior to suspension of interest accrual on nonaccrual loans. Includes nonaccrual loans.
3   For the three months ended March 31, 2021 and 2020, the taxable-equivalent basis adjustments made to the table above were not material.
4   Defined as net interest income, on a fully taxable equivalent basis, as a percentage of average total interest-earning assets.
Earning assets, costing liabilities, contingencies and other factors.  Earnings of ASB depend primarily on net interest income, which is the difference between interest earned on earning assets and interest paid on costing liabilities. The interest rate environment has been impacted by disruptions in the financial markets over a period of several years. In 2020, the Federal Open Market Committee lowered its federal funds rate target range to 0% - 0.25% in response to the financial crisis caused by the COVID-19 pandemic, which resulted in a decrease in ASB’s net interest income and net interest margin. A prolonged low interest rate environment may continue to negatively impact ASB’s net interest income and net interest margin.
Loans and mortgage-backed securities are ASB’s primary earning assets.
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Loan portfolio.  ASB’s loan volumes and yields are affected by market interest rates, competition, demand for financing, availability of funds and management’s responses to these factors. See Note 4 of the Condensed Consolidated Financial Statements for the composition of ASB’s loans.
Home equity— key credit statistics. The HELOC portfolio makes up 17% of the total loan portfolio and is generally an interest-only revolving loan for a 10-year period, after which time the HELOC outstanding balance converts to a fully amortizing variable-rate term loan with a 20-year amortization period. Borrowers also have a “Fixed Rate Loan Option” to convert a part of their available line of credit into a 5, 7 or 10-year fully amortizing fixed-rate loan with level principal and interest payments. As of March 31, 2021, approximately 21% of the portfolio balances were amortizing loans under the Fixed Rate Loan Option. A HELOC loan is typically in a subordinate lien position to a borrower’s first mortgage loan, however, approximately 57% of ASB’s HELOC loan portfolio is in a first lien position.
Attention had been given by regulators and rating agencies to the potential for increased exposure to credit losses associated with HELOCs that were originated during the period of rapid home price appreciation between 2003 and 2007 as they have reached the end of their 10-year, interest-only payment periods. Once the interest only payment period has ended, payments are reset to include principal repayments along with interest. ASB does not have a large exposure to HELOCs originated between 2003 and 2007. Nearly all of ASB’s HELOC originations prior to 2008 consisted of amortizing equity lines that have structured principal payments during the draw period. These older equity lines represent 1% of the HELOC portfolio.
Loan portfolio risk elements.  See Note 4 of the Condensed Consolidated Financial Statements.
Investment securities.  ASB’s investment portfolio was comprised as follows:
 March 31, 2021December 31, 2020
(dollars in thousands)Balance% of totalBalance% of total
U.S. Treasury and federal agency obligations$57,647 2 %$62,322 3 %
Mortgage-backed securities — issued or guaranteed by U.S. Government agencies or sponsored agencies2,496,398 96 2,076,506 95 
Corporate bonds30,831 1 31,351 1 
Mortgage revenue bonds15,427 1 27,185 1 
Total investment securities$2,600,303 100 %$2,197,364 100 %
Currently, ASB’s investment portfolio consists of U.S. Treasury and federal agency obligations, mortgage-backed securities, corporate bonds and mortgage revenue bonds. ASB owns mortgage-backed securities issued or guaranteed by the U.S. government agencies or sponsored agencies, including the Federal National Mortgage Association (FNMA), Federal Home Loan Mortgage Corporation (FHLMC), Government National Mortgage Association (GNMA) and Small Business Administration (SBA). Principal and interest on mortgage-backed securities issued by FNMA, FHLMC, GNMA and SBA are guaranteed by the issuer and, in the case of GNMA and SBA, backed by the full faith and credit of the U.S. government. U.S. Treasury securities are also backed by the full faith of the U.S. government. The increase in the investment securities portfolio was primarily due to the purchase of securities with excess liquidity.
Deposits and other borrowings.  Deposits continue to be the largest source of funds for ASB and are affected by market interest rates, competition and management’s responses to these factors. While deposits have increased by $358 million year-to-date, in part due to PPP loan proceeds and consumer economic impact payments from the CARES Act stimulus program, deposit retention and sustained growth will remain challenging in the current environment due to competition for deposits and the low level of short-term interest rates. Advances from the FHLB of Des Moines, securities sold under agreements to repurchase and federal funds purchased continue to be additional sources of funds. As of March 31, 2021 and December 31, 2020, ASB’s costing liabilities consisted of 99% deposits and 1% other borrowings. The weighted average cost of deposits for the first three months of 2021 and 2020 was 0.08% and 0.23%, respectively.
Federal Home Loan Bank of Des Moines. As of March 31, 2021 and December 31, 2020, ASB had no advances outstanding at the FHLB of Des Moines. As of March 31, 2021, the unused borrowing capacity with the FHLB of Des Moines was $2.0 billion. The FHLB of Des Moines continues to be an important source of liquidity for ASB.
Contingencies.  ASB is 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, ASB cannot rule out the possibility that such outcomes could have a material adverse effect on the results of operations or liquidity for a particular reporting period in the future.
Other factors.  Interest rate risk is a significant risk of ASB’s operations and also represents a market risk factor affecting the fair value of ASB’s investment securities. Increases and decreases in prevailing interest rates generally translate into
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decreases and increases in the fair value of the investment securities, respectively. In addition, changes in credit spreads also impact the fair values of the investment securities.
As of March 31, 2021, ASB had an unrealized loss, net of taxes, on available-for-sale investment securities (including securities pledged for repurchase agreements) in AOCI of $25.8 million compared to an unrealized gain, net of taxes, of $20.0 million as of December 31, 2020. See “Item 3. Quantitative and qualitative disclosures about market risk” for a discussion of ASB’s interest rate risk sensitivity.
During the first three months of 2021, ASB recorded a negative provision for credit losses of $7.0 million in the allowance for credit losses primarily due to improvement in the economic outlook, strong credit results including lower net charge-offs and credit upgrades in commercial real estate and commercial loan portfolios and due to lower personal unsecured loan portfolio balances which had higher credit loss rates. During the first three months of 2020, ASB recorded a provision for credit losses of $9.9 million in the allowance for credit losses primarily due to increased loss reserves for the consumer loan portfolio, increased loss rates for the commercial and commercial real estate portfolios and reserves for forecasted deterioration due to the COVID-19 pandemic.
 Three months ended March 31
Year ended
December 31, 2020
(in thousands)20212020
Allowance for credit losses$101,201 $53,355 $53,355 
Impact of adopting ASU No. 2016-13— 19,441 19,441 
Provision for credit losses(7,035)9,901 49,811 
Less: net charge-offs2,373 5,613 21,406 
Allowance for credit losses, end of period$91,793 $77,084 $101,201 
Ratio of net charge-offs during the period to average loans outstanding (annualized)0.18 %0.44 %0.40 %
ASB maintains a reserve for credit losses that consists of two components, the allowance for credit losses and an allowance for loan commitments (unfunded reserve). The level of the reserve for unfunded loan commitments is adjusted by recording an expense or recovery in provision for credit losses. For the three months ended March 31, 2021 and 2020, ASB recorded a recovery in the provision for credit losses for unfunded commitments of $1.4 million and a provision for credit losses for unfunded commitments of $0.5 million, respectively. As of March 31, 2021 and December 31, 2020, the reserve for unfunded loan commitments was $2.9 million and $3.8 million, respectively.
Legislation and regulation.  ASB is subject to extensive regulation, principally by the OCC and the FDIC. Depending on ASB’s level of regulatory capital and other considerations, these regulations could restrict the ability of ASB to compete with other institutions and to pay dividends to its shareholder. See the discussion below under “Liquidity and capital resources.”
Changes to Community Bank Leverage Ratio. In April 2020, the federal bank regulatory agencies issued two interim final rules to implement Section 4012 of the CARES Act, which requires the agencies to temporarily lower the community bank leverage ratio to 8 percent. The two rules modify the community bank leverage ratio framework so that:
•Beginning in the second quarter of 2020 and until the end of the year, a banking organization that has a leverage ratio of 8 percent or greater and meets certain other criteria may elect to use the community bank leverage ratio framework; and
•Community banking organizations will have until January 1, 2022 before the community bank leverage ratio requirement is re-established at greater than 9 percent.
Under the interim final rules, the community bank leverage ratio was 8 percent beginning in the second quarter of 2020 and for the remainder of calendar year 2020, 8.5 percent for calendar year 2021, and 9 percent thereafter. The interim final rules also maintain a two-quarter grace period for a qualifying community banking organization whose leverage ratio falls no more than 1 percent below the applicable community bank leverage ratio.
As of March 31, 2021, the bank was in compliance with all of the minimum capital requirements under OCC regulations, and was categorized as “well capitalized” under the regulatory framework for prompt corrective action. Beginning in the second quarter of 2020, ASB adopted the community bank leverage ratio framework, which allowed it to report only on the community bank leverage ratio, but does not change minimum capital requirements under OCC regulations. At March 31, 2021, ASB’s leverage fell below the 8.5 percent requirement to qualify for abbreviated reporting under the community bank leverage framework for 2021. The bank will begin reporting its risk-based capital ratios if the community bank leverage ratio does not meet the 2021 requirement after the two-quarter grace period.
Covered Savings Associations. On May 24, 2019, the OCC issued a final rule to allow federal savings associations with total consolidated assets of $20 billion or less, as reported by the association to the OCC on its call report as of December 31, 2017, to elect to operate as covered savings associations. A covered savings association generally has the same rights and
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privileges as a national bank that has its main office situated in the same location as the home office of the covered savings association, with some exceptions. It is subject to the same duties, restrictions, penalties, liabilities, conditions, and limitations that apply to a national bank, with some exceptions, and must comply with certain rules and regulations applicable to the powers and investments of a national bank. A covered savings association is not required to comply with the lending and investment limits in HOLA and is not required to be a qualified thrift lender under HOLA. Finally, a covered savings association is not permitted to retain or engage in any subsidiaries, assets, or activities that are not permissible for a national bank. ASB has initiated a preliminary examination of the benefits and disadvantages of such an election with the preservation of being held by a unitary thrift holding company in mind. On April 1, 2021, the general counsel of the Board of Governors of the Federal Reserve System issued an opinion letter to another institution regarding the preservation of the unitary thrift holding company status. ASB is now undertaking a review of that letter. The bank has not reached a decision on the election.

FINANCIAL CONDITION
Liquidity and capital resources.
(dollars in millions)March 31, 2021December 31, 2020% change
Total assets$8,718 $8,397 4 
Investment securities2,600 2,197 18 
Loans held for investment, net5,218 5,233 — 
Deposit liabilities7,745 7,387 5 
Other bank borrowings103 90 15 
  As of March 31, 2022, there was no balance on HEI’s revolving credit facility or Hawaiian Electric’s revolving credit facility and the available committed capacities under the facilities were $175 million and $200 million, respectively. At the end of the quarter, HEI and Hawaiian Electric had approximately $66 million and $6 million of commercial paper outstanding, respectively. As of March 31, 2022, ASB’s unused FHLB borrowing capacity was approximately $2.1 billion and ASB had unpledged investment securities of $2.8 billion that were available to be used as collateral for additional borrowing capacity.
As of March 31, 2022 and December 31, 2021, the total amount of available borrowing capacity (net of commercial paper outstanding) under the Company’s committed lines of credit was approximately $304 million and $321 million, respectively.
The Company believes that its cash and cash equivalents, expected operating cash flow from subsidiaries, existing credit facilities, and access to the capital markets will be sufficient to meet the Company’s cash requirements over the next twelve months and beyond based on its current business plans. However, the Company expects that its liquidity will continue to be moderately impacted at the Utilities due to higher working capital requirements due to lingering COVID-19 impacts to the local economy. For the Utilities, the economic impact of the pandemic on customers have resulted in higher accounts receivable balances and bad debt expense and may result in higher write-offs in the future. As of March 31, 2022, approximately $38 million of the Utilities’ accounts receivables were 30 days past due. Of the over 30 days past due amounts, approximately 23% were on payment plans. The Company commenced its disconnection process on a tiered basis, starting in the third quarter of 2021, targeting the oldest and largest balances first, which is expected to reduce delinquent accounts receivable balances over time as payments are made. In addition to the cash flow impact from delayed collection of accounts receivable, lower kWh sales relative to the level of kWh sales approved in the last rate case generally result in delayed timing of cash flows, resulting in higher working capital requirements (see “Recent Developments—COVID-19” in the Electric utility section below). At this time, the delay in customer cash collections has not significantly affected the Company’s liquidity. The Company is prepared to address, if needed, the potential financing requirement related to the delayed timing of customer collections.
At ASB, liquidity remains at satisfactory levels largely due to U.S. economic stimulus programs implemented as a result of COVID-19 that led to a substantial increase in customer deposits. ASB’s cash and cash equivalents was $270 million as of March 31, 2022, compared to $251 million as of December 31, 2021. ASB remains well above the “well capitalized” level under the FDIC Improvement Act prompt correction action capital category, and while the economic outlook has improved and is expected to continue to improve, there are still COVID-19 risks, such as new variants, that could create ongoing uncertainty regarding COVID-19’s impact on loan performance and the allowance for credit losses (see “Recent Developments — COVID-19” in the Bank section below).
HEI material cash requirements.HEI’s material cash requirements include: capital expenditures, labor and benefit costs, O&M expenses, fuel and purchase power costs, and debt and interest payments at the Utilities; investments in loans and investment securities at the Bank; labor and benefits costs, shareholder dividends and debt and interest payments at HEI; and HEI equity contributions to support Pacific Current’s sustainable infrastructure investments.
The Company believes that its ability to generate cash, both internally from electric utility and banking operations and externally from issuances of equity and debt securities, as well as bank borrowings, is adequate to maintain sufficient liquidity to fund its contractual obligations and commercial commitments, its forecasted capital expenditures and investments, its expected retirement benefit plan contributions and other short-term and long-term material cash requirements. However, the COVID-19 pandemic continues to be an evolving situation, and the Company cannot predict the extent or duration of outbreaks from new variants, the future effects that it will have on the global, national or local economy, including the impact on the Company’s cost of capital and its ability to access additional capital, or the future impacts on the Company’s financial position, results of operations, and cash flows.
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The consolidated capital structure of HEI (excluding deposit liabilities and other bank borrowings) was as follows:
(dollars in millions)March 31, 2022December 31, 2021
Short-term borrowings—other than bank$71 1 %$54 1 %
Long-term debt, net—other than bank2,316 49 2,322 48 
Preferred stock of subsidiaries34 1 34 1 
Common stock equity2,304 49 2,391 50 
 $4,725 100 %$4,801 100 %
HEI’s commercial paper borrowings and line of credit facility were as follows:
 Average balanceBalance
(in millions) Three months ended March 31, 2022March 31, 2022December 31, 2021
Commercial paper$51 $66 $54 
Line of credit draws on revolving credit facility— — — 
Note:This table does not include Hawaiian Electric’s separate commercial paper issuances and line of credit facilities and draws, which are disclosed below under “Electric utility—Financial Condition—Liquidity and capital resources.” The maximum amount of HEI’s short-term commercial paper borrowings during the first three months of 2022 was $66 million. As of March 31, 2022, available committed capacity under HEI’s line of credit facility was $175 million.
There were no new issuances of common stock through the HEI Dividend Reinvestment and Stock Purchase Plan (DRIP), HEIRSP or the ASB 401(k) Plan in the three months ended March 31, 2022 and 2021 and HEI satisfied the share purchase requirements of the DRIP, HEIRSP and ASB 401(k) Plan through open market purchases of its common stock.
For the first three months of 2022, net cash provided by operating activities of HEI consolidated was $93 million. Net cash used by investing activities for the same period was $228 million, primarily due to capital expenditures, ASB’s purchases of available-for-sale investment securities, partly offset by ASB’sreceipt of investment security repayments and maturities and net decrease in loans. Net cash provided by financing activities during this period was $131 million as a result of several factors, including net increases in ASB’s deposit liabilities and other bank borrowings, the issuances of long-term debt and net increases in short-term borrowings, partly offset by repayment of long-term debt and payment of common stock dividends. During the first three months of 2022, Hawaiian Electric and ASB (through ASB Hawaii) paid cash dividends to HEI of $31 million and $15 million, respectively.
Dividends.  The payout ratios for the first three months of 2022 and full year 2021 were 55% and 60%, respectively. On February 11, 2022, the HEI Board of Directors approved a 1 cent increase in the quarterly dividend from $0.34 per share to $0.35 per share, starting with the dividend in the first quarter of 2022. HEI currently expects to maintain its dividend at its present level; however, the HEI Board of Directors evaluates the dividend quarterly and considers many factors in the evaluation including, but not limited to, the Company’s results of operations, the long-term prospects for the Company, current and expected future economic conditions, including impacts from the COVID-19 pandemic, and capital investment alternatives.
MATERIAL ESTIMATES AND CRITICAL ACCOUNTING POLICIES
In preparing financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Actual results could differ significantly from those estimates.
In accordance with SEC Release No. 33-8040, “Cautionary Advice Regarding Disclosure About Critical Accounting Policies,” management has identified the accounting policies it believes to be the most critical to the Company’s financial statements—that is, management believes that these policies are both the most important to the portrayal of the Company’s results of operations and financial condition, and currently require management’s most difficult, subjective or complex judgments.
For information about these material estimates and critical accounting policies, in addition to the critical policy discussed below, see pages 45 to 46, 62 to 63, and 76 to 77 of HEI’s MD&A included in Part II, Item 7 of HEI’s 2021 Form 10-K.
Following are discussions of the results of operations, liquidity and capital resources of the electric utility and bank segments.
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Electric utility
Recent developments—COVID-19
See also Recent developments—COVID-19 in HEI’s MD&A.
In the first quarter of 2022, COVID-19 case counts peaked in mid-January 2022, followed by a rapid decline in case counts and hospitalizations by the end of the quarter. In response to the improvement in COVID-19 trends, in March 2022, the state ended the Safe Travels program that required proof of vaccination or a negative COVID-19 test for transpacific travelers and removed the indoor mask mandate. As a result, for the first quarter of 2022, driven by continued recovery of the economy and the lifting of all COVID-19 restrictions, the demand for electricity increased 2.5% from 2021 levels.
Accounts receivable collection trends improved in the first quarter with past due accounts receivable balances decreasing by $6.2 million, or 9%, and the number of accounts past due decreasing by approximately 4% since December 31, 2021. The decrease in accounts receivables was primarily driven by payments on installment plans, Low Income Home Energy Assistance Program payment, a large government account payment that was previously in arrears, higher cash receipts associated with increased disconnection efforts, application of the $2 million Kokua bill credit, offset by higher customer balances driven by higher fuel prices. At this time, the delay in customer cash collections has not significantly affected the Utilities’ liquidity. The Utilities are prepared to address, if needed, the financing requirement related to the delayed timing of cash flows collected under the decoupling mechanism through the RBA and the modest slowing or reduction in accounts receivable collections from customers. See “Financial Condition—Liquidity and capital resources” for additional information.
In the second quarter of 2020, the PUC approved the deferral of certain COVID-19 related costs, such as higher bad debt expense, higher financing costs, non-collection of late payment fees, increased personal protective equipment costs, and sequestration costs for mission-critical employees. As of March 31, 2022, these cumulative costs, which have been deferred and recorded as a regulatory asset, totaled approximately $27.8 million (see also discussion under “Regulatory assets for COVID-19 related costs” in Note 3 of the Condensed Consolidated Financial Statements). The Utilities deferred COVID-19 related costs through a PUC approved period that ended on December 31, 2021 and will be seeking recovery of the deferred costs in a separate proceeding to be filed in the second quarter of 2022.
Looking forward, while case counts and hospitalizations have declined since the peak in January 2022, the positivity rate has recently increased. A worsening of COVID-19 case counts with existing or new variants or a reinstatement of COVID-19 restrictions could adversely affect the ability of the Utilities’ contractors, suppliers, IPPs, and other business partners to perform or fulfill their obligations timely, or at all, or require modifications to existing contracts, which could adversely affect the Utilities’ business, increase expenses, and impact the Utilities’ ability to achieve their RPS and other climate related goals. Additionally, while the state’s aggressive response to the pandemic has managed to control the spread of the coronavirus, the measures taken have had a negative economic impact on the state’s businesses and residents, which may influence the PUC’s actions regarding future rate increases.
In March 2022, the consumer price index reached a 40-year high of 8.5% as gas prices and rents spiked. In Hawaii, the Urban Hawaii (Honolulu) Consumer Price Index (CPI) was 7.5% higher than it was one year ago. For the Utilities, the inflationary impacts have primarily manifested as higher fuel prices, which have increased 62% quarter-over-quarter. Although the Utilities are able to pass through fuel costs to customers and have limited fuel cost exposure through a 2% fuel-cost sharing mechanism (approximately $3.7 million exposure annually), higher customer bills could reduce customers’ ability to pay timely or increase the risk of non-payment. In addition, the higher customer bills may lead the PUC to consider other actions to limit or delay any proposed increase in rates in order to mitigate the overall bill impact of rising fuel prices.
Under the PBR framework, the Utilities receive annual inflationary adjustments (compounded) on test year target revenues. The annual revenue adjustment is equal to the gross domestic producer price index (GDPPI), less a productivity factor (currently zero) and a 0.22% customer dividend, multiplied by the previous year’s adjusted revenue requirements. The GDPPI adjustment is measured in October and is effective for the following calendar year. For the 2022 calendar year, GDPPI was measured at 3% in October 2021 and will be remeasured in October 2022 for the 2023 calendar year. Although the GDPPI inflationary adjustment protects the Utilities from inflationary pressures over time, there may be a lag in recovery when prices move rapidly as they have done in recent months.
For a discussion regarding the impact of the economic conditions caused by the COVID-19 pandemic on the Utilities’ liquidity and capital resources, see discussion under “Financial Condition–Liquidity and capital resources.”
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RESULTS OF OPERATIONS
Three months ended March 31Increase 
20222021(decrease)(dollars in millions, except per barrel amounts)
$709 $565 $144 
Revenues. Net increase largely due to:
$105 
higher fuel oil prices and higher kWh generated1
25 
higher purchased power energy prices offset by lower kWh purchased2
10 higher revenue from ARA adjustments, which included an offset of management audit savings delivered to customers
2 revenue in 2022 related to ownership of and responsibility for the U.S. Army’s electrical distribution system on Oahu starting March 1, 2022, offset by an equal amount of operating expense
1 increase related solely to a change in the timing for revenue recognition within the year, which eliminates seasonality in recognizing target revenues and results in recognizing revenues evenly throughout the year with target revenues recognized on an annual basis remaining unchanged
1higher MPIR and PIMs revenue
221 127 94 
Fuel oil expense1. Net increase largely due to higher fuel oil prices and higher kWh generated partially offset by lower penalties for fuel efficiency due to reset of heat rate
164 142 22 
Purchased power expense1, 2. Net increase largely due to higher purchased power energy prices partially offset by lower kWh purchased and lower capacity charges
125 115 10 
Operation and maintenance expenses. Net increase largely due to:
2 more generating facility overhauls and maintenance work performed
2 expense in 2022 related to ownership of and responsibility for the U.S. Army’s electrical distribution system on Oahu starting March, 1, 2022, offset by an equal amount of revenue
2 higher transmission and distribution preventive and corrective maintenance expense
1 higher outside services for Information Technology and Services support, Demand Response Management System, and Battery Bonus program
1 higher property damage and legal reserve for pending claims
1 higher bad debt expense
125 111 14 
Other expenses. Increase due to higher revenue taxes, coupled with higher depreciation expense in 2022 for plant investments in 2021
74 69 5 
Operating income. Increase largely due to higher ARA revenue, MPIR and PIMs revenue and lower penalties for fuel efficiency, partially offset by higher operation and maintenance expenses and higher depreciation expense
59 55 4 
Income before income taxes. Increase largely due to higher operating income
46 43 3 
Net income for common stock. Increase largely due to higher operating income. See below for effective tax rate explanation
1,957 1,909 48 
Kilowatthour sales (millions)3
$103.40 $63.87 $39.53 Average fuel oil cost per barrel
470,851 468,745 2,106 Customer accounts (end of period)
1The rate schedules of the electric utilities currently contain ECRCs through which changes in fuel oil prices and certain components of purchased energy costs are passed on to customers.
2The rate schedules of the electric utilities currently contain PPACs through which changes in purchased power expenses (except purchased energy costs) are passed on to customers.
3 In the first quarter of 2022, kWh sales were higher when compared to the same periods last year largely due to continued recovery from the impacts of the COVID-19 pandemic. COVID-19 cases peaked in January 2022 due to the Omicron variant, but case counts have since returned to pre-Omicron levels. U.S. visitor arrivals continued to increase above first quarter of 2021 levels and approach pre-pandemic levels, but international arrivals remain low. With the outlook of the pandemic transitioning to an endemic status and remaining restrictions removed at the end of March, the economic recovery is expected to strengthen this year as international visitors return and sales rebound, although the improvement is expected to remain below pre-pandemic levels.
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The Utilities’ effective tax rate for the first three months of 2022 and 2021 were comparable at 21% and 20%, respectively.
Hawaiian Electric’s consolidated ROACE was 8.1% and 9.0% for the twelve months ended March 31, 2022 and March 31, 2021, respectively.
The net book value (cost less accumulated depreciation) of utility property, plant and equipment (PPE) as of March 31, 2022 amounted to $4.9 billion, of which approximately 25% related to generation PPE, 66% related to transmission and distribution PPE, and 9% related to other PPE. Approximately 8% of the total net book value relates to generation PPE that has been deactivated or that the Utilities plan to deactivate or decommission.
See “Economic conditions” in the “HEI Consolidated” section above.
Executive overview and strategy. The Utilities provide electricity on all the principal islands in the state, other than Kauai, to approximately 95% of the state’s population and operate five separate grids. The Utilities’ mission is to provide innovative energy leadership for Hawaii, to meet the needs and expectations of customers and communities, and to empower them with affordable, reliable and clean energy. The goal is to create a modern, resilient, flexible and dynamic electric grid that enables an optimal mix of distributed energy resources, such as private rooftop solar, demand response and grid-scale resources to enable the creation of smart, sustainable, resilient communities and achieve the statutory goal of 100% renewable energy by 2045.
Performance-based regulations. On December 23, 2020, the PUC issued a D&O (PBR D&O) approving a new performance-based regulation framework (PBR Framework). See “Regulatory proceedings” under “Commitments and contingencies” in Note 3 of the Condensed Consolidated Financial Statements.
Transition to a decarbonized and sustainable energy future. The Utilities are fully committed to leading and enabling pathways to a decarbonized and sustainable energy future for Hawaii. The Utilities believe that a holistic approach to decarbonization is needed, and that such a strategy requires achieving the Utilities’ decarbonization and renewable energy commitments, facilitating and promoting beneficial electrification, and deploying carbon removal and offsets among other levers to reduce statewide emissions.
In the fourth quarter of 2021, the Utilities outlined its Climate Action Plan to cut carbon emissions from power generation 70% by 2030, compared to a 2005 baseline. The emissions covered by this goal include stack emissions from generation owned by Hawaiian Electric and IPPs who sell electricity to the Utilities. The 2030 commitment would provide a significant portion of the reduction the entire Hawaii economy needs to meet the U.S. target of cutting carbon emissions by at least 50% economy-wide by 2030. Hawaiian Electric has also committed to achieving net zero carbon emissions from power generation by 2045 or sooner. Key elements of the 2030 plan include the closure of the state’s last coal-fired IPP plant in 2022 upon expiry of the PPA, increasing rooftop solar by more than 50% over 2021 levels, retiring six fossil fuel generating units, adding at least 1 GW of renewable generation to what was already in place in 2021, increasing grid-scale and customer-owned storage, expanding geothermal resources, and creating customer incentives for using clean, lower-cost energy at certain times of the day and using less fossil-fueled energy at night. The retirement of fossil-fueled generating units to achieve the Utilities’ 70% decarbonization goal is consistent with state policy and supported by Hawaii State law. See “Forecast of capital expenditures—Liquidity and capital resources” for a discussion of potential capital expenditures related to decarbonization efforts.
On September 1, 2022, the last coal-fired IPP plant in the state, providing approximately 10% of Oahu’s generation, will cease operations, removing a significant amount of GHG emissions from the Utilities’ generation mix. The plant’s aging infrastructure could lead to more unscheduled outages compared to historic performance, which may impact system reliability.
In anticipation of the retirement of the coal-fired IPP plant, the Utilities have developed plans, including contingency plans, to ensure reliable service through the transition period. These plans include the anticipated addition of ten renewable energy/storage projects, reserve capacity from existing generation sources, the acceleration of maintenance work during periods with anticipated higher reserve levels, and multiple demand response/distributed energy resources programs. However, future events, including unexpected issues with existing generation, or supply chain issues and inflationary pressures, as well as federal policies related to solar panel imports, among other factors, delay in the commercial operation of new generation resources, could disrupt the ability of the Utilities to deliver reliable service. Also, see the “Developments in renewable energy efforts—New renewable PPAs” section below.
Hawaii’s renewable portfolio standard law requires electric utilities to meet an RPS of 40%, 70% and 100% by December 31, 2030, 2040 and 2045, respectively. Hawaii law has also established a target of sequestering more atmospheric
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carbon and greenhouse gases than emitted within the state by 2045. The Utilities’ strategies and plans are fully aligned in meeting these targets.
The Utilities have made significant progress on the path to clean energy and have been successful in achieving RPS goals. TheUtilities reached its 2015 RPS goal two years early and exceeded the 30% RPS target for 2020, achieving an RPS of 34.5% that year. In 2021, the Utilities achieved an RPS of 38.4%. The Utilities will continue to actively procure additional renewable energy post-2021 and expect to meet or exceed the next statutory RPS goal of 40% in advance of the 2030 compliance year. (See “Developments in renewable energy efforts” below).
If the Utilities are not successful in meeting the RPS targets as mandated by law, the PUC could assess a penalty of $20 for every MWh that an electric utility is deficient. Based on the level of electricity sales in 2021, a 1% shortfall in meeting the 2030 RPS requirement of 40% would translate into a penalty of approximately $1.7 million. The PUC has the discretion to reduce the penalty due to events or circumstances that are outside an electric utility’s reasonable control, to the extent the event or circumstance could not be reasonably foreseen and ameliorated. In addition to penalties under the RPS law, failure to meet the mandated RPS targets would be expected to result in a higher proportion of fossil fuel-based generation than if the RPS target had been achieved, which in turn would be expected to subject the Utilities to limited commodity fossil fuel price exposure under a fuel cost risk-sharing mechanism. The fuel cost risk-sharing mechanism apportions 2% of the fuel cost risk to the utilities (and 98% to ratepayers) and has a maximum exposure (or benefit) of $3.7 million. Conversely, the Utilities have incentives under PIMs that provide a financial reward for accelerating the achievement of renewable generation as a percentage of total generation, including customer supplied generation. The Utilities may earn a reward for the amount of system generation above the interpolated statutory RPS goal at $20/MWh in 2022, $15/MWh in 2023, and $10/MWh for the remainder of the multi-year rate period.
The Utilities are fully aligned with, and supportive of, state policy to achieve a decarbonized future and have made significant progress in reducing emissions through renewable energy and electrification. This alignment with state policy is reflected in management compensation programs and the Utilities’ long-range plans, which include aspirational targets in order to catalyze action and accelerate the transition away from fossil fuels throughout its operations at a pace more rapid than dictated by current law. The long-range plans, including aspirational targets, serve as guiding principles in the Utilities’ continued transformation, and are updated regularly to adapt to changing technology, costs, and other factors. While there is no financial penalty for failure to achieve the Utilities’ long-range aspirational objectives, the Utilities recognize that there are environmental and social costs from the continued use of fossil fuels.
The State of Hawaii’s policy is supported by the regulatory framework and includes a number of mechanisms designed to maintain the Utilities’ financial stability during the transition toward the State’s decarbonized future. Under the sales decoupling mechanism, the Utilities are allowed to recover from customers, target test year revenues, independent of the level of kWh sales, which have generally trended lower over time as privately-owned distributed energy resources have been added to the grid and energy efficiency measures have been put into place. Other regulatory mechanisms under the new PBR framework reduce some of the regulatory lag during the multi-year rate plan (MRP), such as the annual revenue adjustment to provide annual changes in utility revenues and the exceptional project recovery mechanism, which allows the Utilities to recover and earn on certain approved eligible projects placed into service. See “Regulatory proceedings” under “Commitments and contingencies” and “Decoupling” in Note 3 of the Condensed Consolidated Financial Statements.
Integrated Grid Planning. Achieving high levels of renewable energy and a carbon free electric system will require modernizing the grid through coordinated energy system planning in partnership with local communities and stakeholders. To accomplish this, the Utilities are implementing an innovative systems approach to energy planning intended to yield the most cost-effective renewable energy and decarbonization pathways that incorporates customer and stakeholder input.
The Integrated Grid Planning (IGP) utilizes an inclusive and transparent Stakeholder Engagement model to provide an avenue for interested parties to engage with the Utilities and contribute meaningful input throughout the IGP process. The IGP Stakeholder Council, Technical Advisory Panel and Working groups have been established and meet regularly to provide feedback and input on specific issues and process steps in the IGP. The Utilities submitted an updated IGP work plan to the PUC in January 2021. In August 2021, the Utilities submitted their Revised Inputs and Assumptions to the PUC for review and approval, marking the significant progress made through the stakeholder engagement phase of the IGP process. On March 31, 2022, the Utilities submitted the final Inputs and Assumptions approved by the PUC. The PUC is currently reviewing the Utilities’ planning methodologies and criteria. Once approved, the next step in the IGP process to complete a Grid Needs Assessment will begin.
Demand response programs. Pursuant to PUC orders, the Utilities are developing an integrated Demand Response (DR) Portfolio Plan that will enhance system operations and reduce costs to customers. The reduction in cost for the customer will take the form of either rates or incentive-based programs that will compensate customers for their participation individually,
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or by way of engagements with turnkey service providers that contract with the Utilities to aggregate and deliver various grid services on behalf of participating customers and their distributed assets.
On June 9, 2021, the PUC issued an order providing guidance to the third Grid Service RFP filed on February 23, 2021. The proposed Grid Service RFP focused only on Oahu and is seeking 132 MW of grid services with focus on capacity reduction (60 MW) similarly in response to the potential reserve shortfall from the AES coal plant retirement scheduled on September 1, 2022. The Utilities filed a final draft and received PUC approval to proceed on August 3, 2021. The Utilities subsequently issued an approved Grid Services RFP and the bids were due on October 13, 2021. The Utilities made their final selections on November 10, 2021 and commenced negotiations immediately after. The Utilities executed a GSPA for a total grid services amount of 97.4 MW and filed with the PUC to request approval on March 16, 2022.
On June 8, 2021, the PUC approved the new program, Emergency Demand Response Program (EDRP), a battery storage incentive program to dispatch electricity between 6 p.m. to 8 p.m. daily from participating residential and commercial customers, to address the potential reserve shortfalls following the AES coal plant retirement. The PUC approved EDRP for 50MW on Oahu with an incentive budget not to exceed $34 million, which will be recovered via a surcharge cost recovery mechanism over a 10-year amortization. The Utilities’ implementation plan was approved by the PUC on June 30, 2021, and the Utilities subsequently filed the updated EDRP tariffs on July 1, 2021. On February 25, 2022, the PUC approved an amendment to the Battery Bonus program that provides additional incentives to participating customers. This new amendment became effective on March 1, 2022. As of March 31, 2022, the Utilities have received and approved the applications totaling approximately 5 MW.
Grid modernization. The overall goal of the Grid Modernization Strategy is to deploy modern grid investments at an appropriate priority, sequence and pace to cost-effectively maximize flexibility, minimize the risk of redundancy and obsolescence, deliver customer benefits and enable greater distributed energy resources and renewable energy integration. Under the Grid Modernization Strategy, the Utilities expect that new technology will help increase adoption of private rooftop solar and make use of rapidly evolving products, including storage and advanced inverters. On March 25, 2019, the PUC approved a plan for the Utilities to implement Phase 1 of their Grid Modernization Strategy (proportional deployment of advanced metering infrastructure “AMI”). On February 28, 2022, the PUC expanded the scope of Phase 1 AMI to the full service territory with a completion date set for the third quarter of 2024. The estimated cost of full deployment (including proportional deployment) is approximately $143 million in capital and deferred software cost and is expected to be incurred over five years. As of March 31, 2022, approximately $42 million of capital and deferred software cost has been incurred to date under Phase 1 and is currently being recovered under the MPIR mechanism until such costs are included in base rates. On February 14, 2022, the Utilities filed a request with the PUC to increase operations and maintenance costs to reflect the incremental O&M costs associated with full-service territory AMI deployment. To date, the Utilities have deployed over 65,000 advanced meters, or approximately 14% of the total scheduled deployment under Phase 1.
The Utilities filed an application with the PUC on September 30, 2019 for an Advanced Distribution Management System (ADMS) as part of the second phase of their Grid Modernization Strategy implementation. However, on December 30, 2019, the PUC suspended the Utilities’ application for the Advanced Distribution Management System pending the Utilities’ filing of a supplemental application for the broad deployment of field devices. This supplement and update to the Grid Mod Phase 2 field devices application was filed on March 31, 2021. The estimated cost for the implementation over five years of the ADMS and field devices, which includes capital, deferred software costs and O&M costs, is $105 million. A PUC order was issued on April 27, 2021, unsuspending and resuming consideration of the Phase 2 Application. The Utilities filed the reply statement of position on October 15, 2021, completing the discovery phase of the docket. On November 16, 2021, the PUC suspended the Utilities’ ADMS and Phase 2 field device application to focus the Utilities’ attention on completing Phase 1. The Utilities filed a Motion for Reconsideration with the PUC in response to the suspension, but was denied. The PUC subsequently clarified that the Utilities may resume the Phase 2 docket no earlier than six months before Phase 1 is scheduled to be completed, which is the third quarter of 2024. Resumption of the Phase 2 proceeding would likely commence six months prior to this completion date selected by the PUC.
Community-based renewable energy. In December 2017, the PUC adopted a community-based renewable energy (CBRE) program framework which allows customers who cannot, or chose not to, take advantage of private rooftop solar to receive the benefits of renewable energy to help offset their monthly electric bills and support clean energy for Hawaii. The program has two phases.
The first phase, which commenced in July 2018, totals 8 MW of solar photovoltaic (PV) only with one credit rate for each island, closed on April 9, 2020. Two phase 1 projects (28.32 kW on Maui and 270 kW on Oahu) have been operational for over a year, with four additional phase 1 projects expected to become operational in 2023.
The second phase, which commenced on April 9, 2020 and subsequently expanded on July 27, 2021, allows over 250 MW across all Hawaiian Electric service territories in two tranches for small (under 250 kW), mid-tier and large system sizes
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to encourage a variety of system sizes. To provide opportunities for LMI customers to participate in the program, separate project proposals may be submitted specifically targeting LMI customers.
Eight RFPs were required by order: one each for Oahu, Maui, Hawaii Island, Molokai, and Lanai, and LMI-specific RFPs for Oahu, Maui, and Hawaii Island. LMI projects do not have a size cap nor do they decrease the 250 MW capacity available to other projects.
For Lanai, the Utilities proposed to combine the previously issued Variable Renewable Dispatchable Generation Paired with Energy Storage RFP and the CBRE RFP to optimize the benefits of procuring renewable energy, spurring development and increasing the likelihood of success of the CBRE Program on Lanai. See “Developments in renewable energy efforts–Requests for renewable proposals, expressions of interest, and information” for additional information.
CBRE proposals for Lanai were due on February 14, 2022 and are currently being evaluated.CBRE proposals due date for Molokai was extended until March 1, 2022 and are currently being evaluated. On March 17, 2022 the CBRE LMI RFPs for Oahu, Maui and Hawaii were issued and are currently accepting proposals until May 17, 2022.The Utilities issued the CBRE Tranche 1 RFPs for Oahu, Maui and Hawaii on April 14, 2022 and will accept proposals for these RFPs through August 17, 2022.
The Utilities CBRE Phase 2 Rule 29 became effective on March 10, 2022. The Utilities are currently accepting project applications for small CBRE projects less than 250 kW in size. The PUC reserved 45 MW as well as a small amount of unallocated capacity from Phase 1 for small projects in Phase 2 on Oahu, Maui and Hawaii Island. The Utilities have developed a CBRE Portal where Subscriber Organizations can apply for small project capacity and manage subscribers for all CBRE projects in the program. Customers can also use the portal to subscribe to a project once the Subscriber Organization has added their project to the portal.
Microgrid services tariff proceeding. In enacting Act 200 of 2018, the Hawaii legislature found that Hawaii’s residents and businesses were vulnerable to disruptions in the islands’ energy systems caused by extreme weather events or other disasters, and stated its belief that the use of microgrids would build energy resiliency into Hawaii’s communities, thereby increasing public safety and security. The purpose of Act 200 was therefore to encourage and facilitate the development and use of microgrids through the establishment of a standard microgrid services tariff. In July 2018, pursuant to Act 200, the PUC opened a proceeding to investigate the establishment of a microgrid services tariff. In August 2019, the PUC issued an order prioritizing items for resolution in the docket and directed the Parties to establish working groups (the “Working Group”) to address issues identified by the PUC.
On May 27, 2021, the Utilities filed the Microgrid Service Tariff. On September 21, 2021, the PUC provided guidance for Phase 2 of the Microgrid Tariff proceeding, specifically identifying the objective for Phase 2 to promote self-sufficiency and resilience among microgrid project operators, as well as to further streamline the Microgrid Services Tariff where applicable. Furthermore, the PUC instructed Parties to recommend priority topics, along with supporting rationale to better inform the topics that will be discussed during this phase of the proceeding, which the parties submitted by October 21, 2021.
On April 4, 2022, the PUC established its Prioritized Issues for Resolution in for Phase 2 of the Microgrid proceeding, which includes the following: 1) Microgrid Compensation and Grid Services; 2) Utility Compensation; 3) Customer Protection and Related Considerations; 4) Interconnection; and 5) Working group coordination with related microgrid and resilience Initiatives at Hawaiian Electric and government agencies. Furthermore, the PUC established a procedural schedule to consist of quarterly status conference meetings with the PUC, a Phase 2 Working Group Report, draft of a revised Microgrid Service Tariff, Party comments to the proposed Microgrid Service Tariff, followed by a PUC D&O.
Decoupling. See “Decoupling” in Note 3 of the Condensed Consolidated Financial Statements for a discussion of decoupling.
Regulated returns. As part of the PBR Framework’s annual review cycle, the Utilities track their rate-making ROACEs as calculated under the earnings sharing mechanism, which includes only items considered in establishing rates. At year-end, each utility’s rate-making ROACE is compared against its ROACE allowed by the PUC to determine whether earnings sharing has been triggered. The D&O in the PBR proceeding modified the earnings sharing mechanism to a symmetric arrangement. Effective with annual earnings for 2021, the earnings sharing will be triggered for achieved rate-making ROACE outside of a 300 basis points dead band above and below the current authorized rate-making ROACE of 9.5% for each of the Utilities. Earnings sharing credits or recoveries will be included in the biannual report (formally known as annual decoupling filing) to be filed with the PUC in the spring of the following year. Results for 2021, 2020 and 2019 did not trigger the earnings sharing mechanism for the Utilities.
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Actual and PUC-allowed returns, as of March 31, 2022, were as follows:
%Rate-making Return on rate base (RORB)*ROACE**Rate-making ROACE***
Twelve months ended 
March 31, 2022
Hawaiian ElectricHawaii Electric LightMaui ElectricHawaiian ElectricHawaii Electric LightMaui ElectricHawaiian ElectricHawaii Electric LightMaui Electric
Utility returns7.30 6.01 6.68 8.60 6.66 7.50 9.61 7.41 8.58 
PUC-allowed returns7.37 7.52 7.43 9.50 9.50 9.50 9.50 9.50 9.50 
Difference(0.07)(1.51)(0.75)(0.90)(2.84)(2.00)0.11 (2.09)(0.92)
*      Based on recorded operating income and average rate base, both adjusted for items not included in determining electric rates.
**    Recorded net income divided by average common equity.
***  ROACE adjusted to remove items not included by the PUC in establishing rates, such as incentive compensation.
The factors contributing to the difference between PUC-allowed ROACEs and the ROACEs actually achieved prior to the establishment of PBR include the exclusion of certain expenses from rates (for example, incentive compensation and charitable contributions), the recognition of annual RAM revenues on June 1 annually rather than on January 1, and return on capital additions since the last rate case in excess of indexed escalations. As a result of the D&O in the PBR proceeding, the Utilities are allowed to recognize previously established RAM adjustment and ARA revenues on January 1 of each year.
Regulatory proceedings.  On December 23, 2020, the PBR D&O was issued, establishing a new PBR Framework. The PBR Framework implemented a five-year multi-year rate period (MRP), during which there will be no general rate case applications. In the fourth year of the MRP, the PUC will comprehensively review the PBR Framework to determine if any modifications or revisions are appropriate. See also “Regulatory proceedings” in Note 3 of the Condensed Consolidated Financial Statements.
Developments in renewable energy efforts.  Developments in the Utilities’ efforts to further their renewable energy strategy include renewable energy projects discussed in Note 3 of the Condensed Consolidated Financial Statements and the following:
New renewable PPAs.
•On December 31, 2019, Hawaii Electric Light and PGV entered into an Amended and Restated Power Purchase Agreement (ARPPA). The ARPPA extends the term of the existing PPA by 25 years to 2052, expands the firm capacity of the facility to 46 MW and delinks the pricing for energy delivered from the facility from fossil fuel prices to reduce cost to customers. On March 31, 2021, the PUC suspended the docket pending the completion of a supplemental environmental review under the Hawaii Environmental Policy Act (HEPA). After the Office of Planning and Sustainable Development identified the Planning Department for the County of Hawaii to be the accepting agency and approving authority for any required HEPA review, the PUC lifted the suspension of the docket stating that the docket was ready for decision-making. On March 16, 2022, the PUC issued a D&O, approving the ARPPA, subject to conditions, that include requiring completion of the final environmental review prior to construction. On March 28, 2022, Puna Pono Alliance filed a Motion for Reconsideration seeking reconsideration, modification and/or vacation of the D&O.
•The Utilities’ renewable energy goals depend, in large part, on the success of renewable projects developed and operated by independent power producers. Beginning in 2017, the Utilities embarked on an ambitious procurement effort, selecting multiple solar plus storage efforts to help reach the Utilities renewable portfolio standards goals as well as to assist the Utilities in retiring fossil fuel generation. Several of the recently procured projects have experienced delays and four Stage 2 projects have been declared null and void by the independent power producers due to a number of issues, including supply chain disruptions caused by impacts from the COVID-19 pandemic, solar product detentions at U.S. ports of entry ordered by the U.S. Customers and Border Protection agency, and unforeseen site conditions which resulted in unanticipated project costs or in some cases the inability to effectively use previously identified project sites. Projects have also indicated potential impacts from the investigation launched by the US Department of Commerce on March 28, 2022, in response to a request by Auxin Solar Inc. in regards to solar panel imports. Significant project delays or failures of these projects increase the risk of the Utilities not meeting the renewable portfolio standards or other climate related goals, eligibility for performance incentive mechanisms associated with the speed of increasing renewable generation, and the ability to retire fossil fuel units.
Tariffed renewable resources.
•As of March 31, 2022, there were approximately 554 MW, 119 MW and 133 MW of installed distributed renewable energy technologies (mainly PV) at Hawaiian Electric, Hawaii Electric Light and Maui Electric, respectively, for tariff-based private customer generation programs, namely Standard Interconnection Agreement, Net Energy
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Metering, Net Energy Metering Plus, Customer Grid Supply, Customer Self Supply, Customer Grid Supply Plus and Interim Smart Export. As of March 31, 2022, an estimated 33% of single family homes on the islands of Oahu, Hawaii and Maui have installed private rooftop solar systems, and approximately 20% of the Utilities’ total customers have solar systems.   
•The Utilities began accepting energy from feed-in tariff projects in 2011. As of March 31, 2022, there were 43 MW, 2 MW and 6 MW of installed feed-in tariff capacity from renewable energy technologies at Hawaiian Electric, Hawaii Electric Light and Maui Electric, respectively.
Biofuel sources.
•In July 2018, the PUC approved Hawaiian Electric’s three-year biodiesel supply contract with Pacific Biodiesel Technologies, LLC (PBT) to supply 2 million to 4 million gallons of biodiesel at Hawaiian Electric’s Schofield Generating Station and the Honolulu International Airport Emergency Power Facility and any other generating unit on Oahu, as necessary. The PBT contract became effective on November 1, 2018 and has been extended for one year through December 2022. Hawaiian Electric also has a spot buy contract with PBT to purchase additional quantities of biodiesel at or below the price of diesel. Some purchases of “at parity” biodiesel have been made under the spot purchase contract, which was extended through June 2023. On June 30, 2021, the Utilities issued an RFP for all fuels, including biodiesel, for supply commencing January 1, 2023. The Utilities and PBT signed an agreement on December 13, 2021 for supply of biodiesel on all islands commencing January 1, 2023, subject to PUC approval.
•Hawaiian Electric has a contingency supply contract with REG Marketing & Logistics Group, LLC to also supply biodiesel to any generating unit on Oahu in the event PBT is not able to supply necessary quantities. This contingency contract has been extended to November 2023, and will continue with no volume purchase requirements.
Requests for renewable proposals, expressions of interest, and information.
•Under a request for proposal process governed by the PUC and monitored by independent observers, in February 2018, the Utilities issued Stage 1 Renewable RFPs for 220 MW of renewable generation on Oahu, 50 MW of renewable generation on Hawaii Island, and 60 MW of renewable generation on Maui. To date, summarized information for a total of 8 PPAs is as follows:
UtilitiesNumber of contractsTotal photovoltaic size (MW)BESS Size (MW/MWh)Guaranteed commercial operation datesContract term (years)Total projected annual payment (in millions)
Hawaiian Electric4139.5139.5/5587/31/22, 9/30/22, 1/20/23 &8/31/2320 & 25$32.2 
Hawaii Electric Light26060/24011/3/22 & 12/2/222514.1 
Maui Electric27575/3004/28/23 & 10/27/232517.6 
Total8274.5274.5/1,098$63.9 
The Utilities have received PUC approvals to recover the total projected annual payment of $63.9 million for the eight PPAs through the PPAC to the extent such costs are not included in base rates. On March 29, 2022, the Utilities filed a letter with the PUC requesting approval of an amendment requesting a price and guaranteed commercial operation date change to a previously-approved PPA for Stage 1 on Oahu to resolve a force majeure condition. On May 6, 2022, the PUC conditionally approved this PPA amendment.
•In continuation of their February 2018 request for proposal process, the Utilities issued their Stage 2 Renewable RFPs for Oahu, Maui and Hawaii Island and Grid Services RFP on August 22, 2019. Final awards for the renewable projects were made on May 8, 2020. Final awards for the grid services projects were made starting in January 2020. On Oahu, seven solar-plus-storage projects and one standalone storage project, totaling approximately 281 MW of generation and 1.8 GWh of storage, were selected. On Maui, three solar-plus-storage projects and one standalone storage project, totaling approximately 100 MW of generation and 560 MWh of storage, were selected. On Hawaii Island, two solar-plus-storage projects and one standalone storage project, totaling approximately 72 MW of generation and 492 MWh of storage, were selected. Two Utility Self-Build projects were among those selected; a 40-MW, 160-MWh standalone energy storage system on Maui and a 12-MW, 12-MWh storage system on Hawaii Island. Three renewable plus storage projects voluntarily withdrew from the process prior to execution of a power purchase agreement for various reasons, including change in circumstances for the developer and a misunderstanding of contract requirements. To date, the Utilities had filed 11 PPAs, including 4 PPAs declared null and void by the independent power producers, 2 GSPAs and 2 applications for commitments of funds for capital
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expenditures for approval of the utility self-build projects with the PUC. On March 23, 2022, the PUC approved one solar-plus-storage project on Oahu for 15 MW of generation and 60 MWh of storage.
A summary of the 7 PPAs that are still under active development, is as follows:
UtilitiesNumber of contractsTotal photovoltaic size (MW)BESS Size (MW/MWh)Guaranteed commercial operation datesContract term (years)Total projected annual payment (in millions)
Hawaiian Electric49494/5035/17/23, 10/30/23, 12/29/23 & 4/9/202420 & 25$32.9 
Hawaiian Electric1*N/A185/56512/30/222024.0 
Maui Electric26060/2407/25/23 & 12/29/232518.2 
Total7154339/1,308$75.1 
* See further discussion under “Review of Interconnection Process and Kapolei Energy Storage Power Purchase Agreement” below.
To date, six projects that have been approved by the PUC remain in development – five solar-plus-storage PPAs (112 MW) and one standalone storage PPA (185 MW). The total projected annual payment of $63.5 million for these PPAs will be recovered through the PPAC to the extent such costs are not included in base rates. On February 15, 2022, the Utilities filed letters with the PUC requesting approval of amendments to two of the previously-approved PPAs for Stage 2, one on Oahu and one on Maui, that address delays and price increase due to the COVID-19 pandemic and the global supply-chain crisis, as well as other market conditions that have arisen during the development of these projects. On March 2, 2022, the PUC declined to approve both amendments. On March 14, 2022, both the developer of the project and the Utilities filed a motion for reconsideration for one project, and the developer also filed a motion for reconsideration for the second project. On May 5, 2022, the developer withdrew its motions for reconsideration for both projects and on May 6, 2022, the Utilities withdrew their motion for reconsideration and filed the developer’s notices declaring PPAs for the projects null and void. On May 6, 2022, after the developer declared the PPAs null and void, the PUC granted the Utilities’ motion for reconsideration, approving the amendment to the Maui based project. However, the PUC’s order does not change the developer’s null and void declaration of the PPA for the Maui based project. The PPA remains null and void at this time.
A summary of the GSPAs that were approved by PUC in December 2020 is as follows:
UtilitiesFast Frequency Response - 1
(MW)		Fast Frequency Response - 2
(MW)		Capacity -
Load Build
(MW)		Capacity -
Load Reduction
(MW)
Hawaiian Electric—26.714.519.4
Hawaii Electric Light6.0—3.24.0
Maui Electric6.1—1.94.7
Total12.126.719.628.1
A summary of the utility self-build projects that are pending PUC approval is as follows:
UtilitiesNumber of contractsBESS Size (MW/MWh)Guaranteed commercial operation dates
Hawaii Electric Light112/1212/30/22
Maui Electric140/1604/28/23
Total252/172
•On November 27, 2019, the Utilities issued RFPs for renewable generation paired with energy storage on the islands of Lanai and Molokai. The Utilities were seeking PV paired with storage or small wind (specified as 100 kW turbines or smaller) on Molokai and PV paired with storage on Lanai. The RFP on Lanai was postponed on January 14, 2020 to allow the Utility to re-evaluate the scope of the RFP in response to announced plans to remove two large resorts from the grid. Proposals for the Molokai RFP were received on February 14, 2020. In light of a PUC order issued on April 9, 2020 in the CBRE docket, the Utilities proposed in their July 9, 2020 filing to combine the previously issued and subsequently postponed Lanai RFP with the CBRE RFP described in the order to optimize the benefits of procuring renewable energy, spurring development and increasing the likelihood of success of the CBRE program on Lanai. On May 21, 2021, the PUC approved the proposed combined Lanai RFP. On October 15, 2020, the Utilities selected one project from the Molokai RFP for a total of 4.5 MW of solar and 24 MWh of storage. The developer, however, declined to accept the award. On August 25 and 31, 2021, the Utilities filed proposed final drafts of the CBRE RFPs, which included three dedicated Low-to-Moderate-Income RFPs on Oahu, Maui and Hawaii, three Tranche 1 RFPs on Oahu, Maui and Hawaii, a Molokai CBRE RFP, and a combined Lanai Variable
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and CBRE RFP. On November 22, 2021, CBRE RFPs for Molokai and Lanai were opened. The Lanai RFP closed on February 14, 2022 and the Molokai RFP closed on March 1, 2022. A project has been selected in the Lanai RFP. Proposals are currently being evaluated in the Molokai RFP. On February 8, 2022, the PUC approved, subject to modifications, the CBRE and LMI CBRE RFPs for Oahu, Maui, and Hawaii Island. The Utilities filed the final RFPs with the PUC on February 23, 2022. On March 17, 2022, the CBRE LMI RFPs for Oahu, Maui and Hawaii were opened. The Utilities opened the CBRE Tranche 1 RFPs for Oahu, Maui and Hawaii on April 14, 2022. See “Transition to a decarbonized and sustainable energy future—Community-based renewable energy” for additional information.
•The PUC issued a letter to the Utilities requesting development with a Stage 3 RFP on Hawaii Island on January 21, 2021. In accordance with guidance provided by the PUC in a subsequent letter on April 20, 2021, the Utilities filed the Hawaii Island Grid Needs Assessment on July 15, 2021 and the draft RFP, including model contracts for PV+BESS, wind+BESS, standalone storage, firm renewable generation, and distributed energy resources aggregators on October 15, 2021. The requirements in the Stage 3 RFP are guided by the results of the Grid Needs Assessment. On March 18, 2022, the Utilities filed a second draft of the Stage 3 RFP for Hawaii Island, incorporating stakeholder and PUC feedback.
•On February 18, 2022, the PUC sent a letter to the Utilities directing them to develop Stage 3 RFPs for Oahu and Maui. On March 10, 2022, the Utilities submitted its recommendations on plans to develop Stage 3 RFPs for Oahu and Maui, and on May 2, 2022, the Utilities filed draft RFPs for Oahu and Maui. For Oahu, the Utilities are seeking 500 to 700 MW of renewable firm capacity, and at least 475 GWh of renewable dispatchable energy annually. For Maui, the Utilities are procuring at least 40 MW of renewable firm capacity, and at least 180 GWh of renewable dispatchable energy annually.
•On November 17, 2021, the Utilities filed a request with the PUC to develop an RFP for firm renewable generation for Oahu. On December 22, 2021, the PUC issued guidance to the Utilities on proceeding with such RFP. The Utilities filed a draft RFP on February 28, 2022. Per the PUC’s March 23, 2022 letter, the Utilities will pursue firm renewable generation as a part of the Stage 3 Oahu RFP.
Review of Interconnection Process and Kapolei Energy Storage Power Purchase Agreement.
•In February 2021, the PUC initiated a docket for the purposes of reviewing the status and interconnection progress of various utility-related renewable projects (i.e., Stage 1 and Stage 2 RFP PPAs and CBRE) and the Utilities’ transition plans for the expiration of the AES power purchase agreement, the retirement of the Kahului Power Plant, and other fossil fuel power plant transition plans, as needed. The Utilities filed initial status updates on the project timelines, steps needed for each of the renewable projects to achieve commercial operation and steps the Utilities are taking to address projected extensions of guaranteed commercial operation dates (GCOD) for renewable projects under development, which are due to a variety of factors, including those outside of the control of the Utilities. The PUC subsequently held status conferences on the Utilities’ updates. In April 2021, the PUC issued an Order directing the Utilities to establish regulatory liabilities for the difference between the on-peak avoided cost and the unit price included in the applications for approval of the renewable project PPAs, effective with the GCOD included in the applications (the earliest GCOD included in the applications is July 2021) or from the date of the Order for CBRE Phase 1 projects. The amount of regulatory liabilities to be recorded in future periods are not determinable at this time and would be affected by a number of factors, including the length of the GCOD extension period, the monthly on-peak avoided cost, as well as the factors described above. The Utilities filed a Motion for Reconsideration of the entire Order, or in the alternative to clarify that at most the PUC is directing the Utilities to track the information and not record the information at this time. The Utilities further requested a Stay of the Order pending resolution of the Motion. The Utilities maintain that extensions of GCODs are allowed under the PUC-approved contracts and that the Order has the unintended consequence of imposing penalties against the Utilities without due process. In May 2021, the PUC issued an order clarifying its Order and directed the Utilities to track costs to consumers caused by the perceived delay of renewable projects, and that the PUC does not intend to, at this time, impose any penalties on the Utilities. The Utilities report the tracked cost on a monthly basis.The full text of the Order, Motion for Reconsideration and request for a Stay of the Order, and clarification Order as well as the tracked costs can be found on the PUC website at dms.puc.hawaii.gov/dms (Docket No. 2021-0024).
•Also in April 2021, the PUC approved the Kapolei Energy Storage (KES) PPA (one of the PPAs as a result of the Stage 2 Renewable RFP process) (KES Decision and Order), subject to nine conditions, including the Utilities forgoing the second portion of the PIM rewards amounting up to $1.7 million for the Stage 1 RFP PPAs, removing grid constraints for the Utilities’ CBRE Phase 2 projects and for existing and new distributed energy programs, financial retirement of Hawaiian Electric generating units by specified dates and adjusting target revenues at the retirement dates for such retirements, and a requirement to charge the batteries in the project using significant levels
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of renewable energy generation. The financial retirement of the generating units described in the KES Decision and Order is contrary to the intent of Hawaii Revised Statutes §269-6(d), which encourages the recovery of stranded costs for the retirement of fossil fuel generation, and contrary to the regulatory compact under which in return for agreeing to commit capital necessary to allow utilities to meet their obligation to serve, utilities are assured recovery of their investment and a fair opportunity to earn a reasonable return on the capital prudently committed to the business. Hawaiian Electric filed a Motion for Reconsideration and Stay of the Decision and Order due to potentially significant financial and operational impacts. In May 2021, the PUC granted, in part, Hawaiian Electric’s Motion for Reconsideration and Stay. In this Order, the PUC addressed a number of Hawaiian Electric’s concerns, including removing the condition of the Utilities foregoing the PIM award from Stage 1 RFP projects, agreeing to address grid constraint concerns in respective DER and CBRE dockets and not in the KES docket, removing the minimum thresholds of charging energy coming from renewable energy generation and corresponding deadlines associated with these thresholds and modifying the condition on financial retirement of generating units. The PUC indicated the net book value of generating assets would be addressed at the time of retirement. The full text of the KES Decision and Order and the Motion for Reconsideration and Stay with respect thereto, and the Order granting, in part, Hawaiian Electric’s Motion for Reconsideration can be found on the PUC website at dms.puc.hawaii.gov/dms (Docket No. 2020-0136).
Legislation and regulation. Congress and the Hawaii legislature periodically consider legislation that could have positive or negative effects on the Utilities and their customers. Also see “Environmental regulation” in Note 3 of the Condensed Consolidated Financial Statements.
Fuel contracts. The fuel contract entered into in January 2019, by the Utilities and PAR Hawaii Refining, LLC (PAR Hawaii), for the Utilities’ low sulfur fuel oil (LSFO), high sulfur fuel oil (HSFO), No. 2 diesel, and ultra-low sulfur diesel (ULSD) requirements was approved by the PUC, and became effective on April 28, 2019 and terminates on December 31, 2022. This contract is a requirement contract with no minimum purchases. If PAR Hawaii is unable to provide LSFO, HSFO, diesel and/or ULSD the contract allows the Utilities to purchase LSFO, HSFO, diesel and/or ULSD from another supplier.
On June 9, 2020, the Utilities and PAR Hawaii entered into a First Amendment to the fuel contract. The First Amendment amends only the LSFO pricing to create a two-tiered structure based on volume, with all tier-1 LSFO up to the tier-1 maximum to be purchased exclusively from PAR Hawaii at the established pricing, and purchases in excess of that volume (tier-2) either from PAR Hawaii at the established pricing, or from an alternative supplier. On August 4, 2020, the PUC approved the First Amendment, which has an effective date of July 15, 2020, on an interim basis. The PUC’s approval order allows the recovery of such costs associated with the First Amendment through the ECRC to the extent that the costs are not recovered in base rates. The PUC intends to review whether the First Amendment is reasonable and in the public interest in the final decision, but it will not subject the recovery of the costs between the interim decision and the final decision to retroactive disallowances. On July 6, 2021, the PUC issued a D&O, approving the First Amendment and requiring the Utilities to meet certain conditions of approval (COA). The Utilities are currently addressing the COAs as required in the D&O.
On June 30, 2021, the Utilities issued two RFPs for all fuels for supply commencing January 1, 2023. On February 1, 2022, the Utilities and PAR Hawaii entered into a fuel supply contract commencing January 1, 2023 and Second Amendment to the existing fuel contract to amend tier-1 volumes. The Second Amendment will take effect contingent upon PUC’s approval. The costs incurred under the contract with PAR Hawaii are recovered in the Utilities’ respective ECRCs.
On March 3, 2022, as part of economic sanctions amid the Russia-Ukraine war, Par Hawaii announced that it is suspending all purchases of Russian crude oil, which accounts for at least 25% of Hawaii’s supply. The average fuel oil cost per barrel has increased 62% quarter over quarter and the Utilities is forecasting an approximate 10% increase in the average electric bill for the island of Oahu and approximate 20% average increase for Hawaii and Maui Island.
Army privatization. On October 30, 2020, the PUC approved Hawaiian Electric’s 50-year contract with the U.S. Army to own, operate and maintain the electric distribution system serving the U.S. Army’s 12 installations on Oahu, including Schofield Barracks, Wheeler Army Airfield, Tripler Army Medical Center, Fort Shafter, and Army housing areas. On March 1, 2022, Hawaiian Electric acquired the Army’s existing distribution system for a purchase price of $14.5 million, and will pay the Army in the form of a monthly credit against the monthly utility services charge over the 50-year term of the contract. The acquisition of additional assets contemplated in the contract, with an estimated value of $4 million, is planned for 2023.
Hawaiian Electric took ownership and all responsibilities for operation and maintenance of the system on March 1, 2022 for a 50-year term after a one-year transition period. Under the contract, Hawaiian Electric will make initial capital upgrades over the first six years of the contract and replace aging infrastructure over the 50-year term. In addition to its regular monthly electricity bill, the Army will pay Hawaiian Electric a monthly utility services charge to cover operations and maintenance expenses and provide recovery for capital upgrades, capital replacements, and the existing distribution system
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based on a rate of return determined by the PUC for regulated utility investments, as well as depreciation expense. A preliminary assessment estimated the capital needs of approximately $40 million in the first six years of the contract. The PUC requires Hawaiian Electric to file regular periodic reports on the activities and investments in fulfillment of the contract and will review the major projects planned on behalf of the Army. The annual impact on Hawaiian Electric’s earnings is not expected to be material and will depend on a number of factors, including the amount and timing of capital upgrades and capital replacement.
FINANCIAL CONDITION
Liquidity and capital resources. As of March 31, 2022, there were no amounts outstanding on Hawaiian Electric’s revolving credit facility and $6 million of commercial paper borrowings outstanding by the Utilities. The total amount of available borrowing capacity under the Utilities’ committed line of credit was $200 million.
Hawaiian Electric expects that its liquidity will continue to be moderately impacted at the Utilities due to lingering COVID-19 impacts to the local economy. Compared to pre-pandemic levels, delinquent accounts receivable balances have increased, which could result in higher write-offs in the future, and kWh sales have generally declined until recently, both of which impact the timing of cash flows and creates higher working capital requirements. However, the Utilities’ liquidity and access to capital remains adequate and is expected to remain adequate. As of March 31, 2022, the total amount of available borrowing capacity (net of commercial paper outstanding) under the Utilities’ committed lines of credit and cash and cash equivalents was approximately $223 million.
The moratorium on customer disconnections was lifted on May 31, 2021. Starting in the third quarter of 2021, the Utilities commenced the disconnection process on a tiered basis, targeting the oldest and largest balances first, which is expected to reduce delinquent accounts receivable balances over time and accelerate cash collections.
Hawaiian Electric’s consolidated capital structure was as follows:
(dollars in millions)March 31, 2022December 31, 2021
Short-term borrowings$6 — %$— — %
Long-term debt, net1,677 42 1,676 42 
Preferred stock34 1 34 1 
Common stock equity2,277 57 2,262 57 
$3,994 100 %$3,972 100 %

Information about Hawaiian Electric’s commercial paper borrowings, borrowings from HEI and line of credit facility were as follows:
 Average balanceBalance
(in millions)Three months ended March 31, 2022March 31, 2022December 31, 2021
Short-term borrowings1
   
Commercial paper$13 $6 $— 
Borrowings from HEI— — — 
Line of credit draws on revolving credit facility— — — 
1   The maximum amount of external short-term borrowings by Hawaiian Electric during the first three months of 2022 was approximately $41 million. As of March 31, 2022, Hawaii Electric Light had short-term borrowings from Hawaiian Electric of $5 million and Hawaiian Electric had short-term borrowings from Maui Electric of $12.8 million, which intercompany borrowings are eliminated in consolidation.
Credit agreement. On February 18, 2022, the PUC approved Hawaiian Electric’s request to extend the term of the $200 million Hawaiian Electric revolving credit facility to May 14, 2026. In addition to extending the term, Hawaiian Electric also received PUC approval to exercise its options of two one-year extensions of the commitment termination date and to increase its aggregate revolving commitment amount from $200 million to $275 million, should there be a need. Hawaiian Electric has a $200 million line of credit facility with no amount outstanding at March 31, 2022.
SPRBs. Special purpose revenue bonds (SPRBs) have been issued by the Department of Budget and Finance of the State of Hawaii (DBF) to finance (and refinance) capital improvement projects of Hawaiian Electric and its subsidiaries, but the sources of their repayment are the non-collateralized obligations of Hawaiian Electric and its subsidiaries under loan agreements and notes issued to the DBF, including Hawaiian Electric’s guarantees of its subsidiaries’ obligations.
On May 24, 2019, the PUC approved the Utilities’ request to issue SPRBs in the amounts of up to $70 million, $2.5 million and $7.5 million for Hawaiian Electric, Hawaii Electric Light and Maui Electric, respectively, prior to June 30, 2020,
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to finance the Utilities’ capital improvement programs. Pursuant to this approval, on October 10, 2019, the DBF issued, at par, Series 2019 SPRBs in the aggregate principal amount of $80 million with a maturity of October 1, 2049. As of March 31, 2022, Hawaiian Electric had $2.1 million of undrawn funds remaining with the trustee. Hawaii Electric Light and Maui Electric have no undrawn funds.
On June 10, 2019, the Hawaii legislature authorized the issuance of up to $700 million of SPRBs ($400 million for Hawaiian Electric, $150 million for Hawaii Electric Light and $150 million for Maui Electric), with PUC approval, prior to June 30, 2024, to finance the Utilities’ multi-project capital improvement programs (2019 Legislative Authorization).
On February 9, 2021, the PUC approved the Utilities’ request to issue SPRBs (up to $100 million, $35 million and $45 million for Hawaiian Electric, Hawaii Electric Light and Maui Electric, respectively) through 2022, with the proceeds to be used to finance the Utilities’ multi-project capital improvement programs. The PUC also approved the use of the expedited approval procedure to request the issuance and sale of the remaining/unused amount of SPRBs authorized by the 2019 Legislative Authorization (i.e., total not to exceed up to $400 million for Hawaiian Electric, up to $150 million for Hawaii Electric Light, and up to $150 million for Maui Electric) during the period January 1, 2023 through June 30, 2024.
Taxable debt. On January 31, 2019, the Utilities received PUC approval (January 2019 Approval) to issue the remaining authorized amounts under the PUC approval received in April 2018 (April 2018 Approval) in 2019 through 2020 (Hawaiian Electric up to $205 million and Hawaii Electric Light up to $15 million of taxable debt), as well as a supplemental increase to authorize the issuance of additional taxable debt to finance capital expenditures, repay long-term and/or short term debt used to finance or refinance capital expenditures, and/or to reimburse funds used for payment of capital expenditures, and to refinance the Utilities’ 2004 junior subordinated deferrable interest debentures (QUIDS) prior to maturity. In addition, the January 2019 Approval authorized the Utilities to extend the period to issue additional taxable debt from December 31, 2021 to December 31, 2022. The new total “up to” amounts of taxable debt requested to be issued through December 31, 2022 are $410 million, $150 million and $130 million for Hawaiian Electric, Hawaii Electric Light and Maui Electric, respectively.
As of March 31, 2022, Hawaiian Electric, Hawaii Electric Light, and Maui Electric have $135 million, $85 million, and $45 million, respectively, of remaining taxable debt to issue prior to December 31, 2022. See summary table below.
(in millions)Hawaiian ElectricHawaii Electric LightMaui Electric
Total “up to” amounts of taxable debt authorized through 2022$410 $150 $130 
Less:
Taxable debt authorized and issued in 2018 under April 2018 Approval75 15 10 
Taxable debt issuance to refinance the 2004 QUIDS in 201930 10 10 
Taxable debt issuance in May 2020110 10 40 
Taxable debt executed in October 2020, but issued on January 14, 202160 30 25 
Remaining authorized amounts$135 $85 $45 
On May 3, 2022, the Utilities received PUC approval through the expedited approval process to issue taxable debt (Hawaiian Electric up to $50 million, Hawaii Electric Light up to $30 million and Maui Electric up to $35 million) prior to December 31, 2022.
On April 29, 2022, the Utilities requested PUC approval to issue, over a four-year period from January 1, 2023 to December 31, 2026, unsecured obligations bearing taxable interest (Hawaiian Electric up to $230 million, Hawaii Electric Light up to $65 million and Maui Electric up to $105 million), to finance capital expenditures, repay long-term and/or short-term debt used to finance or refinance capital expenditures, and/or to reimburse funds used for payment of capital expenditures.
Equity. In October 2018, the Utilities received PUC approval for the supplemental increase to issue and sell additional common stock in the amounts of up to $280 million for Hawaiian Electric and up to $100 million each for Hawaii Electric Light and Maui Electric, with the new total “up to” amounts of $430 million for Hawaiian Electric and $110 million each for Hawaii Electric Light and Maui Electric, and to extend the period authorized by the PUC to issue and sell common stock from December 31, 2021 to December 31, 2022. As of March 31, 2022, Hawaiian Electric, Hawaii Electric Light, and Maui Electric have $221.4 million, $93.7 million, and $63.2 million, respectively, of remaining common stock to issue prior to December 31, 2022. See summary table below.
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(in millions)Hawaiian ElectricHawaii Electric LightMaui Electric
Total “up to” amounts of common stock authorized to issue and sell through 2021$150.0 $10.0 $10.0 
Supplemental increase authorized280.0 100.0 100.0 
Total “up to” amounts of common stock authorized to issue and sell through 2022430.0 110.0 110.0 
Less: Common stock authorized and issued in 2017, 2018, 2019, 2020 and 2021208.6 16.3 46.8 
Remaining authorized amounts$221.4 $93.7 $63.2 
On April 29, 2022, the Utilities requested PUC approval to issue and sell each utility’s common stock over a four-year period from January 1, 2023 through December 31, 2026 (Hawaiian Electric’s sale/s to HEI of up to $75 million, Hawaii Electric Light sale/s to Hawaiian Electric of up to $25 million, and Maui Electric sale/s to Hawaiian Electric of up to $55 million) and the purchase of Hawaii Electric Light and Maui Electric common stock by Hawaiian Electric from 2023 through December 31, 2026.
Cash flows. The following table reflects the changes in cash flows for the three months ended March 31, 2022 compared to the three months ended March 31, 2021:
Three months ended March 31
(in thousands)20222021Change
Net cash provided by operating activities$76,775 $31,961 $44,814 
Net cash used in investing activities(74,864)(68,498)(6,366)
Net cash provided by (used in) financing activities(25,974)36,460 (62,434)

Net cash provided by operating activities. The increase in net cash provided by operating activities was driven by higher cash receipts from customers due to increased disconnection effort and receipts of payments on installment plans, and timing in receipts of payments from large government accounts, as well as lower cash paid for accounts payable due to timing, partially offset by higher cash paid for fuel oil stock due to higher fuel oil prices and volume purchased.
Net cash used in investing activities. The increase in net cash used in investing activities was primarily driven by an increase in capital expenditures related to construction activities.
Net cash provided by financing activities. The decrease in net cash provided by financing activities was primarily driven by lower net cash from long-term debts, partially offset by net increase in short-term borrowings.
Material cash requirements. Material cash requirements of the Utilities include O&M expenses, including labor and benefit costs, fuel and purchase power costs, repayment of debt and interest payments, operating lease obligations, its forecasted capital expenditures and investments, its expected retirement benefit plan contributions and other short-term and long-term material cash requirements. The cash requirements for O&M, fuel and purchase power costs, debt and interest payments, and operating lease obligations are generally funded through the collection of the Utilities’ revenue requirement established in the last rate case and other mechanisms established under the regulatory framework. The cash requirements for capital expenditures are generally funded through retained earnings, the issuance of debt, and contributions of equity from HEI and generally recovered through the Utilities’ revenue requirement or other capital recovery mechanisms over time. The Utilities believe that their ability to generate cash is adequate to maintain sufficient liquidity to fund their material cash requirements. However, the COVID-19 pandemic is an evolving situation, and the Utilities cannot predict the extent or duration of the outbreak, the future effects that it will have on the global, national or local economy, including the impacts on the Utilities’ ability, as well as the cost, to access additional capital, or the future impacts on the Utilities’ financial position, results of operations, and cash flows.
Forecast capital expenditures. For the five-year period 2022 through 2026, the Utilities forecast up to $2.1 billion of net capital expenditures, which could change over time based upon external factors such as the timing and scope of environmental regulations and/or unforeseen delays in permitting and timing of PUC decisions. Approximately $1.3 billion is related to replacement and modernization of generation, transmission and distribution assets; approximately $0.5 billion is related to climate-related projects to transition to renewable energy or mitigate climate impacts by increasing the resilience of the system, and approximately $0.3 billion for targeted efforts to improve reliability. Proceeds from the issuance of equity and long-term debt, cash flows from operating activities, temporary increases in short-term borrowings and existing cash and cash equivalents are expected to provide the funds needed for the net capital expenditures, to pay down commercial paper or other short-term borrowings, as well as to fund any unanticipated expenditures not included in the 2022 to 2026 forecast (such as increases in the costs or acceleration of capital projects, or unanticipated capital expenditures that may be required by new environmental laws and regulations).
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Management periodically reviews capital expenditure estimates and the timing of construction projects. These estimates may change significantly as a result of many considerations, including changes in economic conditions, changes in forecasts of kWh sales and peak load, the availability of purchased power and changes in expectations concerning the construction and ownership of future generation units, the availability of generating sites and transmission and distribution corridors, the need for fuel infrastructure investments, the ability to obtain adequate and timely rate increases, escalation in construction costs, the effects of opposition to proposed construction projects and requirements of environmental and other regulatory and permitting authorities.
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Bank
Recent Developments—COVID-19
See also Recent developments—COVID-19 in HEI’s MD&A.
The Hawaii economy continued to improve in the first quarter of 2022 as an increase in visitor arrivals have helped drive a growing labor market and tax collections. Domestic visitor arrivals were near pre-pandemic levels due to pent up demand from leisure travelers. The state and county governments have also lifted all COVID-related travel restrictions for arriving domestic passengers. International visitor arrivals continued to lag significantly behind pre-pandemic levels but it is expected to increase as Asian countries begin to loosen travel restrictions. Other COVID-related mandates have also been lifted such as the indoor mask mandate and capacity limits for indoor and outdoor events. Although new daily case counts have risen recently, hospitalization rates have not been impacted by the increase in infection counts.
The Federal Reserve raised its federal funds rate for the first time in three years in response to inflationary pressures in the economy. The overall level of interest rates across the curve remain at relatively low levels and ASB’s net interest margin for the quarter ended March 31, 2022 of 2.79% was flat to the linked quarter ended December 31, 2021 and lower than the net interest margin for the quarter ended March 31, 2021 of 2.95%.
ASB continued to experience deposit growth, which outpaced loan growth and was used to purchase investment securities. The Bank’s ASB CARES loan program continued to paydown and fees from the program along with the growth in investment securities portfolio contributed to higher interest income, offsetting the effect of lower loan portfolio balances and earning asset yields. Net interest income improved to $59.0 million for the quarter ended March 31, 2022 compared to $57.1 million for the quarter ended March 31, 2021.
For the quarter ended March 31, 2022, ASB recorded a $3.3 million negative provision for credit losses that reduced the allowance for credit losses, reflecting the release of reserves for a nonperforming loan that was paid down, lower loss rates in the commercial real estate loan portfolio and overall lower net charge offs. The provision for credit losses in future quarters will be dependent on future economic conditions and changes to borrower credit quality at that time.
In response to COVID-19, ASB made short-term loan modifications to borrowers who were generally payment current at the time of relief. As of March 31, 2022, approximately $0.1 million of loans remained in their active deferral period. Approximately $6.1 million of loans were not able to resume their contractual payments and were considered delinquent as of March 31, 2022.
In 2020, ASB temporarily closed 15 of its 49 branches and reduced banking hours at the branches that remained open in an effort to reduce social gathering and protect employees and customers. The bank has since reopened seven of the branches that were temporarily closed and permanently closed eight branches. Three of the reopened branches are now digital branches, which provides digital solutions such as full-service ATMs and access to expert bankers through videoconferencing tools while allowing ASB to have a more efficient physical footprint . The reduction in ASB’s branch network should not have a significant impact to the bank’s customers as there are other branches nearby and other channels such as online and mobile banking. ASB continues to evaluate its branch network to determine whether further changes may be appropriate given its customers’ use of other banking channels.
ASB’s senior management team continually addresses the impacts to the operations and business of the bank as a result of the pandemic and meets regularly with ASB’s board of directors to keep them apprised of the impacts of the COVID-19 pandemic.
The CARES Act was signed into law on March 27, 2020. The CARES Act provided over $2 trillion in economic assistance for American workers, families, and small businesses, and job preservation for American industries. The PPP was established under the CARES Act and implemented by the United States Small Business Administration (SBA) to provide a direct incentive for small businesses to keep their workers on the payroll as a result of the COVID-19 crisis. ASB worked with a number of small businesses, both customers and non-customers, to complete the loan application forms so that these businesses could participate in the program. During the first round of PPP, the Bank secured more than $370 million in PPP loans for approximately 4,100 small businesses that supported over 40,000 jobs; ASB received processing fees totaling approximately $13 million and started recognizing these fees over the life of the loans. During the second round of PPP, ASB secured more than $175 million for approximately 2,200 small businesses that supported more than 20,000 jobs; ASB received processing fees of approximately $9 million. The remaining PPP loans outstanding as of March 31, 2022 was approximately $41 million and the remaining fees to be recognized over the life of the loans was approximately $1.5 million.
Other provisions of the CARES Act provides that a financial institution may elect to suspend the requirements under GAAP for certain loan modifications that would otherwise be categorized as a TDR and any related impairment for accounting
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purposes. See Note 4 of the Condensed Consolidated Financial Statements and “Economic conditions” in the “HEI Consolidated” section above.
ASB continues to maintain its low-risk profile, strong balance sheet and straightforward community banking business model.
 Three months ended March 31Increase 
(in millions)20222021(decrease)Primary reason(s)
Interest and dividend income$60 $59 $1 
Average loan portfolio yields were 19 basis points lower—impacted by the continued low interest rate environment as adjustable rate loans have repriced lower during the past year and new loan production yields continue to originate below their portfolio yields. Lower loan yields were also due to lower PPP loan fees recognized in 2022 compared to 2021 as the PPP loan portfolio has paid down significantly over the past year.
Average loan portfolio balances decreased $156 million - home equity lines of credit average balance decreased $97 million due to increased paydowns in the portfolio; consumer loan average balance decreased $45 million due to ASB’s strategic decision to reduce production of this loan type during the period of weakened economic activity caused by the COVID-19 pandemic. Commercial loan average balance decreased $201 million due to repayments in the PPP loan portfolio. Residential average balance increased $154 million due to the Bank’s decision to portfolio a larger portion of the production. Commercial real estate average balance increased $28 million due to demand for this loan type.
Average investment securities portfolio balance increased $801 million—excess liquidity from strong deposit growth invested in agency securities.
Average investment securities yields 30 basis points higher—benefited from lower amortization of premiums in the investment portfolio.
Noninterest income16 19 (3)
Lower mortgage banking income - lower residential loan sale volume due to lower production volume, ASB’s decision to portfolio a larger portion of the residential loan production and lower residential loan sale profit margin in 2022 compared to 2021.
Lower bank owned life insurance income - lower return from insurance policies and lower insurance policy claim proceeds in 2022 compared to 2021.
Gain on sale of real estate - due to the sale of a branch property owned by ASB. The branch was closed in January 2022.
Less: gain on sale of real estate(1)— (1)Gain on sale of real estate, which is included in Noninterest income above and in the Bank’s statements of income and comprehensive income in Note 4, is classified as gain on sale of real estate in the condensed consolidated statements of income, and accordingly, is reflected in operating expenses below as a separate line item and excluded from Revenues.
Less: gain on sale of investment securities, net— (1)1 Gain on sale of investment securities, net, which is included in Noninterest income above and in the Bank’s statements of income and comprehensive income in Note 4, is classified as gain on sale of investment securities, net in the condensed consolidated statements of income, and accordingly, is reflected below following operating income as a separate line item and excluded from Revenues.
Revenues75 77 (2)The decrease in revenues for the three months ended March 31, 2022 compared to the same period in 2021 was primarily due to lower noninterest income partly offset by higher interest income.
Interest expense1 1 — 
Interest expense on deposits and other borrowings were flat.
Average core deposit balances increased $535 million; average term certificate balances decreased $129 million.
Average deposit yields decreased from 8 basis points to 5 basis points.
Average other borrowings decreased $15 million and average yields decreased 8 basis points.
Provision for credit losses(3)(8)5 
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 Three months ended March 31Increase 
(in millions)20222021(decrease)Primary reason(s)
2022 negative provision for credit losses reflects a stable economic outlook, good credit trends including lower net charge-offs and improved credit loss rates which included credit upgrades in the commercial real estate loan portfolio.
2022 negative provision for credit losses also due to the release of loss reserves for a commercial real estate credit.
2021 negative provision for credit losses reflected improvement in economic outlook, strong credit results including lower net charge-offs and improved credit loss rates which included credit upgrades in the commercial real estate and commercial loan portfolios.
2021 negative provision for credit losses was also due to lower personal unsecured loan portfolio balances which had higher credit loss rates.
Delinquency rates have decreased—from 0.43% at March 31, 2021 to 0.27% at March 31, 2022 due to lower residential 1-4 family, commercial real estate, consumer and home equity line of credit loan delinquencies.
Net charge-off to average loans have decreased—from 0.18% at March 31, 2021 to 0.01% at March 31, 2022 primarily due to lower personal unsecured loan portfolio net charge-offs.
Noninterest expense48 48 — 
Lower compensation and benefits expenses offset by higher occupancy expenses.
2021 noninterest expense benefited from a one-time credit adjustment for a change in accounting for the ASB retirement plan.
Gain on sale of real estate(1)— (1)
Expenses45 41 4 The increase in expenses for the three months ended March 31, 2022 compared to the same period in 2021 was due to higher negative provision for credit losses in 2021, partly offset by higher gain on sale of real estate.
Operating income30 36 (6)The decrease in operating income for the three months ended March 31, 2022 compared to the same period in 2021 was primarily due to higher negative provision for credit losses in 2021 and lower noninterest income, partly offset by higher interest income.
Gain on sale of investment securities, net— 1 (1)The decrease in gain on sale of investment securities - primarily due to the sale of investment securities in 2021 with no similar sales in 2022.
Net income24 30 (6)Net income for the three months ended March 31, 2022 was lower than the same period in 2021 due to lower operating income and lower gain on sale of investment securities, partly offset by lower income tax expense.

ASB’s return on average assets, return on average equity and net interest margin were as follows:
Three months ended March 31
(%)20222021
Return on average assets1.04 1.40 
Return on average equity13.70 16.04 
Net interest margin2.79 2.95 

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Three months ended March 31
20222021
(dollars in thousands)Average
balance		Interest
income/
expense		Yield/
rate (%)		Average
balance
Interest
 income/
expense
Yield/
rate (%)
Assets:      
Interest-earning deposits$134,835 $66 0.20 $47,080 $12 0.10 
FHLB stock10,000 74 3.00 9,929 81 3.29 
Investment securities
Taxable3,131,482 13,554 1.73 2,352,570 8,366 1.42 
Non-taxable69,600 367 2.11 47,599 271 2.28 
Total investment securities3,201,082 13,921 1.74 2,400,169 8,637 1.44 
Loans   
Residential 1-4 family2,303,446 20,113 3.49 2,149,788 19,588 3.64 
Commercial real estate1,137,295 9,211 3.25 1,108,851 9,005 3.26 
Home equity line of credit840,974 6,223 3.00 937,942 7,265 3.14 
Residential land20,822 257 4.93 16,457 210 5.11 
Commercial761,525 6,812 3.60 962,198 8,912 3.73 
Consumer113,826 3,459 12.33 158,930 4,987 12.72 
Total loans 1,2
5,177,888 46,075 3.58 5,334,166 49,967 3.77 
Total interest-earning assets 3
8,523,805 60,136 2.83 7,791,344 58,697 3.03 
Allowance for credit losses(71,135)  (101,712)  
Noninterest-earning assets709,010   766,844   
Total assets$9,161,680   $8,456,476   
Liabilities and shareholder’s equity:      
Savings$3,258,551 $207 0.03 $2,901,661 $191 0.03 
Interest-bearing checking1,331,008 64 0.02 1,180,049 57 0.02 
Money market205,363 33 0.07 178,275 37 0.09 
Time certificates411,372 643 0.63 540,461 1,177 0.88 
Total interest-bearing deposits5,206,294 947 0.07 4,800,446 1,462 0.12 
Advances from Federal Home Loan Bank— — — 30,126 23 0.30 
Securities sold under agreements to repurchase and federal funds purchased90,279 5 0.02 75,332 4 0.02 
Total interest-bearing liabilities5,296,573 952 0.07 4,905,904 1,489 0.12 
Noninterest bearing liabilities:      
Deposits2,973,597   2,645,636   
Other194,449   168,067   
Shareholder’s equity697,061   736,869   
Total liabilities and shareholder’s equity$9,161,680   $8,456,476   
Net interest income $59,184   $57,208  
Net interest margin (%) 4
  2.79   2.95 
1   Includes loans held for sale, at lower of cost or fair value.
2   Includes recognition of net deferred loan fees of $1.9 million and $2.8 million for the three months ended March 31, 2022 and 2021, respectively, together with interest accrued prior to suspension of interest accrual on nonaccrual loans. Includes nonaccrual loans.
3   For the three months ended March 31, 2022 and 2021, the taxable-equivalent basis adjustments made to the table above were not material.
4   Defined as net interest income, on a fully taxable equivalent basis, as a percentage of average total interest-earning assets.
Earning assets, costing liabilities, contingencies and other factors.  Earnings of ASB depend primarily on net interest income, which is the difference between interest earned on earning assets and interest paid on costing liabilities. The interest rate environment has been impacted by disruptions in the financial markets over a period of several years. Although the Federal Open Market Committee increased its federal funds rate target range to 0.25% - 0.50% in 2022 due to signs of inflation, ASB’s
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net interest income and net interest margin remain at lower levels. A prolonged low interest rate environment may continue to negatively impact ASB’s net interest income and net interest margin.
Loans and mortgage-backed securities are ASB’s primary earning assets.
Loan portfolio.  ASB’s loan volumes and yields are affected by market interest rates, competition, demand for financing, availability of funds and management’s responses to these factors. See Note 4 of the Condensed Consolidated Financial Statements for a composition of ASB’s loan portfolio.
Home equity— key credit statistics. The HELOC portfolio makes up 16% of the total loan portfolio and is generally an interest-only revolving loan for a 10-year period, after which time the HELOC outstanding balance converts to a fully amortizing variable-rate term loan with a 20-year amortization period. Borrowers also have a “Fixed Rate Loan Option” to convert a part of their available line of credit into a 5, 7 or 10-year fully amortizing fixed-rate loan with level principal and interest payments. As of March 31, 2022, approximately 38% of the portfolio balances were amortizing loans under the Fixed Rate Loan Option. A HELOC loan is typically in a subordinate lien position to a borrower’s first mortgage loan, however, approximately 57% of ASB’s HELOC loan portfolio is in a first lien position.
Loan portfolio risk elements.  See Note 4 of the Condensed Consolidated Financial Statements.
Investment securities.  ASB’s investment portfolio was comprised as follows:
 March 31, 2022December 31, 2021
(dollars in thousands)Balance% of totalBalance% of total
U.S. Treasury and federal agency obligations$166,079 5 %$149,961 5 %
Mortgage-backed securities — issued or guaranteed by U.S. Government agencies or sponsored agencies2,914,027 93 2,900,322 94 
Corporate bonds43,123 1 31,178 1 
Mortgage revenue bonds15,296 1 15,427 — 
Total investment securities$3,138,525 100 %$3,096,888 100 %
Currently, ASB’s investment portfolio consists of U.S. Treasury and federal agency obligations, mortgage-backed securities, corporate bonds and mortgage revenue bonds. ASB owns mortgage-backed securities issued or guaranteed by the U.S. government agencies or sponsored agencies, including the Federal National Mortgage Association (FNMA), Federal Home Loan Mortgage Corporation (FHLMC), Government National Mortgage Association (GNMA) and Small Business Administration (SBA). Principal and interest on mortgage-backed securities issued by FNMA, FHLMC, GNMA and SBA are guaranteed by the issuer and, in the case of GNMA and SBA, backed by the full faith and credit of the U.S. government. U.S. Treasury securities are also backed by the full faith of the U.S. government. The increase in the investment securities portfolio was primarily due to the purchase of treasury and agency mortgage-backed securities with excess liquidity.
Deposits and other borrowings.  Deposits continue to be the largest source of funds for ASB and are affected by market interest rates, competition and management’s responses to these factors. While deposits have increased by $117 million year-to-date, deposit retention and sustained growth will remain challenging in the current environment due to the low level of short-term interest rates. Advances from the FHLB of Des Moines, securities sold under agreements to repurchase and federal funds purchased continue to be additional sources of funds. As of March 31, 2022 ASB’s costing liabilities consisted of 98% deposits and 2% other borrowings compared to 99% deposits and 1% other borrowings as of December 31, 2021. The weighted average cost of deposits for the first three months of 2022 and 2021 was 0.05% and 0.08%, respectively.
Federal Home Loan Bank of Des Moines. As of March 31, 2022 and December 31, 2021, ASB had no advances outstanding at the FHLB of Des Moines. As of March 31, 2022, the unused borrowing capacity with the FHLB of Des Moines was $2.1 billion. The FHLB of Des Moines continues to be an important source of liquidity for ASB.
Contingencies.  ASB is 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, ASB cannot rule out the possibility that such outcomes could have a material adverse effect on the results of operations or liquidity for a particular reporting period in the future.
Other factors.  Interest rate risk is a significant risk of ASB’s operations and also represents a market risk factor affecting the fair value of ASB’s investment securities. Increases and decreases in prevailing interest rates generally translate into decreases and increases in the fair value of the investment securities, respectively. In addition, changes in credit spreads also impact the fair values of the investment securities.
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As of March 31, 2022, ASB had an unrealized loss, net of taxes, on available-for-sale investment securities (including securities pledged for repurchase agreements) in AOCI of $152.4 million compared to an unrealized loss, net of taxes, of $32.0 million as of December 31, 2021. See “Item 3. Quantitative and qualitative disclosures about market risk” for a discussion of ASB’s interest rate risk sensitivity.
During the first three months of 2022, ASB recorded a negative provision for credit losses of $3.8 million in the allowance for credit losses reflecting a stable economic outlook, good credit trends including lower net charge-offs and credit upgrades in the commercial real estate loan portfolio and the release of reserves for a nonperforming commercial real estate loan. During the first three months of 2021, ASB recorded a negative provision for credit losses of $7.0 million in the allowance for credit losses primarily due to improvement in the economic outlook, strong credit results including lower net charge-offs and credit upgrades in the commercial real estate and commercial loan portfolios and lower personal unsecured loan portfolio balances.
 Three months ended March 31
Year ended
December 31, 2021
(in thousands)20222021
Allowance for credit losses, beginning of period$71,130 $101,201 $101,201 
Provision for credit losses(3,763)(7,035)(26,425)
Less: net charge-offs156 2,373 3,646 
Allowance for credit losses, end of period$67,211 $91,793 $71,130 
Ratio of net charge-offs during the period to average loans outstanding (annualized)0.01 %0.18 %0.07 %
ASB maintains a reserve for credit losses that consists of two components, the allowance for credit losses and an allowance for loan commitments (unfunded reserve). The level of the reserve for unfunded loan commitments is adjusted by recording an expense or recovery in provision for credit losses. For the three months ended March 31, 2022 and 2021, ASB recorded a provision for credit losses for unfunded commitments of $0.5 million and a negative provision for credit losses for unfunded commitments of $1.4 million, respectively. As of March 31, 2022 and December 31, 2021, the reserve for unfunded loan commitments was $5.4 million and $2.9 million, respectively.
Legislation and regulation.  ASB is subject to extensive regulation, principally by the OCC and the FDIC. Depending on ASB’s level of regulatory capital and other considerations, these regulations could restrict the ability of ASB to compete with other institutions and to pay dividends to its shareholder. See the discussion below under “Liquidity and capital resources.”
Changes to Community Bank Leverage Ratio. In April 2020, the federal bank regulatory agencies issued two interim final rules to implement Section 4012 of the CARES Act, which requires the agencies to temporarily lower the community bank leverage ratio to 8 percent. The two rules modify the community bank leverage ratio framework so that:
•Beginning in the second quarter of 2020 and until the end of the year, a banking organization that has a leverage ratio of 8 percent or greater and meets certain other criteria may elect to use the community bank leverage ratio framework; and
•Community banking organizations had until January 1, 2022 before the community bank leverage ratio requirement is re-established at greater than 9 percent.
Under the interim final rules, the community bank leverage ratio was 8 percent beginning in the second quarter of 2020 and for the remainder of calendar year 2020, 8.5 percent for calendar year 2021, and 9 percent thereafter. The interim final rules also maintain a two-quarter grace period for a qualifying community banking organization whose leverage ratio falls no more than 1 percent below the applicable community bank leverage ratio.
Beginning in the second quarter of 2020, ASB adopted the community bank leverage ratio framework, which allowed it to report only on the community bank leverage ratio, but does not change minimum capital requirements under OCC regulations. At March 31, 2021, ASB’s leverage ratio was below the 8.5 percent requirement to qualify for abbreviated reporting under the community bank leverage framework for 2021 and started reporting its risk-based capital ratios in the third quarter of 2021. As of March 31, 2022, the bank was in compliance with all of the minimum capital requirements under OCC regulations, and was categorized as “well capitalized” under the regulatory framework for prompt corrective action.
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FINANCIAL CONDITION
Liquidity and capital resources.
(dollars in millions)March 31, 2022December 31, 2021% change
Total assets$9,252 $9,182 1 
Investment securities3,139 3,097 1 
Loans held for investment, net5,118 5,140 — 
Deposit liabilities8,289 8,172 1 
Other bank borrowings137 88 56 
As of March 31, 2022, ASB was one of Hawaii’s largest financial institutions based on assets of $8.7$9.3 billion and deposits of $7.7$8.3 billion.
As of March 31, 2021,2022, ASB’s unused FHLB borrowing capacity was approximately $2.0$2.1 billion. As of March 31, 2021,2022, ASB had commitments to borrowers for loans and unused lines and letters of credit of $1.9$2.0 billion, of which, commitments to lend to borrowers whose loan terms have been modified in troubled debt restructurings were nil. Management believes ASB’s current sources of funds will enable it to meet these obligations while maintaining liquidity at satisfactory levels.
For the three months ended March 31, 2022, net cash provided by ASB’s operating activities was $24 million. Net cash used during the same period by ASB’s investing activities was $152 million, primarily due to purchases of available-for-sale securities of $291 million and additions to premises and equipment of $1 million, partly offset by the receipt of investment security repayments and maturities of $109 million, a net decrease in loans of $28 million, proceeds from redemption of bank owned life insurance of $2 million and proceeds from the sale of real estate of $1 million. Net cash provided by financing activities during this period was $147 million, primarily due to increases in deposit liabilities of $117 million and a net increase in repurchase agreements of $49 million, partly offset by a net decrease in mortgage escrow deposits of $4 million and $15 million in common stock dividends to HEI (through ASB Hawaii).
For the three months ended March 31, 2021, net cash provided by ASB’s operating activities was $17 million. Net cash used during the same period by ASB’s investing activities was $448 million, primarily due to purchases of available-for-sale securities of $782 million, purchases of held-to-maturity securities of $88 million, additions to premises and equipment of $3 million, contributions to low income housing investments of $3 million and a net increase in stock from the Federal Home Loan Bank of $1 million, partly offset by the receipt of investment security repayments from investment securitiesand maturities of $205 million, proceeds from the sale of investment securities of $197 million, a net decrease in loans receivable of $24 million and proceeds from the redemption of bank owned life insurance of $3 million. Net cash provided by financing activities during this period was $362 million, primarily due to increases in deposit liabilities of $358 million and a net increase in repurchase agreements of $13 million, partly offset by a net decrease in mortgage escrow deposits of $4 million and $5 million in common stock dividends to HEI (through ASB Hawaii).
For the three months ended March 31, 2020, net cash provided by ASB’s operating activities was $29 million. Net cash used during the same period by ASB’s investing activities was $140 million, primarily due to purchases of available-for-sale securities of $159 million, a net increase in loans of $66 million, additions to premises and equipment of $2 million and contributions to low income housing investments of $1 million, partly offset by the receipt of repayments from investment securities of $82 million and proceeds from the sale of low income housing investments of $7 million. Net cash provided by financing activities during this period was $122 million, primarily due to increases in deposit liabilities of $112 million and a net increase in other bank borrowings with original maturities of three months or less of $42 million, partly offset by a net decrease in mortgage escrow deposits of $5 million and $28 million in common stock dividends to HEI (through ASB Hawaii).
ASB believes that maintaining a satisfactory regulatory capital position provides a basis for public confidence, affords protection to depositors, helps to ensure continued access to capital markets on favorable terms and provides a foundation for growth. FDIC regulations restrict the ability of financial institutions that are not well-capitalized to compete on the same terms as well-capitalized institutions, such as by offering interest rates on deposits that are significantly higher than the rates offered by competing institutions. Beginning in the second quarter of 2020, ASB has adopted the community bank leverage ratio framework and is required to report only its leverage ratio. As of March 31, 2021 and December 31, 2020,2022, ASB was well-capitalized (well-capitalized ratio requirements noted in parentheses) with a Tier-1 leverage ratio of 8.3%7.8% (5.0%), common equity Tier-1 ratio of 13.3% (6.5%), Tier-1 capital ratio of 13.3% (8.0%) and 8.4%total capital ratio of 14.3% (10.0%). As of December 31, 2021, ASB was well-capitalized (well-capitalized ratio requirements noted in parentheses) with a Tier-1 leverage ratio of 7.9% (5.0%), respectively.common equity Tier-1 ratio of 13.3% (6.5%), Tier-1 capital ratio of 13.3% (8.0%) and total capital ratio of 14.3% (10.0%). All dividends are subject to review by the OCC and FRB and receipt of a letter from the FRB
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communicating the agencies’ non-objection to the payment of any dividend ASB proposes to declare and pay to HEI (through ASB Hawaii).
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company considers interest-rate risk (a non-trading market risk) to be a significant market risk for ASB as it could potentially have material impacts on the Company’s results of operations, financial condition and liquidity. For additional quantitative and qualitative information about the Company’s market risks, see HEI’s and Hawaiian Electric’s Quantitative and Qualitative Disclosures About Market Risk in Part II, Item 7A of HEI’s 20202021 Form 10-K (pages 7477 to 76)79).
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ASB’s interest-rate risk sensitivity measures as of March 31, 20212022 and December 31, 20202021 constitute “forward-looking statements” and were as follows:
Change in interest ratesChange in NII
(gradual change in interest rates)		Change in EVE
(instantaneous change in interest rates)
(basis points)March 31, 2021December 31, 2020March 31, 2021December 31, 2020
+3005.1 %7.0 %18.5 %31.4 %
+2003.5 5.0 13.5 23.9 
+1001.9 2.7 7.6 14.0 
-100(2.1)(1.9)(14.6)(25.2)
Change in interest ratesChange in NII
(gradual change in interest rates)		Change in EVE
(instantaneous change in interest rates)
(basis points)March 31, 2022December 31, 2021March 31, 2022December 31, 2021
+3003.6 %5.6 %10.3 %15.5 %
+2002.4 4.0 7.6 11.7 
+1001.2 2.3 4.2 7.0 
-100(1.5)(2.5)(6.0)(12.6)

ASB’s net interest income (NII) sensitivity profile was less asset sensitive as of March 31, 2021 as2022 compared to December 31, 2020,2021, primarily driven by the increase in market rates and core deposit funded investment securities purchases. The increase in market rates decreased prepayment expectations in the bank’s fixed-rate mortgage and mortgage-backed investment portfolios, driving decreased asset sensitivity. In addition, the deployment of strong core deposit growth into new fixed-rate investment purchases further contributed to decreased sensitivity.
Economic value of equity (EVE) sensitivity decreased as of March 31, 20212022 compared to December 31, 20202021 as the duration of assets lengthened.lengthened while the duration of core deposits shortened. The steepening of the yield curveincrease in market rates led to slower prepayment expectations and lengthened the duration of the fixed-rate mortgage and mortgage-backed investment portfolios. The upward shift in the yield curve shortened the duration of core deposits, further contributing to decreased EVE sensitivity.
The computation of the prospective effects of hypothetical interest rate changes on the NII sensitivity and the percentage change in EVE is based on numerous assumptions, including relative levels of market interest rates, loan prepayments, balance changes and pricing strategies, and should not be relied upon as indications of actual results. To the extent market conditions and other factors vary from the assumptions used in the simulation analysis, actual results may differ materially from the simulation results. NII sensitivity analysis measures the change in ASB’s twelve-month, pretax NII in alternate interest rate scenarios, and is intended to help management identify potential exposures in ASB’s current balance sheet and formulate appropriate strategies for managing interest rate risk. The simulation does not contemplate any actions that ASB management might undertake in response to changes in interest rates. Further, the changes in NII vary in the twelve-month simulation period and are not necessarily evenly distributed over the period. These analyses are for analytical purposes only and do not represent management’s views of future market movements, the level of future earnings or the timing of any changes in earnings within the twelve month analysis horizon. The actual impact of changes in interest rates on NII will depend on the magnitude and speed with which rates change, actual changes in ASB’s balance sheet and management’s responses to the changes in interest rates.
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Item 4. Controls and Procedures
HEI:
Disclosure Controls and Procedures
The Company maintains a set of disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934, as amended (Exchange Act), is recorded, processed, summarized and reported within the time periods specified in SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) or Rule 15d-15(e) of the Exchange Act. Management, including the Company’s Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective, as of the end of the period covered by this report, at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There have been no changes in internal control over financial reporting during the first quarter of 20212022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Hawaiian Electric:
Disclosure Controls and Procedures
Hawaiian Electric maintains a set of disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed by Hawaiian Electric in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC’s rules and forms, and that such information is accumulated and communicated to Hawaiian Electric’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
An evaluation was performed under the supervision and with the participation of Hawaiian Electric’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of Hawaiian Electric’s disclosure controls and procedures, as defined in Rule 13a-15(e) or Rule 15d-15(e) of the Exchange Act. Management, including Hawaiian Electric’s Chief Executive Officer and Chief Financial Officer, concluded that Hawaiian Electric’s disclosure controls and procedures were effective, as of the end of the period covered by this report, at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There have been no changes in internal control over financial reporting during the first quarter of 20212022 that have materially affected, or are reasonably likely to materially affect, Hawaiian Electric’s internal control over financial reporting.
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PART II - OTHER INFORMATION

Item 1. Legal Proceedings
The descriptions of legal proceedings (including judicial proceedings and proceedings before the PUC and environmental and other administrative agencies) in HEI’s and Hawaiian Electric’s 20202021 Form 10-K (see “Part I. Item 3. Legal Proceedings” and proceedings referred to therein) and this Form 10-Q (see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Notes 3 and 4 of the Condensed Consolidated Financial Statements) are incorporated by reference in this Item 1. With regard to any pending legal proceeding, alternative dispute resolution, such as mediation or settlement, may be pursued where appropriate, with such efforts typically maintained in confidence unless and until a resolution is achieved. Certain HEI subsidiaries (including Hawaiian Electric and its subsidiaries, ASB and Pacific Current and its subsidiaries) may also be involved in ordinary routine PUC proceedings, environmental proceedings and litigation incidental to their respective businesses.
Item 1A. Risk Factors
For information about Risk Factors, see pages 1820 to 3034 of HEI’s and Hawaiian Electric’s 20202021 Form 10-K and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Quantitative and Qualitative Disclosures about Market Risk” and the Condensed Consolidated Financial Statements herein. Also, see “Cautionary Note Regarding Forward-Looking Statements” on pages iv through vi herein.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(c) Purchases of HEI common shares were made on the open market during the first quarter of 20212022 to satisfy the requirements of certain plans as follows:
ISSUER PURCHASES OF EQUITY SECURITIES
Period*
Total Number of Shares Purchased **		 
Average
Price Paid
per Share **		 Total Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsMaximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
January 1 to 31, 202118,229$34.08—NA
February 1 to 28, 202127,571$34.29—NA
March 1 to 31, 2021179,276$38.47—NA
Period*
Total Number of Shares Purchased **		 
Average
Price Paid
per Share **		 Total Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsMaximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
January 1 to 31, 202212,306$41.90—NA
February 1 to 28, 202214,171$41.35—NA
March 1 to 31, 2022177,272$42.12—NA
NA Not applicable.
* Trades (total number of shares purchased) are reflected in the month in which the order is placed.
**The purchases were made to satisfy the requirements of the DRIP, the HEIRSP and the ASB 401(k) Plan for shares purchased for cash or by the reinvestment of dividends by participants under those plans and none of the purchases were made under publicly announced repurchase plans or programs. Average prices per share are calculated exclusive of any commissions payable to the brokers making the purchases for the DRIP, the HEIRSP and the ASB 401(k) Plan. Of the “Total number of shares purchased,” 12,1397,373 of the 18,22912,306 shares, 16,2888,597 of the 27,57114,171 shares and 154,919150,302 of the 179,276177,272 shares were purchased for the DRIP; 4,7403,644 of the 18,22912,306 shares, 9,1763,958 of the 27,57114,171 shares and 19,31920,995 of the 179,276177,272 shares were purchased for the HEIRSP; and the remainder was purchased for the ASB 401(k) Plan. The repurchased shares were issued for the accounts of the participants under registration statements registering the shares issued under these plans.

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Item 6. Exhibits
FormAgreement to provide the SEC with instruments which define the rights of Restricted Stock Unit Agreement, pursuant to 2010 Equityholders of certain long-term debt of HEI and Incentive Plan, as amended and restated February 5, 2021.its subsidiaries.
PreferabilityRegulatory Capital Maintenance/Dividend Agreement dated May 26, 1988, between HEI, HEIDI and the Federal Savings and Loan Insurance Corporation (by the Federal Home Loan Bank of Seattle).
OTS letter regarding release from Part II.B. of Deloitte & Touche LLP, Independent Registered Public Accounting Firmthe Regulatory Capital Maintenance/Dividend Agreement dated May 26, 1988.
Nonemployee Director Retirement Plan, effective as of October 1, 1989.
Certification Pursuant to Rule 13a-14 promulgated under the Securities Exchange Act of 1934 of ConstanceScott W. H. LauSeu (HEI Chief Executive Officer)
Certification Pursuant to Rule 13a-14 promulgated under the Securities Exchange Act of 1934 of Gregory C. Hazelton (HEI Chief Financial Officer)
HEI Certification Pursuant to 18 U.S.C. Section 1350
HEI Exhibit 101.INSXBRL Instance Document - the instance document does not appear on the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
HEI Exhibit 101.SCHInline XBRL Taxonomy Extension Schema Document
HEI Exhibit 101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
HEI Exhibit 101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
HEI Exhibit 101.LABInline XBRL Taxonomy Extension Label Linkbase Document
HEI Exhibit 101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
HEI Exhibit 104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
Preferability letter of Deloitte & Touche LLP, Independent Registered Public Accounting Firm. SeeSupply Contract for Low Sulfur Fuel Oil, High Sulfur Fuel Oil, No. 2 Diesel, and Ultra-Low Sulfur Diesel by and between Hawaiian Electric, Hawaii Electric Light, and Maui Electric and PAR Hawaii Refining, LLC dated February 1, 2022 (certain confidential information has been omitted)
Second Amendment dated February 1, 2022 to Supply Contract for Low Sulfur Fuel Oil, High Sulfur Fuel Oil, No. 2 Diesel, and Ultra-Low Sulfur Diesel by and between Hawaiian Electric, Hawaii Electric Light, and Maui Electric and PAR Hawaii Refining, LLC dated January 21, 2019 (certain confidential information has been omitted)
Certification Pursuant to Rule 13a-14 promulgated under the Securities Exchange Act of 1934 of Scott W. H. SeuShelee M. T. Kimura (Hawaiian Electric Chief Executive Officer)
Certification Pursuant to Rule 13a-14 promulgated under the Securities Exchange Act of 1934 of Tayne S. Y. Sekimura (Hawaiian Electric Chief Financial Officer)
Hawaiian Electric Certification Pursuant to 18 U.S.C. Section 1350

* Exhibit was previously filed with the SEC prior to 1994.
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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned, thereunto duly authorized. The signature of the undersigned companies shall be deemed to relate only to matters having reference to such companies and any subsidiaries thereof.
HAWAIIAN ELECTRIC INDUSTRIES, INC. HAWAIIAN ELECTRIC COMPANY, INC.
(Registrant) (Registrant)
   
   
By/s/ ConstanceScott W. H. LauSeu By/s/ Scott W. H. SeuShelee M. T. Kimura
 ConstanceScott W. H. LauSeu  Scott W. H. SeuShelee M. T. Kimura
 President and Chief Executive Officer  President and Chief Executive Officer
 (Principal Executive Officer of HEI)  (Principal Executive Officer of Hawaiian Electric)
   
   
By/s/ Gregory C. Hazelton By/s/ Tayne S. Y. Sekimura
 Gregory C. Hazelton  Tayne S. Y. Sekimura
 Executive Vice President  Senior Vice President,
 and Chief Financial Officer  and Chief Financial Officer and Treasurer
 (Principal Financial Officer of HEI)  (Principal Financial Officer of Hawaiian Electric)
   
   
Date: May 10, 20219, 2022 Date: May 10, 20219, 2022

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