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Hawaiian Electric Industries maintains dividend

MEDIA RELEASE | BUSINESS WIRE

On Feb. 8, the board of directors of Hawaiian Electric Industries, Inc. maintained the regular quarterly cash dividend of 31 cents per share, payable March 10, to shareholders of record at the close of business on Feb. 22, 2011 (ex-dividend date is Feb. 17, 2011). The dividend is equivalent to an annual rate of $1.24 per share.

Dividends have been paid continuously since 1901. At the indicated annual dividend rate and the closing share price on Feb. 10, 2011 of $25.09, HEI’s yield is 4.9 percent.

In addition, HEI’s 28th annual meeting of shareholders has been scheduled for 9:30 a.m. Tuesday, May 10, 2011 in Room 805, American Savings Bank Tower 8th Floor, 1001 Bishop Street, Honolulu. Shareholders of record at the close of business March 2 will be entitled to vote.

HEI supplies power to more than 400,000 customers or 95% of the Hawaii market through its electric utilities, Hawaiian Electric Company, Inc., Hawaii Electric Light Company, Inc. and Maui Electric Company, Limited, and provides a wide array of banking and other financial services to consumers and businesses through American Savings Bank, F.S.B., one of Hawaii’s largest financial institutions.

HEI Reports 2010 and Fourth Quarter Earnings

Hawaiian Electric Industries, Inc. has reported consolidated net income for common stock for the full year of 2010 of $113.5 million, or $1.21 diluted EPS, compared to $83.0 million, or $0.91 diluted EPS for 2009.

Excluding the fourth quarter 2009 losses related to the liquidation of the bank’s private-issue mortgage-related securities (PMRS) portfolio, adjusted 2009 earnings were $102.3 million or $1.12 diluted EPS.

The overall increase in year-over-year earnings was driven by the bank’s 2010 cost reduction achievements from the completion of its multi-year performance improvement project (PIP) and lower credit costs.

Consolidated net income for the fourth quarter of 2010 was $24.7 million, or $0.26 diluted EPS, compared to $13.7 million, or $0.15 diluted EPS for the fourth quarter of 2009. Excluding the PMRS losses discussed above, adjusted 2009 fourth quarter earnings were $33.0 million or $0.36 diluted EPS.

“This was a solid year for HEI as we demonstrated improved profitability and earnings and reduced risk. We achieved several key milestones in our strategic initiatives at both operating companies,” said Constance H. Lau, HEI president and chief executive officer. “Our distinctive business combination continues to provide our company with a strong balance sheet, access to capital markets needed to invest in the strategies of our companies and the financial resources to continue providing an attractive dividend for our shareholders.”

“At the utility, we recently received approval to implement a new regulatory model that will provide for more timely cost recovery for our clean energy and reliability investments. This new model will help us meet our state’s goals to transition to a clean energy economy and achieve one of the most aggressive renewable portfolio standards in the nation,” Lau said.

“At the bank, we successfully completed our multi-year performance improvement project in 2010. As a result, we achieved significant improvements in profitability and cost structure while enhancing our product and service offerings for our customers. We are pleased to report a strong 1.20% return on assets and 56% efficiency ratio for the year,” Lau said.

“While we have more to accomplish, I am confident that we are on the right course to continue delivering value for our shareholders and to create long-term benefits for all of our stakeholders.”

Full-Year Results

Bank net income for 2010 was $58.5 million compared to $41.1 million, excluding the PMRS charges in 2009. The primary drivers for the $17.4 million increase in net income over adjusted net income for the prior year were (on an after-tax basis):

* $11 million decrease in noninterest expense primarily due to additional cost savings derived from the completion of the PIP in 2010;
* $7 million lower provision for loan losses;
* $6 million increase in noninterest income primarily due to the non-recurrence of 2009 impairment charges of $9 million on mortgage-related securities, which was offset by lower fee and other income in 2010 as a result of the Regulation E impact on overdraft fees and a 2009 gain on the sale of one commercial loan.

These factors were partially offset by $7 million lower net interest income primarily due to lower earning asset balances as the majority of new residential mortgage originations were sold. Net interest margin improved to 4.23% in 2010, up from 4.19% in 2009, primarily due to lower funding costs.

Provision for loan losses (pretax) was $20.9 million in 2010 compared with $32.0 million in 2009. The $11.1 million decline in the provision was primarily due to the provision made in 2009 relating to one large commercial loan that was subsequently sold during 2009. The 2010 net charge-off ratio remained low at 0.61%, an improvement from 0.66% in 2009.

Noninterest expense (pretax) for 2010 was $148.9 million in 2010, $18.6 million lower than the $167.5 million in 2009 as a result of the successful execution of the PIP.

Fourth Quarter Results

Bank net income for the fourth quarter of 2010 was $13.3 million compared to $14.9 million, excluding the PMRS charges, for the same quarter last year and $15.3 million in the third quarter of 2010.

The $1.6 million decrease in net income for the fourth quarter of 2010 compared to the fourth quarter of 2009 (excluding the 2009 PMRS charges) was primarily attributable to (on an after-tax basis):

* $2 million higher provision for loan losses;
* $2 million reduction in net interest income primarily due to lower yields and lower earning asset balances as a consequence of the sales of low yield, fixed-rate mortgage originations; and
* $2 million reduction in noninterest income due to lower fees as a result of regulatory changes related to overdraft fees.

These factors were partially offset by $4 million reduction in noninterest expense derived from the substantial completion of the PIP in the second quarter of 2010.

The $2.0 million decrease in fourth quarter 2010 net income compared to the third quarter of 2010 was primarily due to (on an after-tax basis): $2 million higher provision for loan losses and $1 million lower net interest income, which was offset by $1 million lower noninterest expense.

Net interest margin was 4.21% in the fourth quarter of 2010, down from 4.27% in the fourth quarter of 2009, as the decline in mortgage asset balances was offset by higher balances of lower yielding short-term investment securities.

The decline in net interest margin in the fourth quarter 2010 compared to the third quarter 2010 net interest margin of 4.31% was primarily attributable to higher third quarter recognition of deferred loan fees related to a significant increase in mortgage prepayments.

Provision for loan losses (pretax) was $8.6 million in the fourth quarter of 2010 compared with $5.0 million in the fourth quarter of 2009 and $6.0 million in the third quarter of 2010.

The increase in the provision in the fourth quarter was primarily due to:

* $1.2 million charge-off of one commercial loan; and
* Approximately $1.4 million for a one-time adjustment to enhance our reserve methodology for our declining portfolio of residential lot loans.

The fourth quarter 2010 net charge-off ratio was 0.72%, low compared to industry averages reported last quarter, but up from 0.53% in the third quarter 2010 due to the charge-off of the one commercial loan discussed above.

Noninterest expense (pretax) for the fourth quarter of 2010 was $35.0 million, the lowest level since the start of the PIP and down from $41.7 million in the fourth quarter of 2009 and $36.3 million in the third quarter of 2010.

The bank remains strongly capitalized with a Tier 1 leverage ratio of 9.2% and total risk-based capital ratio of 13.9% as of the end of the fourth quarter of 2010.

— Find out more:
http://phx.corporate-ir.net/phoenix.zhtml?c=101675&p=irol-newsArticle&ID=1527922&highlight=

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