Hawaiian Electric Industries, Inc. Reports Solid Second Quarter 2008 Performance

"Excluding the effects of the bank balance sheet restructuring, net income would have been $40.7 million, or $0.48 per share for the second quarter of 2008," said Constance H. Lau, HEI president and chief executive officer. "All areas of the company contributed to solid performance in the quarter," said Lau. "Our utilities continued to regain financial strength from interim rate relief after several tough quarters last year. Excluding the balance sheet restructuring charges, the bank's earnings and profitability improved quarter-over-quarter. Additionally, holding and other company losses were lower due to lower interest and general and administrative expenses," noted Lau.

UTILITY RESULTS

Electric utility net income for the second quarter of 2008 was $27.4 million compared with $10.7 million for the same quarter in 2007. "We are seeing recovery from unusually low earnings a year ago when our utilities were awaiting rate increases to earn a return on reliability investments and recover higher operating costs," said Lau.

At the same time, kilowatthour sales were down slightly compared with the same quarter of 2007 largely due to the effects of conservation and demand-side management programs more than offsetting the impact of mildly warmer temperatures. "Hawaii customers have been diligently seeking ways to conserve energy in response to the dramatic rise in the cost of fuel, which impacts the price of nearly all goods and services here in Hawaii," said Lau.

Other operations and maintenance (O&M) expenses were flat quarter-over-quarter, as higher operations expenses for customer efficiency programs and operations reliability were slightly more than offset by lower maintenance expense resulting primarily from the lower scope of unit overhauls and timing of vegetation management expenses. "However, we expect higher O&M expense levels for the second half of 2008 due to planned increases in production and transmission and distribution maintenance work," noted Lau.

The utility also recorded $1.1 million in higher quarter-over-quarter depreciation expenses due to 2007 plant additions.

BANK RESULTS

Bank net loss for the second quarter of 2008 was $18.1 million, compared to net income of $12.6 million for the same quarter last year. Results include after-tax charges of $35.6 million related to the balance sheet restructuring and the following other after-tax items: a $1.2 million previously-disclosed technology project write-off, a $2.6 million insurance recovery, and a $0.6 million gain on the sale of MasterCard stock.

"Bank operations were strong in the second quarter," said Lau. "We are excited that the balance sheet restructuring, along with product enhancements and productivity initiatives, have successfully positioned the bank for greater profitability."

Net interest income in the second quarter of 2008 was $52.6 million compared to $51.1 million in the second quarter of 2007. The impact of lower interest expense, primarily due to lower rates on deposits and borrowings and lower deposit balances, more than offset the decline in interest income, primarily due to lower yields on assets and lower investment balances. Net interest margin expanded to 3.39% in the second quarter of 2008, compared with 3.20% in the second quarter of 2007.

In the second quarters of 2008 and 2007, the bank recorded $1.2 million in provision for loan losses. "The overall credit quality of the bank's loan portfolio remains good. However, we remain cautious and are actively monitoring our loan portfolios as there are signs that the local economy and real estate market are slowing," added Lau.

Quarter-over-quarter bank noninterest income and noninterest expense were primarily impacted by the aforementioned balance sheet restructuring, technology project write-off, insurance recovery and gain on sale of MasterCard stock. Services expenses were lower by $3.7 million, primarily due to lower consulting and legal expenses.

HOLDING AND OTHER COMPANIES' RESULTS

The holding and other companies' net losses were $4.2 million in the second quarter of 2008 compared with $5.7 million in the second quarter of 2007. The quarter-over-quarter improvement was primarily due to lower interest and general and administrative expenses.

WEBCAST AND TELECONFERENCE

Hawaiian Electric Industries, Inc. will conduct a webcast and teleconference call to review its second quarter 2008 earnings on Tuesday, August 5, 2008, at 8:00 a.m. Hawaii Time (2:00 p.m. Eastern Time). The event can be accessed through HEI's website at http://www.hei.com or by dialing (866) 510-0710, passcode: 57495087 for the teleconference call.

An online replay of the webcast will be available at the same website beginning about two hours after the event. Replays of the teleconference call will also be available approximately two hours after the event through August 19, 2008, by dialing (888) 286-8010, passcode: 43538430.

Representing management will be Constance H. Lau, president and chief executive officer, Hawaiian Electric Industries, Inc. and chairman, Hawaiian Electric Company, Inc.; and Timothy K. Schools, president, American Savings Bank, F. S. B.

HEI supplies power to over 400,000 customers or 95% of Hawaii's population through its electric utilities, Hawaiian Electric Company, Inc., Hawaii Electric Light Company, Inc. and Maui Electric Company, Ltd. and provides a wide array of banking and other financial services to consumers and businesses through American Savings Bank, F.S.B., the state's third largest financial institution based on 2007 year-end asset size.

FORWARD-LOOKING STATEMENTS

This release may contain "forward-looking statements," which include statements that are predictive in nature, depend upon or refer to future events or conditions, and usually include words such as expects, anticipates, intends, plans, believes, predicts, estimates or similar expressions. In addition, any statements concerning future financial performance (including future revenues, expenses, earnings or losses or growth rates), ongoing business strategies or prospects and possible future actions, which may be provided by management, 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 assumptions about HEI and its subsidiaries, the performance of the industries in which they do business and economic and market factors, among other things. These forward-looking statements are not guarantees of future performance.

Forward-looking statements in this release should be read in conjunction with the "Forward-Looking Statements" discussion (which is incorporated by reference herein) set forth on page iv of HEI's Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, and in HEI's future periodic reports that discuss important factors that could cause HEI's results to differ materially from those anticipated in such statements. Forward-looking statements speak only as of the date of this release.

Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three months ended Six months ended June 30, June 30, ------------------- ----------------------- (in thousands, except per share amounts) 2008 2007 2008 2007 ---------------------------------------------------------------------- Revenues Electric utility $688,121 $492,712 $1,312,010 $ 940,390 Bank 85,950 107,526 191,794 211,986 Other (16) 525 (132) 2,410 --------- --------- ----------- ----------- 774,055 600,763 1,503,672 1,154,786 --------- --------- ----------- ----------- Expenses Electric utility 632,725 463,923 1,205,631 898,609 Bank 116,942 87,832 199,423 173,864 Other 2,786 3,699 6,270 8,463 --------- --------- ----------- ----------- 752,453 555,454 1,411,324 1,080,936 --------- --------- ----------- ----------- Operating income (loss) Electric utility 55,396 28,789 106,379 41,781 Bank (30,992) 19,694 (7,629) 38,122 Other (2,802) (3,174) (6,402) (6,053) --------- --------- ----------- ----------- 21,602 45,309 92,348 73,850 --------- --------- ----------- ----------- Interest expense-other than on deposit liabilities and other bank borrowings (18,186) (19,282) (37,435) (39,793) Allowance for borrowed funds used during construction 835 586 1,597 1,184 Preferred stock dividends of subsidiaries (473) (473) (946) (946) Allowance for equity funds used during construction 2,105 1,202 4,006 2,434 --------- --------- ----------- ----------- Income before income taxes 5,883 27,342 59,570 36,729 Income taxes 747 9,793 20,467 12,416 --------- --------- ----------- ----------- Net income $ 5,136 $ 17,549 $ 39,103 $ 24,313 ========= ========= =========== =========== Basic earnings per common share $ 0.06 $ 0.21 $ 0.47 $ 0.30 ========= ========= =========== =========== Diluted earnings per common share $ 0.06 $ 0.21 $ 0.47 $ 0.30 ========= ========= =========== =========== Dividends per common share $ 0.31 $ 0.31 $ 0.62 $ 0.62 ========= ========= =========== =========== Weighted-average number of common shares outstanding 84,052 81,907 83,762 81,679 ========= ========= =========== =========== Adjusted weighted-average shares 84,155 82,124 83,822 81,906 ========= ========= =========== =========== Net income (loss) by segment Electric utility $ 27,432 $ 10,650 $ 52,017 $ 11,103 Bank (18,093) 12,582 (3,517) 24,178 Other (4,203) (5,683) (9,397) (10,968) --------- --------- ----------- ----------- Net income $ 5,136 $ 17,549 $ 39,103 $ 24,313 ========= ========= =========== =========== Twelve months ended June 30, ----------------------- (in thousands, except per share amounts) 2008 2007 ---------------------------------------------------------------------- Revenues Electric utility $2,477,934 $2,016,257 Bank 405,303 417,791 Other 2,067 1,711 ----------- ----------- 2,885,304 2,435,759 ----------- ----------- Expenses Electric utility 2,282,751 1,893,184 Bank 367,044 344,285 Other 13,279 14,924 ----------- ----------- 2,663,074 2,252,393 ----------- ----------- Operating income (loss) Electric utility 195,183 123,073 Bank 38,259 73,506 Other (11,212) (13,213) ----------- ----------- 222,230 183,366 ----------- ----------- Interest expense-other than on deposit liabilities and other bank borrowings (76,198) (77,220) Allowance for borrowed funds used during construction 2,965 2,642 Preferred stock dividends of subsidiaries (1,890) (1,890) Allowance for equity funds used during construction 6,791 5,646 ----------- ----------- Income before income taxes 153,898 112,544 Income taxes 54,329 39,791 ----------- ----------- Net income $ 99,569 $ 72,753 =========== =========== Basic earnings per common share $ 1.20 $ 0.89 =========== =========== Diluted earnings per common share $ 1.20 $ 0.89 =========== =========== Dividends per common share $ 1.24 $ 1.24 =========== =========== Weighted-average number of common shares outstanding 83,249 81,461 =========== =========== Adjusted weighted-average shares 83,283 81,644 =========== =========== Net income (loss) by segment Electric utility $ 93,070 $ 47,776 Bank 25,412 46,915 Other (18,913) (21,938) ----------- ----------- Net income $ 99,569 $ 72,753 =========== ===========

This information should be read in conjunction with the consolidated financial statements and the notes thereto for the year ended December 31, 2007 (included in HEI's Form 8-K dated February 21, 2008) and the consolidated financial statements and the notes thereto in HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2008 and June 30, 2008 (when filed). Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.

Hawaiian Electric Company, Inc. (HECO) and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three months ended Six months ended June 30, June 30, ------------------- --------------------- (in thousands) 2008 2007 2008 2007 ---------------------------------------------------------------------- Operating revenues $686,647 $491,249 $1,309,141 $938,046 --------- --------- ----------- --------- Operating expenses Fuel oil 273,755 167,121 523,298 327,050 Purchased power 177,226 133,727 328,021 245,243 Other operation 59,422 53,643 115,001 100,836 Maintenance 23,990 29,869 47,603 57,205 Depreciation 35,401 34,272 70,835 68,539 Taxes, other than income taxes 62,371 44,903 119,857 87,450 Income taxes 17,094 6,492 32,472 10,998 --------- --------- ----------- --------- 649,259 470,027 1,237,087 897,321 --------- --------- ----------- --------- Operating income 37,388 21,222 72,054 40,725 --------- --------- ----------- --------- Other income Allowance for equity funds used during construction 2,105 1,202 4,006 2,434 Other, net 1,111 1,049 2,207 (5,149) --------- --------- ----------- --------- 3,216 2,251 6,213 (2,715) --------- --------- ----------- --------- Income before interest and other charges 40,604 23,473 78,267 38,010 --------- --------- ----------- --------- Interest and other charges Interest on long-term debt 11,810 11,390 23,534 22,886 Amortization of net bond premium and expense 639 646 1,270 1,192 Other interest charges 1,059 874 2,045 3,015 Allowance for borrowed funds used during construction (835) (586) (1,597) (1,184) Preferred stock dividends of subsidiaries 229 229 458 458 --------- --------- ----------- --------- 12,902 12,553 25,710 26,367 --------- --------- ----------- --------- Income before preferred stock dividends of HECO 27,702 10,920 52,557 11,643 Preferred stock dividends of HECO 270 270 540 540 --------- --------- ----------- --------- Net income for common stock $ 27,432 $ 10,650 $ 52,017 $ 11,103 ========= ========= =========== ========= OTHER ELECTRIC UTILITY INFORMATION Kilowatthour sales (millions) 2,476 2,501 4,885 4,905 Cooling degree days (Oahu) 1,295 1,255 2,249 2,100 Average fuel cost per barrel $ 104.78 $ 62.74 $ 99.29 $ 60.43 This information should be read in conjunction with the consolidated financial statements and the notes thereto for the year ended December 31, 2007 (included in HECO Exhibit 99.1 to HECO's Form 8-K dated February 21, 2008) and the consolidated financial statements and the notes thereto in HECO's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2008 and June 30, 2008 (when filed). Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.

American Savings Bank, F.S.B. and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three months ended Six months ended June 30, June 30, ------------------------------------- (in thousands) 2008 2007 2008 2007 ---------------------------------------------------------------------- Interest and dividend income Interest and fees on loans $ 61,747 $60,093 $125,212 $120,374 Interest and dividends on investment and mortgage-related securities 22,729 30,428 47,180 58,593 ---------- ------- --------- -------- 84,476 90,521 172,392 178,967 ---------- ------- --------- -------- Interest expense Interest on deposit liabilities 15,619 20,832 33,839 41,570 Interest on other borrowings 16,265 18,581 35,414 36,987 ---------- ------- --------- -------- 31,884 39,413 69,253 78,557 ---------- ------- --------- -------- Net interest income 52,592 51,108 103,139 100,410 Provision for loan losses 1,155 1,200 2,055 1,200 ---------- ------- --------- -------- Net interest income after provision for loan losses 51,437 49,908 101,084 99,210 ---------- ------- --------- -------- Noninterest income Fees from other financial services 5,413 6,885 12,236 13,386 Fee income on deposit liabilities 6,767 6,457 13,561 12,512 Fee income on other financial products 1,639 1,856 3,443 3,868 Loss on sale of securities (18,323) - (17,388) - Other income 5,978 1,807 7,550 3,253 ---------- ------- --------- -------- 1,474 17,005 19,402 33,019 ---------- ------- --------- -------- Noninterest expense Compensation and employee benefits 19,039 18,164 37,279 36,560 Occupancy 5,390 5,341 10,787 10,289 Equipment 3,221 3,785 6,335 7,263 Services 4,170 7,895 9,843 16,253 Data processing 2,609 2,646 5,225 5,203 Loss on early extinguishment of debt 39,843 - 39,843 - Other expense 9,653 9,336 18,847 18,516 ---------- ------- --------- -------- 83,925 47,167 128,159 94,084 ---------- ------- --------- -------- Income before income taxes (31,014) 19,746 (7,673) 38,145 Income taxes (12,921) 7,164 (4,156) 13,967 ---------- ------- --------- -------- Net income $(18,093) $12,582 $ (3,517) $ 24,178 ========== ======= ========= ======== Net interest margin (%) 3.39 3.20 3.27 3.14

This information should be read in conjunction with the consolidated financial statements and the notes thereto for the year ended December 31, 2007 (included in HEI Exhibit 13 to HEI's Form 8-K dated February 21, 2008) and the consolidated financial statements and the notes thereto in HEI's Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2008 and June 30, 2008 (when filed). Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year.

SOURCE: Hawaiian Electric Industries, Inc.

Hawaiian Electric Industries, Inc. Suzy P. Hollinger, 808-543-7385 808-203-1155 Facsimile Manager, Treasury and Investor Relations E-mail: shollinger@hei.com