Welcome to the third quarter 2008 financial results and outlook conference call. My name is [Shameka] and I will be your coordinator for today. At this time all participants are in a listen only mode. We will conduct a question and answer session towards the end of this conference. (Operator Instructions) I would now like to turn the presentation over to your host for today’s call Ms. Suzy Hollinger, Manager Treasury and Investor Relations.

Thanks for joining us for an update on Hawaiian Electric Industries. Here with me from senior management and speaking today are Connie Lau, HI President and CEO, Robbie Alm, HECO Executive Vice President and Tim Schools, ASB President, Curtis Harada, Acting Financial Vice President, Treasurer and CFO, Tayne Sekimura, HECO’s Financial Vice President and Alvin Sakamoto, ASB’s Executive Vice President Finance are also on the call. Connie will start today’s presentation with a few comments on third quarter earnings, our continued focus on positioning the company for improved profitability and the Hawaii economy. Connie will then move to an update on the utility, operations and Robbie will discuss the Hawaii clean energy initiative. Tim will come on the phone and update you on the bank and Connie will make some closing remarks. At the end of the presentation we’ll open it up for your questions. Before I hand the call over to Connie, I would like to alert you that forward-looking statements will be made on today’s call. Please reference our third quarter form 10Q that was filed this morning for information about forward-looking statements. Now, let me turn the call over to Connie to begin the formal comments.

Thank you for joining us on our third quarter update. I’m pleased that HEI reported another good quarter. Earnings were $0.44 per share, $0.20 ahead of last year when third quarter results were impacted by a $0.10 per share utility customer refund accrual. All segments contributed to solid third quarter results. The key drivers were continued restoration of the utility’s financial health from rate relief received primarily in the last quarter of 2007, 31% higher bank net income from a steeper yield curve, continued good credit quality and lower expenses resulting from performance improvement initiatives and lower interest expenses for the holding and other companies. As I’ve noted in prior quarters strategically our two core operating companies have been keenly focused on improving fundamental operating and financial performance. As reported last quarter the bank restructured its balance sheet to reduce its less profitable wholesale business and began a performance improvement project focused on improving operating efficiency. On this call we’re pleased to announce that our utility has recent entered in to a historic agreement with our Governor, Consumer Advocate and Department of Business and Economic Development and Tourism to establish a vision and framework to make Hawaii energy future clean, renewable and sustainable. The key initiatives in the agreement focus on developing energy sources indigenous to our islands as a hedge against having to rely almost exclusively on imported oil and coal. The islands have abundant renewable energy sources in the wind, waves, sun, geothermal, biomass and more. The agreement acknowledges the need for a strong and financially viable utility to help attract the investment dollars necessary to lessen Hawaii’s dependence on imported fossil fuel, have positive impact for our precious island environment and lessen the volatility of the fuel component in our customer’s bills. The Hawaii’s clean energy initiative…

The generation resource strategy of HEI is to displace petroleum based generation with new renewable generation and to couple these intermittent fixed cost resources with dispatchable renewable generation such as bio fuels, biomass and geothermal. Transmission and distribution improvements will be necessary to integrate these resources and this strategy is expected to have two benefits: one, a reduction in the exposure to the volatility of oil prices; and two, in the long term a reduction in bills as lower price non-petroleum based generation is combined with customer choice programs to offset the cost of infrastructure required to add these renewable generation sources. The agreement was covered extensively in our 8Ks so I won’t discuss all the elements but I would like to highlight a few of them. First, the Parties agreed to seek legislative changes to the existing renewable portfolio standard law establishing new RPS goals of 25% by 2020 and 40% by 2030. Unlike most utilities in the nation, Hawaiian Electric has the potential to modify most of its existing generation fleet which currently is fueled by liquid petroleum to burn a compatible liquid renewable bio-fuel. This allows for an increase in renewable generation using existing assets and only incurring costs to convert or coal-fire these units with bio-fuels. In addition to renewable generation commitments, the agreement also includes key changes in regulations to support the renewable generation strategy. Some key regulatory elements include a recommendation by all parties to establish a decoupling mechanism similar to those adopted by the California utilities. The mechanisms would separate utility revenues from sales thus removing the inherent disincentive for energy efficiency and conservation as well as customer sided generation. Period cost-based adjustments could be made between rates cases. The agreement also recognizes that the utility must be able to provide new generation resources to backup renewable wind and solar energy and that the utility’s infrastructure must be upgraded to facilitate the integration of intermittent renewable resources. To help recover investments faster, the agreement includes a clean energy infrastructure surcharge similar to the renewable energy infrastructure program surcharge already under consideration by the PUC under which renewable and related investments by the utilities, such as smart meters which enable customer choice options, to be recovered more quickly. It also includes an option for the utility to seek construction work in progress in rate based treatment for large clean energy projects so that cost recovery can begin earlier. The majority of the terms of this agreement can be implemented through the regulatory process. Some of the terms such as the change to the RPS law may require legislation. We believe that our regulators are open to the elements of the agreement and we are hopeful that the agreement will facilitate a streamlined regulatory process so that these initiatives and the projects and programs they represent can be implemented quickly. Now let me ask Connie to return to summarize remarks for our utilities.

The firming and infrastructure additions that Robbie mentioned and customer programs such as advanced metering infrastructure or AMI will require new capital investments which support our Hawaii Clean Energy initiative. At the same time the slowing local economy could delay some new customer projects providing some offset in the need for capital expenditures. As a result our current forecast of approximately $1.2 billion in net capital expenditures over the next five years is currently being evaluated. To sum up our utility operations, earnings are recovering with interim rate relief for all three utilities most of which was granted in late 2007. O&M expenses up 5% in the quarter are expected to rise further in the fourth quarter to approximately 6% on a full-year basis. At the same time the outlook for kilowatt hour sales is trending down and Hawaii’s slowing economy is expected to put further downward pressure on sales. Through the first nine months sales were down 1.2% and we are expected to end the year slightly below that. The Hawaii Clean Energy initiative provides a rare opportunity to jumpstart changes in regulations, to facilitate a rapid rise in the level of renewable and distributed generation on our systems, and over the next several quarters we will begin the many regulatory and legislative processes needed to put the terms of this agreement into effect. Overall, our utilities have an exciting future and opportunity to lead our nation in the integration of renewable sustainable energy. We believe we are doing what it takes to be well positioned for the long-term success of our investors, our customers and our community. Now I’d like to turn the call over to Tim to discuss the banks.

I’m very proud of the third quarter results for the bank. This quarter we were able to observe the impact of our second quarter balance sheet restructuring and the results are in line with our expectations. We maintained our net income level on a greatly reduced balance sheet allowing us to increase our leverage ratio and return capital to HEI. This resulted in a significant improvement of ASB’s net interest margin percentage and return on assets. We also continued to build on the momentum from the wave of services and products we have recently introduced into the market. This quarter we introduced what we believe to be the market-leading interest checking product allowing us to further simplify our product set and consolidate our seven checking accounts into two. As we approach the new year, we are now developing plans and adjusting incentives to increase our products per household by soliciting more business form our large base of single-product households. Before we get into the details of the third quarter, here’s a snapshot of our results versus the prior and year-over-year quarters. Keep in mind our second quarter financial results have been adjusted for the impact of the balance sheet restructuring. It is important to also note that the second quarter benefited from insurance recoveries and security gains that we do not anticipate in future quarters. This provided a temporary benefit to second quarter net income, return on assets, revenue growth and its efficiency ratio. As you can see we’ve begun to make progress in improving the trends of our net income, return on assets, net interest margin and efficiency ratio. If you were to annualize the third quarter net income, our current run rate is about $62 million and that includes an annualized $8 million of provision expense. While credit…

To sum up, all segments of our company contributed to a strong third quarter. We have been focused on positioning the company for improved operating and financial performance which is even more critical in a declining economic environment. The agreement we signed on the Hawaii Clean Energy initiative in October will help ensure the financial viability of our utility, facilitate the execution of our renewable strategy, and give us attractive renewable investment opportunities. Work on critical renewable reliability projects continues and we are focused on recovery of these investments and earning a reasonable return through the regulatory process. We are in the discovery phase of our Oahu 2009 test year rate case and in accordance with the Hawaii Clean Energy initiative we will file 2009 test year rate cases for both HELCO and MECO to reset base rates and decouple sales. In addition we expect a decision shortly on the clean energy infrastructure surcharge which would provide for accelerated recovery of clean energy investments. I am pleased with the progress the bank has made on its performance improvement initiatives. The June balance sheet restructuring is producing desired outcomes including increasing net interest margin and return on assets in line or above peers. Tim and his team continue to work on lowering the efficiency ratio and bringing new products and services to the Hawaii market and see meaningful opportunities on both fronts. You may have seen that our Board declared a quarterly dividend yesterday of $0.31 per share payable on December 10 to holders of record on November 17. At a closing price of $26.96 yesterday, our yield of 4.6% remains attractive and the stock has been performing well this year. Through yesterday our total return to shareholders in 2008 was 23%. Now with that, I’d like to end this formal portion of the program and we would be happy to take your questions.

(Operator Instructions) Our first question comes from [Paul Patterson - Glenn Rock]. [Paul Patterson - Glenn Rock]: On the loan loss reserves, I guess because you guys are having less charge-offs its decreasing loan loss reserves year-over-year. Is that right? What’s the outlook for these loan loss reserves as this economy is weakening and all the others are negative credit indicators that you guys went over?

Let me ask Tim to answer that.

From a banking standpoint we don’t typically look year-over-year. Last year was actually related to one credit. You may remember in the fourth quarter we had a sizable charge-off of about $5 million. That provision in third quarter last year was to prepare for that charge-off and that’s now through the system. Our provisions actually have increased from second quarter. I don’t want to mislead anyone. We don’t see anything scary but certainly our trends you would call are negative and our past dues are increasing, our both 30-day and 90-day; we look at two measures. Then on the commercial side there’s something called a risk rating scale where even if they’re not past due, you constantly are looking at the fundamentals of your customers as far as their covenants. So internally you have a risk grading system where you’ll grade them one to 10. We certainly are seeing a credit migration to lower ratings. Nothing scary but the movement is downward, so therefore under the ALLL methodology you have factors that you provide for increased levels of charge-offs. If you take this quarter at $2 million times four, that’s an $8 million run rate. If you take the second quarter at $1.4 million or $1.2 million, so it was at maybe $4 million or $5 million run rate. So certainly the annualized run rate is increasing. [Paul Patterson - Glenn Rock]: The reason why I mentioned last year is because that was a sort of better environment and I guess what you’re saying is that because of preparing for that $5 million number that’s what’s skewing it.

That was an isolated credit whereas the provision from second quarter to this one would be a lot more granular credits. It’s really across the scale where we’re seeing group migration. Let’s say again everything in the life is relative, we’re a [thrift] so we have very low numbers, fairly conservative. Our charge-offs will go up. I’m not going to mislead you. But if you looked at our 30-day past due, 90-day past due, watch loans, our percentages would be way near the bottom of the national average just because of the profile of the balance sheet. It doesn’t mean we won’t have losses. [Paul Patterson - Glenn Rock]: But in terms of us thinking about these loan loss provisions, we should expect them to increase. Any idea about how much we should expect them to increase?

No. That’s hard to estimate. We’re on top of our customers and we’re actively working with them. Honestly, things change so fast as you know out in the capital markets that things can change quarter-to-quarter. We have a good outlook a quarter or two out but it’s hard to determine past that. I think we’re certainly anticipating that they will be at least this level or maybe slightly higher at this point for some time. [Paul Patterson - Glenn Rock]: The deposit interest costs that you guys have, you mentioned that there’s been some falloff in CDs and money markets. Why is that? Is that because of competition? Is that because you guys have lowered the rate that you’re paying on those deposits?

10 years ago or so you used to always see one-year, three-year, five-year CD rates. You don’t see a lot of people going out with that much term anymore. So typically CDs on average, the bulk of them are 12 months or less. The Fed really started lowering rates I think third or fourth quarter last year and I think that funds, Kevin’s here with me, I think it was 4.50 or 4.75 this time last year. Fed funds is at 1 now. So what’s happened is interest rates have come down so much that nationally most of the CDs that are maturing, that money’s not choosing to go back into CDs. Typically they will park money when rates are this low in savings or checking accounts so that’s probably where we’re seeing some of the migration. Some of our growth in non-interest-bearing is probably coming from our CDs. And then I’m sure that some are shopping for rates. We always try and price our CDs at least at the median to our market if not higher. We don’t want to be the highest in the market and we don’t want to be the lowest, so we try and stay competitive. [Paul Patterson - Glenn Rock]: Is the money going from the CDs and the money markets into the free checking or is it going to other banks?

It’s hard to track deposit flows but certainly a good percentage is going into free checking. [Paul Patterson - Glenn Rock]: With respect to the outlook for the rate cases, you mentioned HELCO and MECO. When do you guys expect to file those?

It’s a fairly new agreement under Clean Energy to be looking at filing the HELCO and MECO 2009 rate cases. We’re actually evaluating that timing right now. Most likely if we file it given the filing schedule, we will not be looking at relief probably until late in 2009 and more likely 2010. [Paul Patterson - Glenn Rock]: When we’re looking at the Clean Energy initiative, you guys showed a chart in which customer builds were supposed to go down under this. Just a few quick questions here. On bio-fuel costs compared to the price of a barrel of oil on a BTU comparable basis, what are we talking about? Could you give the comparison of that? Just in general, what is the cost when you throw in the cost of alternative energy vis-à-vis what your traditional cost is pretty much burning fuel oil?

Let me ask Robbie to answer that question because t hat is one that of course we had to study as we did the Clean Energy initiative.

There are sort of two parts to that. The first part is what are bio-fuel costs? We’re probably talking about two different sets of bio-fuels in our system. One is bio-diesel where our neighbor island systems are heavily diesel in their orientation. Bio-diesel’s been ahead of diesel. On the Oahu units you’re probably looking at less refined oils and those have been currently less than fuel oil expense. So it’s hard to predict that market. That is a developing market but we don’t have any particular reason to be worried that either bio-fuels are not available or that we won’t be able to get them at a decent cost, particularly the less refined oils. If you look at the chart, what it’s really based on is the notion that the intermittent local sources of power, primarily wind, can be bought at long-term fixed price contracts reflecting capital costs of installing the wind farm without any fuel costs because of course the fuel cost of wind is free. What you’re hedging fluctuating oil prices with is an increasing amount of intermittent renewable energy purchased at long-term fixed price contracts detached by Hawaii law from any reference to the avoided cost of oil. It really is a form of hedging and unlike most states in the country, our renewable energy prices actually come in below fuel oil, certainly recently. We’re in a different environment that many other places where the referenced fuel is coal or hydro. Our reference is petroleum which has had significant price variation against we’ll play the renewable contracts. [Paul Patterson - Glenn Rock]: At what price of oil is the break-even part in terms of those renewable contracts versus fuel oil? What price per barrel? Obviously at $140, I think it was $133 a barrel, that’s one thing. Where is it not competitive?

We haven’t figured out that precise number but what we’ve been looking at are the long-term trends for oil costs based on Department of Energy numbers and our own assessments of it up against fixed long-term wind contracts that we’re in the process of negotiating right now and comparing those two numbers to look overall at what it looks like going out 10 and 20 years. Both numbers are changing. As you know, wind costs have gone up as turbine availability is down and we’re in a hot wind market if you will. So our wind numbers are changing. We don’t have a specific number where that is but we do believe if you look at long-term fuel projections by anybody, even the more conservative DOE numbers, that we won’t have any trouble justifying the notion of using these long-term fixed price contracts as a hedge.

I would just add that when you think of the bio-fuel side of it, the benefit for us is a diversification so that we aren’t totally petroleum based and that we have the opportunity to look at what happens in the palm oil market or the vegetable oil market, and the two are not moving together. As Robbie said, the bio-diesel prices have been higher than the diesel prices but the reverse has been true on the crude palm oil side. The second part of the bio-fuels for us is as you know I mentioned that one of the underpinnings of Hawaii Clean Energy initiative was to develop indigenous resources in Hawaii whether it be the sun or wind or waves, but the other one is as you know we were originally an agrarian society and we have an agricultural industry that has struggled in sugar and pineapple. So one of the other potentials for our state is to rejuvenate that agricultural industry and begin producing oil crops particularly in our steam units where we are testing out the use of basically the first crush of those oil crops. That could be very beneficial for both our agricultural industry and the energy industry where we can grow those sources locally, not have to refine them tremendously and then be able to use that in our steam plants. The final thing I’d add is to your question on renewable. The whole point of the Clean Energy initiative is to really give us a whole portfolio of potential renewable because frankly we’re going to have to track what happens with the cost of wave technology or wind technology, solar, but it gives us the opportunity to build a diversified portfolio and we will have to be looking at the costs of each of those projects as they come to fruition. Frankly, right now one of the things that’s affecting the cost of renewables is what’s happened in the capital markets and the availability of project financing for a lot of those projects. It’s a situation that we have to evaluate on a continuing basis.

In addition to what both Connie and Robbie talked about and looking ahead, fossil fuels will be getting more expensive once we look at carbon taxes or other penalties that are enacted as part of the federal and state greenhouse gas legislation. So that is a consideration too as we plan for all of this.

Our next question comes from James Bellessa - D.A. Davidson & Co. James Bellessa - D.A. Davidson & Co.: The green initiative in your state, what legislation changes are required?

At the moment we’re expecting that the only legislative changes will really be in the RPS changes as Robbie indicated. Most of the initiatives we believe can be implemented on the regulatory side. James Bellessa - D.A. Davidson & Co.: What is the proposed RPS again? Would you review that again?

It would be 40% in 2030. there was also an increase in the 2020 number to 25% from 20%. That will be based on peer renewables not counting energy efficiency. James Bellessa - D.A. Davidson & Co.: What are the regulatory changes that you think are required to accomplish this?

Basically a lot of the agreement as Robbie sketched it out will require regulatory changes. Of course the decoupling mechanism and the recoupling through cost adjustment mechanism will require decisions by the Public Utilities Commission. The clean energy infrastructure surcharge that would give us accelerated recovery for clean energy type investments would also require PUC approval. Much of what you see there really has to go through the Commission. To the extent that we have any major capital projects that go forward, under today’s regulation we are required to file for approval of those projects with the Commission. We will still be doing that. James Bellessa - D.A. Davidson & Co.: What’s the timeline that you expect on the regulatory changes?

Much of it is moving forward already. As Robbie indicated, the clean energy infrastructure surcharge has a pending docket now that is very similar to this surcharge mechanism so we’ll be incorporating the concept of the clean energy infrastructure surcharge in that existing docket. A lot of the decoupling and recoupling we are looking at the presently filed 2009 rate case for Oahu as setting the base for Oahu, and then as I indicated we would be filing rate cases for the other three utilities on 2009 test years as well to decouple and recouple them. A lot of the regulatory mechanisms, we are one of the tenants of the Clean Energy initiative was to do that on an accelerated basis so we’re working closely with the Commission and the consumer advocate to incorporate as much as we can in existing dockets. I’d say the next 12 to 18 months will be a busy time for us. Robbie does this on a daily basis so let me just ask Robbie if he wants to add anything to that.

I think you’ve covered major ones. I think the Commission has ordered us to come up with strong decoupling and feed in tariff mechanisms by the end of this year to facilitate forward movement on that. We’ll be filing the advance meter infrastructure by year end. The energy cost adjustment cause issues can probably be handled within the current rate cases. Some of the issues like feed in tariff and suspension of the [wheeling] docket and others await letters from all the parties to the Commission which I think will give them a basis to act. I think the agreement is designed to have all of the major elements before the Public Utilities Commission and in their hands to adopt by the end of ’08 or the first six months of ’09 so that that regulatory action could largely be accommodated in ’09. James Bellessa - D.A. Davidson & Co.: You said that the five-year cap ex plan is being re-evaluated but I didn’t catch why.

The reason for that is under Clean Energy now we will move ahead with things like the advanced metering infrastructure. We will be incorporating that into our capital budgets going forward. Also preparing for a transition to a Smart grid. But the other major reason frankly is because of the financial crisis where we really have to look at the capital projects that we had in there to support customer installations and customer developments as to whether those customer developments will be going forward. I think as you know, many companies are re-evaluating their capital expenditures programs and really looking to see what the right timing is for those programs. That will automatically adjust the portion of our capital budget that is set aside for customer installations. James Bellessa - D.A. Davidson & Co.: I understand that it’s under evaluation but directionally do you think that the cap ex budget is going down or up, just directionally?

We’ve had a lot of discussion about that. I think in the very, very near term there’s probably not a major difference in the cap ex but for the longer term there could be some significant changes. James Bellessa - D.A. Davidson & Co.: You have three segments. The other segment, can you give us any outlook there? Do you see the earnings drag subsiding over time or is this the level that it’s going to be at for some time?

Before we go on to that question, I think Tayne wanted to add something on the capital expenditures question.

I wanted to add that simply related to clean energy and cap ex, we’re currently engaged in a planning and implementation study that’s part of the agreement because there are some technical requirements that we will need to look at. So that is why our cap ex is still under development right now. James Bellessa - D.A. Davidson & Co.: And the outlook for the other segment?

I don’t know if I can really give you too much of an outlook there because as you know what is in that other segment is primarily personnel costs at the holding company and then the debt that is at the holding company level, most of which is as I said earlier longer-term fixed rate. I think the next major maturities that we have there are not until 2011.

Our next question comes from Jonathan Arnold - Merrill Lynch.

I notice you just filed a mixed shelf registration today. Why are you filing that at this point and what are your plans for issuance in the capital markets in the next year or so?

That really kind of relates back to Jim’s question. We frankly have been evaluating the funding requirements for the company given all the recent changes in capital markets over the last six weeks, so that has to be put together also with the capital expenditures side that we just talked about. We frankly are evaluating that situation. As you know and I mentioned, the stock has been performing very well. We’re looking at the prudency of whether it makes sense for us to look at some longer term financing. I think as you noted in that section where we talked about filing a new omnibus shelf, which actually replaces a current omnibus shelf that we have that would otherwise expire at the end of this month, we also made note of the fact that the utility is looking at its revenue bond financing and the timing of that. We’re evaluating all of the financing plans for the company right now.

Given your comments about the stock, are you suggesting you may be looking at equity as one of the possible options?

I think that is a possibility. We have a major capital expenditure program that is still underway and as I’ve noted the Hawaii Clean Energy initiative gives us some wonderful opportunities to make renewable investments and be able to recover them and earn on them in rates. Those opportunities are ones that are longer term that go really beyond the current crisis in the financial markets and certainly if we can have the ability to make those investments, we’re going to want to do that. I think that’s a good thing for our shareholders.

Is it fair to say that if you did issue equity it would be in conjunction with growth opportunities that are not currently in the base plan?

I’d say it would be both. It could be what is already in the base plan but also additions into that base plan. In the base plan we do have investment opportunities already. As you know, we’re building out CT1 on Oahu and ST7 on the Big Island and we have the East Oahu transmission project right behind both of those. So there are already some significant investment opportunities in the current cap ex. I don’t know Curt if you’d like to add anything or Suzy?

I think you covered it well Connie. Again it really is dependent largely on the need of the utilities for equity going forward.

We’re also monitoring market conditions.

Our next question comes from Asher Khan - SAC Capital.

Connie, in the Q it clearly says that you are contemplating an equity issuance. Is the shelf effective right now? If you wanted to come into market tomorrow or the day after, can you come in?

Yes. The shelf would be effective because it’s an omnibus shelf.

So the wording in the Q seems to indicate a more eminent equity offering or am I reading some old language which is there or is it just the way it’s phrased?

No. I think as Suzy mentioned we’re monitoring market conditions. Frankly since about six weeks ago we’ve been watching the markets carefully because I think we’re in an incredibly unprecedented time when you have trillion dollar commercial markets freezing up and having to fund short-term debt just on an overnight basis. We’re taking all of that market risk and uncertainty in the financial markets into consideration as we look at what is best for our company and shareholders over the long term.

Then if I could just go over what you said. If I understand, we still have for the fourth quarter you said sales are going to be down which might hurt utility net income but then we still have a portion of the interim hike which goes through from one of the subsidiaries if I’m right for MECO. And then you were saying further that sales are going to be down next year but we get an interim hike in the middle of the year, and then if I’m right, the decoupling mechanisms are not going to be there till 2010 if I understood your explanation. So are we going to see utility earnings going down and then starting to pick up in the second half of the year and then with the decoupling mechanism coming up in 2010 just becomes a rate base or the clean air imitative growth increments going forward?

I think that all that you cited is what we had said with one exception. On the decoupling mechanism my comment about 2010 really related to Maui and the Big Island HELCO and it is possible that we would see decoupling for Oahu in the 2009 interim rate case that has already been filed for Oahu.

Could you give us some ballpark? What is the 1% decline in sales impact to earnings per share?

I think I’ll ask Tayne to give that.

Maybe I can answer it in terms of our earnings for the quarter and also year-to-date to give you a feel for where we stand. For year-to-date our sales are down through September 1.2% and that has had an impact to earnings of about $4 million.

That’s after-tax earnings?

That’s correct. And I’m comparing 2008 year-to-date sales through September compared to 2007 year-to-date September sales. 1.2% down.

That is for the nine months you mentioned, right?

That’s correct.

I want to add to Connie’s comments on the omnibus. We are evaluating on a daily basis. It really is contingent upon market conditions so I guess the answer to your question is we’re looking at it daily and it could occur any time.

And a lot of that relates to a judgment call about the liquidity of the capital markets frankly because we do have the capital expenditure program to finance currently planned to be financed with longer term financing.

Our next question comes from [Analyst for Jane Pekler - Levin Capital Strategies]. [Analyst for Jane Pekler - Levin Capital Strategies]: On the prospect for an equity issuance, I think I got the question answered but it sounds like this could happen potentially this year. It’s not like you’re going to take a few months to make this decision. It could happen at any time.

That’s correct.

It could happen at any time but of course as you know the omnibus shelf is good for a period of time. [Analyst for Jane Pekler - Levin Capital Strategies]: At the bank, I guess all banks have the ability to access the TARP facility set up by the federal government. Is that something you would ever consider?

It is something that we are evaluating. At first glance however if you look at American, it actually doesn’t need additional capital. In fact as we reported earlier American just returned excess capital to the holding company. But the TARP legislation and the implementing regulations actually are really still being fleshed out so it is something that we are monitoring.

Our next question comes from [Steven Gambooza] - Longbow Capital. [Steven Gambooza] - Longbow Capital: In terms of the actual need in terms of the balance sheet, it looks like you were at 47% equity at the consolidated level at the end of the quarter. Is that right?

That’s correct. [Steven Gambooza] - Longbow Capital: What HOLDCO equity ratio are you targeting? I know there’s some off balance sheet adjustments, applied debt from PPAs and other things. How much of implied debt is there and given that amount, what’s your equity target at HOLDCO?

Again, that’s currently under evaluation. Given the current conditions of the capital markets, we believe that additional equity may be prudent if the markets don’t return to normal. We’re really evaluating it based upon how the capital markets are performing. [Steven Gambooza] - Longbow Capital: It seems that your equity ratio over time has been pretty consistent. Has there been some change in terms of what the rating agencies have communicated to you in terms of what they want you to run at?

No. Definitely not. The thing that is as you can tell we’re hedging a lot on this and it’s primarily because the underlying conditions for the company have not changed but what has changed significantly I think for everyone are the capital markets and just judgment calls about the liquidity of the capital markets. [Steven Gambooza] - Longbow Capital: Your equity ratio has been 48% +/- 1% for really the last four or five years.

Maybe I can answer it this way. Had the events of the last six weeks not occurred, we would probably not be having this conversation.

Our next question comes from [Craig White - Rivana Capital]. [Craig White - Rivana Capital]: I just wanted to follow up on Paul’s questions about the allowance for loan losses at the bank but maybe take a different angle on it. One of your peer Hawaiian banks reported their earnings last week. Their nonperforming assets are half of yours but they raised their loan loss reserves again to more than double yours. Tim, you were calling credit the wildcard for the bank. If it goes against you and you had to raise it to about the same level as this peer, that would take about $40 million out of the bottom line. What would happen to the capital ratios at the bank and could you guys potentially be in a situation where you’ve got to return capital from the parent back down to the bank?

Tim, do you want to address the first part?

I think you’re referencing Bank of Hawaii and they certainly are a great operator. I guess the first thing I’d point to is their charge-offs are significantly higher than ours. Their charge-offs this quarter I think were close to 40 or 45 basis points. Provision is an indication for future losses. I don’t really follow their portfolio but their losses are running much higher than ours. Part of that is not because of anything of bad credit. We have a different balance sheet profile. If you were to look at our balance sheet, we are largely residential mortgages that tend to have lower credit losses so you would tend to have a lower reserve percentage. I imagine if you look at their reserve percentage, it’s probably more like a commercial bank in the 130 range. That’s what I’m used to coming from commercial banks. Here it’s more 75 to 80 basis points. It’s hard to look just because we’re both in Hawaii at what we’re doing on our provisions but I would imagine that they probably have a larger commercial portfolio and I’m not sure what’s driving the increased reserve for them.

I’d just add that if you’ve followed us for a while, you would have seen where we have charted the reserve percentage against banks and thrifts, and because we were building the commercial and commercial real estate portfolios we began increasing our reserve ratio from a thrift level closer to a commercial bank level. But as Tim points out the primary difference between us and the other institutions in Hawaii that are reporting is the composition of the balance sheet.

Another thing would also be on the consumer side of the balance sheet. Again, I don’t really follow the balance sheets of First Hawaiian or Bank of Hawaii but my understanding is they also have more traditional consumer loans. They may have more auto loans; they may have more credit cards. Again we’re largely residential first mortgages. Certainly the delinquencies of auto loans have really risen so I’m not sure of their situation. [Craig White - Rivana Capital]: You feel better because you’ve got more residential mortgages than them?

Without a doubt, and I think our loss profile but there’s trade-offs right? If you look at their loan yield, I bet you that their loan yield’s higher than ours. Again, it’s hard to compare bank to bank. They probably earn more and they run with higher charge-offs. We earn less and we run with lower charge-offs. It’s hard to argue which model’s best. They certainly have a very high return on assets and are very well run organizations. Just different models. [Craig White - Rivana Capital]: Did I catch correctly in the prepared remarks that you’ve started to see housing prices finally start turning negative there in Oahu?

Yes, that’s correct. We’re down from about $650,000 generally to around just under $600,000 now.

On your other comment about could the bank ever need capital, I’m never going to say never. Certainly look at the mainland and look at those banks. It’s unprecedented times and a lot of the banks over there are in need of the capital. We certainly don’t see that on the horizon but could an occasion ever happen that it got that bad in life? Of course.

I guess I’d relate that back to the question on TARP. At this point in time from a holding company perspective, the holding company has always supported the bank and has always supported its capital ratio. In fact we have a capital maintenance agreement with the regulators for the bank. Right now I think what we would do is look very closely at TARP should the bank need capital.

I just wanted to let you know that the October numbers have come out for Oahu real estate sales and actually median sales prices have come back up to $625,000.

Our next question comes from [Paul Patterson - Glenn Rock].

Before you ask your question, let me just comment on those median prices. I think we’ve made this comment to you all previously, which is that not as much the Oahu numbers but certainly the neighbor island numbers can swing pretty significantly just on a month-to-month basis because of the mix of the projects and the kinds of resales that are going through the numbers since we don’t have a hugely deep market in Hawaii. But I’d say overall we’re seeing the housing prices on the main island of Oahu and I think about 2/3 of the bank’s loans are on the island of Oahu. The residential prices have been holding fairly well but you are seeing some decreases in prices. There are just not as many buyers in the market now. [Paul Patterson - Glenn Rock]: I wanted to follow up on the equity question. Realistically within the parameters of what you’re looking at, what is the total amount of equity that you think in the near term you could be issuing? Would it be the entire shelf?

It’s unlikely to be the entire shelf.

There’s no stated amount with the shelf. It’s a [wicsy] shelf. [Paul Patterson - Glenn Rock]: What kind of numbers are we thinking about here when you mention this potential equity issuance?

I think that would depend on market conditions. [Paul Patterson - Glenn Rock]: Is there anything that we should be looking at? Is there any financing coming up in which you believe that the equity would be likely to be used for? I’m just trying to get some sort of sense here. It’s been put out there and I was just wondering if there are any parameters we can think about in terms of the potential level of equity that actually might be issued if in fact it is.

I guess another way to think about it and go back to what the answer I gave before is that if the last six weeks hadn’t happened, we wouldn’t be having this conversation. If you think about it from that perspective if we were to issue equity, it would really be to keep a similar kind of balance going forward to maintain the general credit quality of the company. One of the things that I can tell you is that we have a current filed rate case for the utility that has a capital structure somewhat similar to what we have previously used of the relative balance between debt and both common and preferred equity. We’re not anticipating any major changes from that perspective on a long-term basis. [Paul Patterson - Glenn Rock]: Is preferred stock something that you guys are also thinking about?

We currently have that in the capital structure but as I say we’re re-evaluating all the financing plans to look at what is the optimal financing for the company because as you know all the traditional relationships between debt, equity, hybrids, preferreds, even the difference between taxable debt and tax exempt debt, all of those relationships have frankly been changing in the last few weeks.

This concludes the Q&A portion of the conference. I would now like to turn the call back over to management for closing remarks.

Thank you very much for being on the call and for your questions today. If you have further questions, please contact me at 808-543-7385. Thanks and Aloha.

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Good day.