Welcome to the third quarter 2009 Hawaiian Electric Industries, Inc. earnings conference call. (Operator instructions) I would now like to turn the presentation over to Shellee Kimura, Manager for Investor Relations and Strategic Planning. Please go ahead.

Aloha and good morning. Thanks for joining us for an update on HEI. Here with me from our senior management team and speaking today are Connie Lau, HEI President and CEO; Jim Ajello, HEI’s CFO; Dick Rosenblum, HECO, President and CEO; Tim Schools, ASB President and other members of members of senior management are also on the call. Connie will begin the presentation with a strategic update and Jim will take you through economic and financial highlights. Connie will then discuss key investment points and then open it up for Q&A. In today’s presentation, management will be using non-GAAP financial measures to describe the bank’s operating performance. Management believes these measures provide a clearer picture of the bank’s operating performance and are a better indicator of the bank’s core operating activities. We have provided more detailed information about management’s use of non-GAAP financial measures including detail reconciliations from equivalent GAAP measures to the non-GAAP financial measures used in the presentation in the accompanying disclosure and schedules to today’s presentation slides that are posted on our website. Forward-looking statements will also be made on today's call. Please reference pages IV and V of our third quarter form 10-Q that was filed today for information about forward-looking statements. You may also reference the accompanying disclosure to the web cast slides located on our website. Let me ask Connie to begin the presentation.

Aloha everyone. Good morning and thank you for joining us today. For the third quarter we earned $0.37 per share compared to $0.44 per share for the same quarter last year. We are pleased with our company’s overall performance given our expectations at the outset of the quarter for continued pressure on earnings given the continuing difficult economic conditions and delays in the regulatory process. Disciplined efforts to control costs in our operating companies contributed significantly to mitigating these effects in the quarter. As a result of this and other factors, our results are trending better than we guided in the second quarter but still lower than we had originally forecast for the year. Last quarter we indicated that expense controls at the utility should at least keep earnings for the second half of 2009 at the same depressed levels as the first half with an aggressive management action to implement short-term cost deferrals and reductions helped us manage through delays in rate relief and in the implementation of new regulatory mechanisms. However, while a small portion of these reductions are sustainable, the majority of the reductions are temporary cost containment efforts which cannot be sustained long-term without impacting operations. In addition, kilowatt hour sales although still below budget for the year benefited from more normal weather than we saw in the first half of the year. At the bank, at the end of the second quarter we expected strong revenue and additional reductions in non-interest expenses to continue to help offset elevated credit costs. During the quarter the bank experienced strong core deposit account and balance growth and continued expense reduction and benefited from lower loan loss provisions and a gain on sale of a large commercial credit. This was offset by higher other than temporary impairments (OTTI) charges…

Thanks Connie. I will start with an update on the state of our local economy, touch on earnings and move to an update of our expectations for our key performance drivers. I will end by discussing support for the dividend, liquidity and capital. First, the economic backdrop. Hawaii’s tourism industry is a significant driver of Hawaii’s economy and it is also one of our largest utility customer segments. You can see from this slide the significant impact of the declines in the U.S. and Japanese economies on our visitor industries. However, arrivals appear to have stabilized near 2002/2003 levels and in fact increased 7% in September over the same month last year. Local economists expect visitor arrivals and expenditures to achieve modest gains in 2010 of between 1.2-3.2% and 2.9% respectively. Unemployment rose dramatically over the last year from 4.4% in September 2008 to 7.2% in September 2009. However, it still remains well below the national average of 9.8%. The Oahu housing market saw a slight improvement in September 2009 with increases to both home sale prices and volumes over the same period last year. The median resale price for Oahu homes was $600,000 in September 2009, up 1.7% from the same period last year. While volumes for the month were up compared to the same month last year, year-to-date volumes were 16.2% lower. Local authorities note that while the housing market is still weak there are indications that the Oahu market may have passed the bottom. This slide shows local economist expectations for key economic indicators. Based on their projections we expect the impacts of Hawaii’s weak economic conditions on electric sales and bank credit provisions will persist. Despite this economic backdrop HEI earned $33.5 million or $0.37 per share in the quarter compared to $37.3 million or $0.44…

Thanks Jim. We continue to see the opportunity for investment in our company as multi-fold. I will take a moment to frame the primary investment points before opening it up to your questions. At our utility we are working hard with the consumer advocate, the PUC and their staff towards a new regulatory model which will help us significantly close the gap between our earned and allowed rates of return. At the same time, we will continue to seek recovery of costs and return on investments through the traditional rate case process. In addition to the Maui Electric 2010 rate case recently filed, we expect to file a HELCO rate case before the end of the year. Filing these cases is also consistent with the Hawaii Clean Energy Initiative agreement as they are intended to set the base for decoupling for HELCO and MECO. Pending the outcome and timing of the decision on the outstanding items in the 2009 HECO rate case and the decoupling docket we are also anticipating in 2011 a rate case for Oahu. At the bank, the core business is performing very well. Given our profitability improvements to date and expectations over the next year, the bank has the possibility to go from roughly $50 million per year as it did in 2007 and on an adjusted basis in 2008 to $65-70 million with an ROA of about 1.4% when credit expenses normalize. This estimate is subject to no material changes in the yield curve which could affect net interest income. We believe we are making good progress in realizing these opportunities which will provide support for the dividend. We continue to recognize the importance of the dividend to our investors. At 7% our current dividend yield remains attractive. Thank you all for your attention. I will now open it up for your questions.

(Operator instructions) The first question comes from the line of Paul Patterson – Glenrock Associates. Paul Patterson – Glenrock Associates: On the O&M, how should we think about that coming back and how will decoupling deal with that I guess?

There is sort of two categories of the O&M reductions. One are reductions we would expect to sustain through future years. That is primarily as a result of renegotiating some contracts. We have taken all service contracts that are more than six months old and asked for decreases. As you would expect in this economy we are seeing some of those. The majority of the reduction, however, is pushing off work and reducing things that will in fact come back in future years. You would expect the majority of the reduction to show up in later years and it really consists of things like outages on power plants that because of lower sales were rescheduled into out years, minor maintenance that was rescheduled to the outer years.

Let me correct. The overhauls.

I’m sorry. Overhauls. Paul Patterson – Glenrock Associates: How does the decoupling work with that? In the absence of the base rate case, how do you get recovery of that? I know [inaudible] and what have you but how should we think about that O&M and how it would impact volumes? Assuming the decoupling order similar to the settlement you have enacted prior to the beginning of the year?

In each case the base level of that is in the rate case and then the rate adjustment mechanisms will actually pick it up on an index level so that is how the financial part of it would work. Paul Patterson – Glenrock Associates: So in the absence of base rate cases we are going to have higher O&M in 2010? Is that correct?

That is correct. Then that is the reason we are anticipating we would be filing a 2011 rate case as well that would then reset that base. Paul Patterson – Glenrock Associates: When would that come about?

The 2011 would have to be filed before the middle of the year in 2010. Paul Patterson – Glenrock Associates: So the middle of 2011 that we get relief on that?

Correct. Paul Patterson – Glenrock Associates: As far as the decoupling case you mentioned you hope to have one by the end of the year. Is there anything we should think about in terms of watching that process?

I don’t believe so. I am looking at Dick too and we don’t think that there is anything additional that would be coming with that. Paul Patterson – Glenrock Associates: On the OTTI stuff, it seems to be increasing and the loan loss provisions if you could just address them a little bit more. That hybrid mortgage security issue, what do you think is causing the impact in the third quarter and just give us a little more flavor as to what is happening in the third quarter versus the second quarter in terms of the performance of the securities.

Directly to your question what happened was delinquencies continued to go up and the loss factors of the loans that have actually been foreclosed in those pools were higher than they were earlier in the year. The way that works is banks generate these mortgages that we sell on the secondary market. Capital markets create these pools you can buy into. We have roughly 50 different securities that we bought and in each of those would be a bunch of mortgages. Right? One maybe in Tampa. One maybe in Wisconsin. One in California. One in Oklahoma. Wherever. We have a bunch of mortgages. You get data back from the servicer every month. Private mortgage backed securities basically means they are not fully guaranteed and insured by the government like agency securities. So we knew we had these and we have been monitoring them and then you can buy different trenches. So if you buy into this the first trench comes you take the losses first. Second trench we take in the second. The third trench is taken third. In most of these we are in the less risk trench. We are typically in the last trench which is the best. A couple of them we are not. We are in the first trench. Anyway, in second quarter news started coming out in the market that there were more market for these securities. Prices were coming back. Second quarter also was the first quarter we started hearing wow, home prices linked month were starting to plateau or come up. Home sales were starting to plateau or come up. So instead of realizing a loss we said let’s hold off another quarter and see what happens. When we got our third quarter data the trajectory of delinquencies continued on the same path. It is basically about a 30-35 degree angle if you look at the last 15 months which is continuing up of delinquencies. Then of all the loans that they foreclose, the loss rates on those are staggering. They are 50-60% when you take in the value of those loans they are losing 50-60%. As Dick said in his comments we have been evaluating this every month for the last 15 months. As we have studied it, it doesn’t look like the national mortgage market is going to bounce back quickly. So we think it is going to go sideways to potentially slightly worse. So there are prospects for more OTTI. Paul Patterson – Glenrock Associates: What would it be worse, as opposed to flat? If the numbers are so bad on the recovery what does that indicate? You might see more delinquencies? What would make you think it would be flat?

I would say it is one of the two. I don’t know. Just like I haven’t been able to call it the last 15 months. As you are saying, I would suggest there are three options. It is going to get better; it’s going to stay flat or it is going to get worse. It is definitely one of the other two. As I just said, our delinquencies have been a straight 30 degree rise and they have not slowed down at all. It has been a straight 30 degree rise. We were optimistic in hearing the second quarter news hey I don’t know where people report these linked quarter increases in housing prices and housing sales. We are seeing some plateauing in Hawaii but the national data we are getting out at a whole, it is not happening. Really what hurt it worse in the third quarter was the loss experience. It is all a function of the delinquencies and our actual losses. Up until the second quarter the houses that had foreclosed were losing about 30% of their value. The houses that were foreclosed in the third quarter lost 50% of their value.

That is the reason why we said there are two areas in our assets that we continually monitor. One is the residential loans we talked about previously and then these private mortgage backed securities. Just like Tim has put together a strategy to work the residential lot loans much more closely so that we can work with the borrowers to restructure those credits or pay down some of those loans. We are doing the same thing on the private mortgage backed side and we are looking for strategies to mitigate this risk as we manage that portfolio better.

Ladies and gentlemen this concludes the question and answer session for today’s conference. I would like to turn the call back over to Shellee Kimura for any closing remarks.

Thank you for being on the call today. If you have follow-up questions please contact me at 808-543-7384 or via email at skimura@HEI.com. Thank you everyone.

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