Prompt:
Human: We're continuing to follow social distancing procedures.
So our executives are in different locations today.
Please bear with us again if we have any delays or mixed audio quality during the call.
On the call, we'll use non-GAAP financial measures to describe our operating performance.
And now Connie will begin with her remarks.
I am very proud of the performance of our company and our employees during this COVID-19 pandemic.
While all of us face uncertainties regarding the trajectory of the virus and its implications for our pace of economic recovery, what is clear is the strength and resilience of our businesses, the dedication of our employees and our commitment to supporting our customers and our economy throughout this period.
On last quarter's call, we talked about the strengths that would help our company navigate through COVID-19.
Our long history of providing essential services for most of our state; our strong liquidity across our enterprise; the stabilizing effect of decoupling and other regulatory mechanisms at our utility; and our bank's conservative approach to risk, low-risk loan portfolio, low-cost core deposit base and strong capital position.
This strong foundation, coupled with other factors that benefited earnings, enabled us to deliver solid financial results for the second quarter, $0.45 per share compared to $0.39 per share in the same period last year, while achieving important progress on our long-term goals.
I'll start with an update on the virus and economic conditions in Hawaii before turning to an update on our companies.
Then Greg will review our financial results and outlook.
We're fortunate that Hawaii continues to have the nation's lowest COVID-19 mortality rate.
While cases per capita in Hawaii have generally been lower than other states throughout the pandemic, we have seen an uptick in cases recently, which our state is working to address.
We're seeing the effects of reopening of our local economy and unprecedented federal stimulus, which is estimated to have delivered approximately $7.7 billion in funding to our state thus far.
Hawaii's unemployment rate improved to 13.9% in June after peaking at 23.8% in April.
At our utility, while sales were 11.6% below the same quarter last year, we've seen sales improve in some areas such as shopping centers and retail since opening of our local economy began.
We've also seen areas that have maintained stability throughout the COVID period such as our federal government and military presence.
Residential real estate values have remained strong and are up from last year, showing continued strength for the collateral that secures much of our bank's lending.
A key question for Hawaii's economy is when transpacific travel and tourism can resume.
Hawaii currently plans to allow travelers with a negative COVID test to forego the mandatory 14-day quarantine beginning September 1.
Recognizing Hawaii's prudent management of COVID-19, Japan announced Hawaii's addition to a list of 12 global destinations deemed safe for Japan residents to resume travel.
This will help restart tourism, although it may take some time before we see tourism near pre-COVID levels.
Of course, all of these plans are subject to the actual course of the virus and the effectiveness of mitigation.
While tourism and federal stimulus developments will have a significant impact on the pace at which our economy rebounds, our state does have the ingredients for a solid recovery.
We continue to benefit from a robust federal government presence here as host to the U.S.-Indo Pacific Command, from which the U.S. watches 52% of the world's surface and all component service commands.
We also believe the unique environment and experience we offer here will continue to make our state a very attractive place for tourism.
There is a new energy to economic diversification efforts here as well, and our companies are actively supporting those efforts.
Turning to our company.
At our utility, solid regulatory foundations have served both the company and our customers well and enabled us to be a source of strength for our community during this unprecedented time.
Our decoupled regulatory structure has provided accrued revenue stability despite reduced sales in the second quarter.
On June 30, our commission approved our request to defer COVID-related costs to be considered for potential recovery in a future proceeding.
To help customers during this time, we extended our suspension of disconnections through September one and have offered a range of payment plans to help customers manage their bills.
Working closely with customers is a key focus for us.
Ensuring our services are affordable is also a key focus now even more than ever.
Customer bills are lower now than last quarter due to lower fuel costs and a reduction in the RBA component of the bill due to higher-than-projected electricity sales in 2019.
A customer using 500-kilowatt hours of electricity in July paid 14% less for that energy than in March.
We are also working to become a highly efficient utility.
And as of June 30, we recorded $7.2 million in a regulatory liability account related to ERP benefits, amounts that are to be returned to customers as a reduction in O&M expenses included in rates.
We've also secured significantly lower and fixed priced renewable energy plus storage contracts through our recent RFPs, which will help lower and stabilize customer bills once those come online.
Last week, the PUC issued a final decision in the Hawaii Electric Light rate case.
Results were consistent with the interim decision maintaining current effective rates.
In recognition of financial challenges our customers face in this COVID period, in late May, we and the consumer advocate filed a settlement with the PUC to hold base rates flat in Hawaiian Electric's 2020 Oahu rate case.
You may recall that the PUC had commissioned a management audit as part of the rate case.
The audit report highlighted areas for improvement, including several we had identified and were working to address.
In response to the audit and as part of the settlement, we committed to ramp up to $25 million in annual savings by year-end 2022 to be delivered to customers beginning by 2023.
We have proposed to deliver those savings to customers through PBR.
An interim decision on the settlement is scheduled for October.
In addition, we are no longer planning to file a Maui Electric 2021 rate case.
To offset the lack of a base rate increase and achieve our $25 million by year-end 2022 commitment, we're developing and have begun implementing plans to reduce costs, including through overtime reductions, better scheduling and coordination, managed reductions of our workforce and reducing lower priority work.
And in the second quarter, we already began to see some of these savings.
As we advance these important cost reductions, we, our commissions and other stakeholders continue to ensure that the renewable and regulatory transition moves forward.
There is great interest in our state in doing everything we can to make Hawaii's economic recovery a green and sustainable recovery.
Performance-based rate making, or PBR, continues on track for PUC decision this December, which we believe will lay out the core mechanisms and performance incentive mechanisms, or PIMs. A new step in the schedule has been added thereafter to enable development of tariffs to implement the new and changed mechanisms.
The commission will determine when the new changes will be effective in 2021.
We continue to aggressively advance efforts to help move our state toward 100% renewable energy and carbon neutrality.
These efforts will also help provide jobs and construction activity to help our state recover from the impacts of COVID-19.
This includes pursuing new sources of renewable energy through Hawaii's largest renewable procurements.
In May, we announced the final selection of projects for our Stage two renewable energy RFP.
We're excited to have 14 projects, all solar plus storage or storage only, from the original 16 selected moving forward through the contract negotiation and community engagement phase.
If all are completed, they could add about 450 megawatts of solar and about three gigawatt hours of storage to our system.
Two of the projects are company self-build storage projects on Maui and Hawaii Island.
Stage one RFP projects also continue to advance.
While some developers provided force majeure notices as a preventive measure given the possibility of COVID-19 interruptions, so far, all stage one projects are still moving forward.
Last month, the commission approved our application to rebuild the Puna Geothermal Venture, or PGV, transmission line.
This will allow us to bring PGV back on to our system under the existing PPA, while awaiting approval of our amended PPA.
With land at a premium in Hawaii, we'll need to use both open land and as many rooftops as are available to reach our renewable energy goals.
We're gathering information on parcels as small as one acre and rooftops of at least 3,200 square feet for future grid-scale solar and wind projects and community solar projects.
We also continue working to help reduce carbon emissions from the transportation sector.
To help accelerate this transition, we filed a pilot project for eBUS make-ready infrastructure.
And just this week, Hawaiian Electric announced its commitment to convert its entire fleet of light-duty vehicles across the islands, nearly 400 sedans, SUVs, small vans and light trucks to be electric by 2035, leading the state of Hawaii in electric vehicle fleets.
Turning to our bank.
In the second quarter, we stayed focused on doing the right things during this difficult time, ensuring employee and customer safety and well-being, supporting our customers, managing risk and controlling costs.
We've ramped up sanitation efforts and the use of PPE at all of our locations and workspaces, and we've rolled out a new contactless card for all of our debit cardholders to keep them safe.
We've been able to help our customers manage economic uncertainty, offering fee suspensions and loan deferral and forbearance options, and providing Paycheck Protection Program, or PPP loans.
Our team worked aggressively to secure and deploy PPP funding, delivering $370 million in loans for approximately 4,100 small businesses that represent roughly 40,000 jobs in our state.
This accounted for the bulk of our loan growth in the quarter.
At the bank, we have a front-row seat to the effects of federal stimulus with federal stimulus checks, leading to significant deposit growth, 24% on an annualized basis.
This excess liquidity gives us added cushion during this COVID period, although it does pressure net interest margin.
The bank's net interest margin was also impacted by the lower interest rate environment and PPP loans.
Our core focus has been prudently managing our risk.
Our team has been working closely with commercial customers to understand their financial condition and ensure we provision at the right levels, and we're controlling costs despite additional COVID related expenses.
We're also taking advantage of new opportunities that this period presents.
As an example, we've seen rapid customer adoption of self-service options such as online banking and ATMs. This allows us to accelerate our plans for optimizing our branch footprint.
We've also started implementing our planned replacement of our ATM fleet with smart ATMs which will be the newest in Hawaii and will give customers even more capabilities outside the branches.
Now Greg will review our results for the quarter and our outlook.
Turning to our second quarter results on Slide 7.
Consolidated earnings per share were $0.45 versus $0.39 in the same quarter last year.
At the utility, timing and management of expenses and the PUC's grant of deferral treatment for COVID-19 related expenses had a positive impact.
At the bank, strong mortgage production and a gain on sale of securities helped offset tighter lending margins and higher provision.
At the holding company, while costs were well in line with plan, we did see a slight increase due to an acceleration, an increase in our charitable giving during the quarter to support our local community organizations and those impacted by COVID.
Consolidated 12-month ROE remains healthy at 9.4%.
Utility ROE increased 10 basis points versus the same time last year to 7.9%.
Bank ROE, which we look at on an annualized rather than a trailing 12-month basis, was 8% for the quarter, down from last year due to economic impacts of COVID-19.
Turning to the next slide.
Utility earnings were $42.3 million compared to $32.6 million in the same quarter last year, reflecting, in part, savings due to process improvements and targeted cost reductions.
The most significant drivers of the variance were $7 million lower operations and maintenance expenses, primarily due to fewer generating unit overhauls, less generating station maintenance work associated with overhauls, the reclassification of COVID-19-related bad debt expense from the first quarter of 2020 to a regulatory asset as a result of the PUC approval to defer these expenses and lower labor costs due to lower staffing levels and reduced over time.
The lower generation overhauls and station maintenance work represented approximately $4 million of the $7 million O&M variance and are largely timing related as some of that work will be performed later this year or next year.
Earnings also reflected a $5 million revenue increase from $4 million higher RAM revenues and $1 million for recovery of West Loch project and grid modernization projects under the MPIR mechanism.
$1 million higher net income due to an unfavorable adjustment in 2019 related to reliability performance incentives and $1 million lower interest expense due to debt refinancings at lower rates.
These items were slightly offset by the following after tax items: $1 million lower allowance for funds used during construction as we were as there were fewer long-duration projects in construction work in progress; $1 million higher cost savings from ERP system implementation to be returned to customers; and $1 million higher depreciation due to increasing investments to integrate more renewable energy, improve customer reliability and strengthen system efficiency.
Turning to the drivers of the utility's financial performance for the remainder of the year, the Public Utility Commission issued its final decision for our Hawaii Island Utility, confirming Hawaii Electric's 9.5% allowed ROE and 58% equity capitalization with no change to base rates.
Separately, if the PUC approves our settlement with the consumer advocate in the Hawaiian Electric rate case for Oahu, we should see a similar outcome, no increase in base rates with 9.5% allowed ROE and 58% equity capitalization.
The utility's multiyear strategy for greater operational efficiency and cost reductions should help offset the lack of base rate increases.
The PUC order approving deferral of COVID-related expenses covers expenses incurred from March 17 to year-end.
In the second quarter, we reclassified a pre-tax amount of $2.5 million in bad debt expense and incurred in the first quarter to a regulatory asset.
COVID related costs have been $6.5 million to date.
A separate application will be filed to request recovery of such costs in the future.
Although sales were down 11.6% versus the second quarter of last year, due to decoupling revenues, we were not significantly impacted.
Substantial decreases in fuel prices have been positive for both the utility and customers.
Steel prices were down close to 30% in the quarter, and the average customer bill declined by over $20 per month monthly since the pandemic began.
The utility may qualify for rewards this year under the fuel cost risk-sharing mechanism as well.
On Slide 10, we continue to forecast approximately $360 million of CapEx during 2020.
Last quarter, you may recall, we indicated the potential for up to $30 million below the forecast given potential COVID impacts.
After a full quarter in the COVID environment, we have confidence in achieving the $360 million we forecast for the year.
We're maintaining our longer-term CapEx and rate base guidance.
In 2021 to 2022 period, we still expect CapEx to average approximately $400 million per year or about 2 times depreciation.
As you know, with capital projects, the timing of a specific project spend can sometimes shift between years.
And the chart at the bottom left reflects some modest updates.
Those updates don't change our overall guidance in the bar chart on the top left.
We continue to expect the utility to be able to self-fund its forecasted CapEx through 2020 via retained earnings and access to the debt capital markets.
Turning to the bank.
American's net income was $14 million, down from $15.8 million in the prior quarter and $17 million in the same quarter last year.
Net interest income was $56.7 million compared to $61.1 million in the linked quarter and $61.5 million in the second quarter of 2019.
The decrease was primarily due to lower asset yields given the lower interest rate environment.
Higher amortization of premiums within the mortgage-backed securities portfolio also impacted investment portfolio yield.
Net income was also impacted by a higher provision for the quarter.
ASB took an additional $7 million in credit reserves related to COVID as well as an additional $4 million for unfunded commitments.
On the net income noninterest income side, gains on sales of securities contributed positively to net income.
We realized $7.1 million gain related to the sale of Visa Class B restricted shares and $2.2 million gain on the sale of investment securities as we sold some legacy positions to reduce credit risk and yield volatility in our investment portfolio.
There were additional COVID-related expenses and savings within noninterest expense.
American incurred $3.7 million in COVID-related expenses, consisting of additional pay to frontline employees, the payout of excess vacation days for employees unable to use vacation while working through the pandemic, purchases of PPE and sanitation supplies and employee meals purchased to promote employee safety and support small business restaurants.
These higher COVID-related expenses were largely offset by lower travel, business development and marketing expenses.
On Slide 12, ASB's net interest margin declined to 3.21% this quarter from 3.72% in the first quarter.
On the upper right, we've detailed the elements of that decline.
The lower interest rate environment was the largest driver of the net interest margin compression, comprising 34 basis points of the decline.
Much of this reflected anticipated repricing in Q2 of most of our adjustable and floating rate portfolio.
four basis points was related to low-yielding PPP loans.
FAS 91 amortization was also a large factor, reflecting a faster rate of prepayments due to lower rates at the long end of the curve.
This accounted for 15 basis points of compression.
We also realized strong deposit growth from the federal stimulus and unemployment benefits that added to cash deposit balances.
While bolstering our liquidity and low-cost funding base, these temporary the temporary excess liquidity is low-yielding and pressured margins.
As noted, we did realize benefit from lower deposit costs, which contributed eight basis points to net interest margin.
Turning to bank drivers for the remainder of the year.
We expect continued margin pressure, but at a more moderate pace than in the second quarter.
In the second quarter, NIM compression compressed quickly as variable rate loans repriced after the Fed lowered its benchmark rate to near 0 in March.
Approximately 93% of our variable rate portfolio have now repriced and indices to which those variable rates are tied are at or near their floors.
Thus, we don't expect that part of our loan book to have materially impacted be materially impacted by further NIM compression.
We do expect continued refinancing of our fixed rate loan portfolio, such as home mortgages, as customers take advantage of historically low rates.
This type of repricing is more gradual.
Aside from continued low interest rates, we expect increased amortization in the investment portfolio to continue to impact net interest margin.
As a reminder of how that impacts NIM, we purchased bonds for the investment portfolio at a premium or discount, and that premium or discount is amortized over the expected life of the bond's cash flows.
For mortgage-backed securities, which comprise 90% of this portfolio, the amortization increases if prepayments accelerate.
We see this occur in low interest rate environments as refinance activity increases.
We expect excess liquidity to continue to pressure margins at similar levels to those realized this quarter as well.
Given these factors, we now expect net interest margin to be in the 3.35% to 3.25% range for the year.
Turning to the provision.
As mentioned, we did have an additional provision further in the quarter related to COVID-19.
The total provision recognized during the quarter was $15.1 million as reflected in our on our income statement, which also included $4.3 million allowance related to unfunded commitments.
As noted on the slide, reserves for unfunded commitments are recorded in other liabilities on the balance sheet rather than the allowance for credit losses.
We believe we have approximately we have appropriately provided for future credit losses as of June 30.
The provision outlook for the balance of the year is dependent on the economic conditions, which at this point remain uncertain.
We are not currently providing full year bank provision guidance given the uncertainty created by the impacts of COVID-19 on our economy.
Slide 15 provides an update on what we're seeing in our loan portfolio.
Overall, we have a high-quality loan book that remains healthy with only 3% of our borrowers requesting or qualifying for additional deferral thus far.
Our residential book comprises approximately 60% of the loan portfolio, and the loan-to-value of that portfolio remains conservative at 52%.
Only a small portion of that portfolio, roughly 8%, have requested payment relief.
In consumer loans, which make up just over 4% of the overall portfolio, we've seen a high-volume of deferment request but at low balances.
While curtailment of supplemental unemployment benefits could result in increased deferment requests, we're closely monitoring what happens with additional federal stimulus.
We have moved all commercial markets and CRE loans with payment deferrals to what is called special mention, meaning that those are subject to enhanced monitoring.
These loans will be reevaluated for upgrade after successful resumption of payments.
Given the enhanced monitoring we have implemented for the commercial markets and CRE loans as well as the overall quality of our loan book, we feel we are well provisioned as of June 30.
ASB continues to maintain ample liquidity and healthy capital ratios despite the challenging economic condition.
The bank has strong liquidity with over $3 billion available from a combination of FHLB and unencumbered securities.
ASB's Tier one leverage ratio of 8.4% was comfortably above well-capitalized levels at the end of the second quarter.
As a reminder, the bank is self funding, and we don't expect to see a scenario in which it would need capital from the holding company.
Turning to our consolidated liquidity.
We are well positioned to withstand the impacts of COVID through the remainder of the year and beyond.
As of June 30, we had $425 million of undrawn credit facility capacity, consisting of $150 million at the holding company and $275 million at the utility with just $16.5 million in commercial paper outstanding, all at the holding company.
The utility paid off $14 million in long-term debt when it matured in July with no other long-term debt maturities until 2022.
As of June 30, it had $65 million in unrestricted cash balances.
In 2021, the utility has $50 million in short-term bank loan maturity and expects to access the debt capital markets to help fund its capital investment program.
At the holding company, we have $50 million long-term debt and $65 million short-term bank term loan maturing in the first half of 2021, and we are currently planning refinancing options for those maturities.
On Slide 18, we expect our dividend from the from an equity investment in the utility to be consistent with our earlier projections as the utility continues to perform in line with plan and has sufficient retained earnings to support its capital investment requirements and adequate liquidity to support growth in the customer account receivable balances and payment programs for customers that are impacted by COVID-19.
Although the dividend from ASB is lower than our pre-COVID outlook, bank dividends received to date are sufficient to maintain HEI's strong consolidated capital structure and liquidity.
On Tuesday, the Board approved our quarterly dividend of $0.33 per share at an annualized rate of $1.32 per share.
We expect to maintain our external dividend and do not expect the need for additional equity at this time.
We've talked through the key drivers for the utility and the bank.
And on Slide 19, you'll see our resulting guidance for the year.
At the utility, we're reaffirming our guidance range and expect to be within the low end of the range.
At the bank, we are continuing to provide pre-tax pre-provision income guidance, which includes net interest income, noninterest income and noninterest expense to range from $90 million to $110 million.
We now expect mid-single-digit earning asset growth compared to low to mid-single-digit growth we previously forecasted.
Given the current low interest rate environment and excess liquidity, we expect interest margin in the 3.25% to 3.35% range.
Our holding company guidance is unchanged at $0.27 to $0.29 loss.
Since it is still too early to determine bank provision, we're unable to provide consolidated earnings per share guidance at this time.
 Assistant:

Chosen response:
hawaiian electric industries q2 earnings per share $0.45.
q2 earnings per share $0.45.


Prompt:
Human: Second quarter consolidated financial results were strong as Hawaii's economy improved and as we advanced key priorities across our enterprise.
Our consolidated net income for the quarter was $63.9 million with earnings per share of $0.58, 31% and 29%, respectively, above the same quarter last year.
This followed a great first quarter, and for the first half of the year, our consolidated net income and earnings per share were up 56% compared to the first half of 2020.
At the Utility, our year-to-date results have benefited from our focus on cost management and efficiency and from timing items expected to reverse in the balance of the year.
We expect the Utility to remain within its full-year guidance range announced in February.
The improved Hawaii economy and strengthened credit quality of our Bank loan portfolio were key drivers of our results year-to-date and, in the second quarter, enabled the Bank to release a portion of its reserves for credit losses resulting in a negative provision for the quarter.
We are again increasing our full-year Bank and consolidated guidance, which Greg will cover shortly.
We've seen strengthening in Hawaii's economy with the reopening of our local economy and rebound of tourism.
However, we are closely monitoring the recent increase in cases due to the delta variant, as well as how our community response.
More than 60% of Hawaii residents are now fully vaccinated and we expect that that will increase as more employers, including state and county government, are requiring employees to be vaccinated or subject to frequent testing.
Controlling virus levels will enable Hawaii to continue to be an attractive tourism destination and that will help us as our economy open.
Daily visitor arrivals have increased strongly over the last couple of months, approaching, and sometimes exceeding, pre-pandemic levels with most of our arrivals continuing to be from the U.S. Mainland.
In June, arrivals from the U.S. West region were approximately 15% above June 2019 and their spending was 33% higher.
Unemployment declined to 7.7% in June, the fifth month of improvement.
Hawaii real estate values and activity remain robust.
For July, median prices of Oahu's single-family homes were up 22% and sales volume was up 12% over last year.
For condos, prices were up 8% and sales were up 58%.
As of the May forecast, UHERO, the University of Hawaii Economic Research Organization, expected state GDP to increase 4% in 2021 and 3.1% in 2022.
While we've seen great progress on the economy, we're still taking a cautiously optimistic approach, particularly with uncertainty due to the delta variant.
At the Utility, we remain focused on cost efficiencies as we make needed investments to continue to provide affordable, resilient and reliable electricity to reach Hawaii's climate goals.
The new Performance-Based Regulation or PBR framework is now fully in effect as of June 1, and we've begun returning cost savings to our customers under the management audit savings commitment and customer dividend component of the ARA or Annual Revenue Adjustment mechanism.
As we've discussed in the past, Performance Incentive Mechanisms or PIMs are an important part of the PBR framework.
In May, the Hawaii Public Utilities Commission approved the final details of a suite of PBR PIMs which are now in effect.
The Commission has now started a process to consider and develop additional performance incentives.
This includes PIMs and shared savings mechanisms relating to grid reliability, retirement of fossil fuel generation, interconnection of large renewable energy projects, and cost control for fuel, purchased power and other non-ARA costs.
We don't yet know when an additional performance mechanisms would come into effect or what the potential earnings impact could be.
However, we always expected PBR would be a process of continued refinement, and we look forward to collaborating with stakeholders to develop new ways to align incentives with customer interests.
As we've always said, reaching our collective clean energy and decarbonization goals must be done in a way that is equitable and involve everyone working together.
A lot of the progress we're seeing now across Utility scale and distributed renewable energy additions, grid modernization and the electrification of transportation are good examples of this.
The Powering Past Coal Task Force, convened by our Governor Ige, has brought together a range of stakeholders to ensure Commission-approved projects on Oahu are successfully brought online as we prepare for retirement of Hawaii's only coal plant.
We're pressing forward on Stage 1 and 2 renewable procurement projects with independent power producers.
Three Stage 1 projects are now under construction with others slated to start construction this year or early next year.
Six of 12 Stage 2 projects now have approved PPAs and the remaining six Stage 2 projects are pending approval.
Last quarter, we sought clarification from the Commission regarding the interconnection docket and the Kapolei Energy Storage battery energy storage project.
We appreciated the Commission's work to respond quickly in both matters.
In the interconnection docket, the Commission clarified its intent for us to track costs to customers resulting from changes in project schedules rather than record such costs.
And the Commission revised the conditions to its approval of the Kapolei Storage project, enabling us to now work with the developer to advance that project.
We are working to accelerate the addition of more distributed energy resources and are advancing programs to benefit all customers.
As of this June, we surpassed 90,000 cumulative installed customer-sited solar systems, which comprise most of the nearly 1 gigawatt of solar capacity on our grid.
And now the Battery Bonus program launched last month incentivizes customers to add storage and benefit the overall system by allowing the Utility to use energy from those systems in the evening hours.
Grid modernization is also progressing well with advanced meter deployment accelerating with the Commission's approval to shift from an opt-in to an opt-out approach, enabling greater operational efficiencies and more customer options.
Finally, we are encouraged by recent developments that will accelerate electrification of transportation here in Hawaii and across the country.
In June, the Commission approved our eBus make-ready Infrastructure pilot project, which is projected to provide savings for bus fleet operators, while decreasing GHG emissions.
Governor Ige signed into law a bill to replace the state's light duty vehicles with a zero-emission fleet by 2035, consistent with our Utility's own fleet electrification goal and to allocate 3% of oil barrel tax revenues to finance construction of EV charging stations.
President Biden's recently announced goal of 50% of vehicle sales being electric by 2030 will also help accelerate our electrification efforts, which will benefit our customers, our environment and our clean energy transition.
Turning to the Bank.
ASB's strong results reflected the credit-driven reserve release and resulting negative provision for credit losses as the economy and credit quality improved.
We believe our reserve levels are appropriate, taking into account ongoing pandemic uncertainty.
The Bank's margin improved compared to the first quarter, benefiting from fees related to ASB CARES or Payment Protection Program, PPP loans, lower amortization of investment premiums and a continued record low cost of funds of 7 basis points.
We're still seeing margin pressures due to low asset yields and excess liquidity as strong deposit growth continues to outpace lending opportunities at present.
Even so, earning asset growth is helping us grow net interest income consistent with our expectations and we're starting to see more in the loan pipeline with an uptick in home equity lines of credit, as well as continued strength in residential mortgages and commercial real estate.
As ASB's digital banking transformation continues, we're focused on strategic investments to keep the franchise strong and competitive, expand service levels and continue to deliver the personal touch that is a hallmark of who we are as a bank.
Ann and the Bank team are upgrading the Bank's technology, data analytics and operating model to allow our team members to transition away from processing tasks and focus more on customer relationships and satisfaction.
We're getting great feedback from Bank customers on our digital offerings so far.
Nearly 50% of consumer deposits are now through our upgraded ATM fleet or mobile platform and customer satisfaction remains high.
We've opened three digital centers to date with a fourth opening today and are excited to see how this new concept, which merges our digital platforms with our warm in-person presence, performs in the coming months.
And now, Greg will discuss our financial results and our outlook.
Turning to our second quarter results.
Consolidated earnings per share were $0.58 versus $0.45 in the same quarter last year, a 29% increase quarter-over-quarter.
Both the Utility and Bank performed well and contributed to our strong consolidated results.
The Utility delivered stable earnings even as quarterly results reflected higher O&M expenses, driven by an expected uptick in generation overhauls.
The Bank delivered solid financial performance that was enhanced by the reduction of reserves for credit losses and resulting negative quarterly provision, reflecting underlying improvements to the credit profile of its loan portfolio.
And the holding company loss has remained in line with expectations.
Compared to the same time last year, our consolidated trailing 12-month ROE improved over 100 basis points to 10.5% and the Utility realized return on equity increased levels of 100 basis points to 8.9%.
As you may recall from our Q1 earnings call, we indicated the Utility ROE expectations for the second half of 2021 would be impacted by the management audit savings commitment and customer dividend as O&M reductions that have improved earnings in the first half of 2021 are returned to customers under PBR, starting June 1.
Also of note, Bank ROE, which we look at on an annualized basis, more than doubled to 16.8%.
On Slide 8, Utility net income of $41.9 million was comparable with second quarter 2020 results of $42.3 million.
The most significant variance drivers were $6 million of higher O&M expenses compared to the second quarter of last year.
The main factors that drove higher O&M included $3 million due to more generating facility overhauls.
These were largely timing-related as some of the overhauls budgeted for late last year and earlier this year took place on a delayed basis this quarter.
We also had $2 million from lower bad debt expense in the second quarter of 2020 due to the recording of year-to-date amounts following the Commission's decision allowing deferral of COVID-19-related expenses last year; about $1 million from the write-off of a terminated agreement relating to a combined heat and power unit; and $1 million due to increase in an environmental reserve.
Of note, O&M increases were partially offset by $1 million from lower staffing levels and efficiency improvements.
We also had about $1 million higher in depreciation.
The higher O&M and depreciation were offset by $5 million in higher RAM revenues, Rate Adjustment Mechanism revenues.
$2 million of this increase related to a change in the timing for revenue recognition within the year with target revenues recognized on an annual basis remaining unchanged; $1 million from lower non-service pension costs due to the reset of pension costs included in rates as part of a final rate case decision; and $1 million lower expense -- lower Enterprise Resource Planning system implementation benefits to be passed on to customers as we have already fully delivered on our commitment to provide customer savings under this program for Hawaiian Electric.
Turning to the drivers of Utility performance for the rest of the year.
All PBR PIMs from the December PBR order are now in effect.
We expect no material upside from the PIMs this year and are now tracking the potential for reliability PIM penalties and expected downside sharing under the fuel cost risk sharing mechanism.
We saw some reliability impacts related to prolonged repairs at one of our substations, which has been partially restored and full restoration is expected to be completed soon.
In addition, fuel costs have increased from our January benchmark and thus we expect there will be some downside sharing under the fuel cost risk sharing mechanism.
We currently have approximately $26 million of COVID-related costs, primarily estimated bad debt expense and deferred regulatory asset account.
The moratorium on customer disconnections expired on May 31 and we've requested continuation -- continued deferral of COVID-related costs until the end of this year.
We will file for recovery once we get a better idea of actual bad debt or realized amounts that requires some time so we can see how our work with customers on payment plans and other bill assistance alternatives plays out.
As mentioned, our O&M expense this quarter was impacted by an increase in overhauls, including some that were previously delayed.
We expect to incur more overhaul expenses in the second half of the year and those are included in our guidance.
The Utility's ability to achieve the accelerated management audit savings commitment is an important driver of results this year.
To date, we've been able to realize savings through increased efficiency and our cost management programs.
The Utility is on track to achieve savings to meet its annual $6.6 million commitment, which we started returning to customers on June 1.
Utility capital investments to date have been lower than planned due to productivity improvements and efficiencies that have reduced certain project costs, delay from prolonged repairs of one of our substations limiting work that could be done on other parts of the system, and some supply chain delays due to the pandemic.
We now expect capex to be in the $310 million to $335 million range for the year compared to our prior capex guidance of $335 million to $355 million.
While this means our forecasted rate base growth is now 3% to 4% from a 2020 base year, we don't expect this year's lower capex range to impact the long-term earnings growth.
That's because under PBR, earnings growth comes from three main sources: the Annual Revenue Adjustment mechanism, which covers O&M and baseline capex and our ability to manage our spending within that allowance; separate capex recovery mechanisms, such as EPRM, Exceptional Project Recovery Mechanism and our renewable energy recovery mechanism; and performance incentives.
We still expect to realize 4% to 5% Utility earnings growth, not including potential upside from PIMs starting in 2022, the first full year of PBR.
Recovery of electrification of transportation and resilience projects could drive incremental growth from there.
Turning to the Bank.
ASB's net income for the quarter was $30.3 million compared to $29.6 million last quarter and $14 million in the second quarter of 2020.
The negative provision for credit losses was the most significant driver of higher income.
American grew net interest income, while non-interest income was lower compared to the same quarter last year, where we had higher gains on sale of securities, including a $7 million after-tax gain from the sale of Visa Class B restricted shares.
Now I'll go through the drivers in more detail.
On Slide 12, ASB's net interest margin expanded slightly during the quarter to 2.98% from 2.95% in the first quarter.
Fees related to PPP loans, lower amortization of investment premiums and a record low cost of funds helped soften the pressure from the low interest rate environment and continued strong deposit growth.
We recognized $5 million in PPP fees in the second quarter as ASB continues to actively assist customers through the forgiveness process.
American anticipates a slight reduction in PPP fee recognition for the second half of the year and continued tapering in 2022 and thereafter.
Total deferred fees as of June 30 were $9.6 million.
Lower amortization of investment premiums this quarter was driven by a slower pace of repayments as a result of lower refinance activity.
This quarter, we continue to see record low cost of funds at 0.07%, down 1 basis point from the linked quarter and 11 basis points from the prior year.
Overall, we still expect that NIM for the year will range from 2.8% to 3%.
However, we anticipate that that balance sheet growth should still lead to net interest income in line with expectations for the year despite the continued low interest rate environment.
In the second quarter, the allowance for credit losses declined $13.5 million, reflecting the improved local economy and credit quality with credit upgrades in the commercial loan portfolio, lower net charge-offs and lower reserve requirements related to the customer unsecured loan portfolio.
The Bank recorded a negative provision for credit losses of $12.2 million compared to a negative provision of $8.4 million in the first quarter and a provision expense of $15.1 million in the second quarter last year.
ASB's net charge-off ratio of 0.04% was the lowest since 2015.
This compared to 0.18% in the first quarter and 0.49% in the second quarter of 2020.
Non-accrual loans were 1.03%, up slightly compared to 1% in the first quarter and 0.86% in the prior year quarter.
The increase in non-accrual loans was largely in the residential portfolio, which has a very low historical -- has very low historical loss rates and strong collateral positions.
As of June 30, nearly all previously deferred loans have returned to scheduled payments.
We believe we are appropriately provisioned in light of the ongoing uncertainty of the pandemic.
Our allowance for credit losses to outstanding loans was 1.51% at quarter end.
ASB continues to manage liquidity and capital conservatively, maintaining ample liquidity and healthy core capital ratios.
The Bank has more than $4 billion in available liquidity from a combination of reliable resources.
ASB's Tier 1 leverage ratio of 8% was comfortably well above well-capitalized levels.
Given the current lower risk profile of our portfolio, we continue to target a Tier 1 leverage ratio in the 7.5% to 8% range to ensure competitive profitability metrics and growth of the ASB dividend, while maintaining strong -- a strong capital position.
Regarding HEIs financing outlook for 2021.
At the holding company, we expect higher Bank dividends to HEI this year than reflected in the previous guidance given ASB's year-to-date performance, improved outlook and efficient capital structure.
We now expect Bank dividends of approximately $55 million to $65 million versus the previously estimated $50 million to $60 million.
Consolidated capital structure and liquidity remains strong and we do not anticipate the need to issue external equity in 2021 unless we identify significant additional accretive investment opportunities.
And we remain committed to maintaining an investment-grade credit profile.
Turning to our guidance.
We're reaffirming our previously issued Utility guidance but expect to be in the lower half of the range due to headwinds from potential reliability PIM penalties and downside sharing under the fuel cost risk sharing mechanism.
However, we're revising our Bank and consolidated HEI guidance.
Our revised Bank guidance is $0.79 to $0.94 per share, up from our prior guidance of $0.67 to $0.74.
This reflects our updated provision range of negative $15 million to negative $20 million.
Given growing uncertainty due to the delta variant, we have not included any potential additional provision credits for the balance of 2021 in our guidance range.
However, we will continue to monitor the economic data closely and make future reserve decisions based on third quarter data.
We expect the increased Bank profitability and dividend to the holding company to translate into higher consolidated earnings growth.
As a result, we're increasing our consolidated earnings per share guidance to $2 to $2.20 per share.
To wrap up, the second quarter was strong financially and operationally for our companies and we're positioned well to continue delivering value for all our stakeholders the rest of this year and beyond.
As we've always said, ESG is in our DNA, and as we work to integrate ESG further into our strategies, business planning, risk management practices and reporting, we're very focused on ensuring linkage to value for all stakeholders.
 Assistant:

Chosen response: q2 earnings per share $0.58.


Prompt:
Human: We hope you're safe and well.
I have been deeply impressed by the dedication of our employees and the resilience of our customers and communities as we all adapt to the ongoing challenges of COVID-19.
Our core strengths continue to serve us well in these unprecedented times.
That includes our long history of providing essential services for the State of Hawaii, strong liquidity, stabilizing utility regulatory mechanisms, our Bank's conservative approach to risk, its low risk loan portfolio and strong capital position.
In the third quarter, our financial stability enabled us to continue helping our customers, our economy and our communities and again to deliver solid financial results.
Net income of $65 million and earnings per share of $0.59 compared to $63.4 million and earnings per share of $0.58 in the same quarter last year.
I'll start with an update on the virus and economic conditions in Hawaii before turning update on our companies.
Then, Greg will review our financial results and outlook.
Well, there is still uncertainty regarding the course of the virus and the timing of economic recovery, we've seen some positive signs.
First, daily new COVID cases are down significantly from the surge we saw this summer.
The seven-day average of new cases is down to 92 with about a 2% positivity rate after a second stay-at-home order on Oahu starting in late August.
Oahu's local economy largely reopened in late September, under a tiered framework and since then we've been able to move to the second tier allowing more business activity.
On October 15, Hawaii's tourism sector reopened with a program allowing domestic travelers with a negative COVID test to bypass the 14-day quarantine.
Since then, we've seen an average of 5,600 arrivals per day, up from the roughly 2,000 a day that we saw before the 15th.
Starting today, this program also includes travelers from Japan and Hawaii is working to extend it to other countries.
While the tourism reopening is encouraging, the timing of a sustained reopening depends on how the virus plays out.
The federal government and military, our second largest economic driver, have maintained stability throughout the COVID period.
Residential real estate values have also remained strong.
Year-to-date September, Oahu's single family home prices were up 3.3% and compared to the month of September last year, Oahu's single family home prices were up more than 13% driven by low inventory and low interest rates.
The latest forecast from the University of Hawaii Economic Research Organization or UHERO whose outlooks have informed our own estimates, projects Hawaii's economic recovery starting in 2021 and accelerating into 2022.
Turning to our companies.
Keeping customer rates down has been a central focus for our utility.
That began before the onset of COVID and remains a core priority.
Fortunately, customers have seen some bill relief this year.
Lower fuel costs and a lower revenue balancing account component from higher-than-projected electricity sales last year meant that an Oahu residential customer using 500-kilowatt hours of electricity in October paid 13% less than in March.
The commission has extended the suspension of disconnections for non-payment through year-end.
We continue working with customers on repayment options and connecting them with services to help them through this time including with utility bills.
Last month, the commission approved our settlement with the consumer advocate to not increase base rates in our Oahu rate case.
In improving the settlement, the Commission maintained Hawaiian Electric's current allowed return on equity of 9.5% and 58% equity capitalization, lifted the 90% cap on Schofield Generating Station project cost recovery, ended the 2017 rate case customer benefit adjustments and deemed the enterprise resource planning system benefits commitment to be flowed through to customers as part of the zero base rate increase.
To help offset the lack of a base rate increase and deliver on our commitment to ramp up to $25 million in customer savings by year-end 2022, our utility is executing on its multi-year efficiency improvement program, which began earlier this year.
While we pursue cost efficiencies, we are also pressing forward aggressively on our clean energy goals.
We are on track to exceed the 2020 RPS milestone of 30% for the year.
Since the RPS calculation divides renewable energy by sales, lower sales due to COVID temporarily pushed our RPS above 35% as of the second quarter.
With electricity sales expected to increase in the fourth quarter, we expect RPS to moderate, but still exceed 30% by year-end.
In the next few years, we anticipate strong RPS growth from our major renewable energy and storage procurements.
In the third quarter, we filed eight purchase power agreements for renewable energy and storage projects and to self-build storage applications as part of our Stage 2 procurement.
Two of the projects selected in that procurement are still under negotiation.
Last month the PUC approved the 8th final PPA from our Stage 1 procurement for a solar-plus-storage project on Maui.
If all Stage 1 projects and the filed Stage 2 projects come online in anticipated timeframes, they would add nearly 600 megawatts of renewable energy and 3 gigawatt hours of storage to our system between now and the end of 2023.
This will help [indecipherable] Hawaii in 2022 with the expiration of one of our Oahu IPP contracts.
The Stage 2 projects together with our recently proposed Kahului synchronous condenser project will also help us retire one of our Maui fossil plants by 2024.
We are also preparing an RFP for up to 235 megawatts of community-based renewable energy.
Given the scale of our system, these procurements are significant.
If you add up what I've just talked about, you get over 800 megawatts, that's on a system with a total peak load of just 1,200 megawatts on Oahu and 200 megawatt each on Hawaii Island and Maui County.
While timing for projects to come online can be affected by many factors, there is no question we are moving forward aggressively.
As you know, we, the commission and many stakeholders, have been working hard to align the regulatory framework with customer interest and Hawaii's renewable energy goals through the performance-based regulation or PBR docket.
The commission has kept the docket moving through COVID and appears on track for a December decision.
The guiding principles is set early on in PBR including maintaining financial integrity of the utility and the collaborative stakeholder based approach, the commission established has been consistent throughout the process.
We've generally summarized areas of consensus and divergence on Slide 30 of our deck.
The Commission's decision and order will confirm the way forward.
The Commission has been progressing other dockets too, and just last week approved a 50-year contract for Hawaiian Electric to own, operate and maintain the electric system serving the Army's 12 installations on Oahu.
Turning to our banks.
American Savings Bank continues its solid execution of the dynamic COVID environment.
Areas are returning to normal operations.
We've reopened six branches we had temporarily closed.
While low interest rates continue to compress net interest margin in the third quarter, we were able to replace much of the prior quarter's gains on sales securities through core activities, including strong mortgage banking income and resumption of certain payments.
We remain focused on sound risk management, with the timing of a sustained tourism reopening uncertain, ASB's third quarter results again reflect elevated provision.
We think we are well-provisioned and continue proactively working with customers to understand how their financial health and outlook are affected by COVID.
Cost efficiency is and will continue to be our main focus particularly in the current low interest rate environment.
In addition to reducing COVID costs, we also closed five branches with two more scheduled in December.
Most of these have been temporarily closed earlier in the pandemic.
We're continuing to roll out our new smart ATMs providing more customer options and convenience.
We've been impressed by how customers have conserved to manage their resources during this time.
The majority of customers who sought initial loan deferrals are returning to repayment while some customers and sectors are more impacted, overall we are seeing low delinquency rates and continued strong deposit growth.
For customers who received PPP loans, we're now working on forgiveness and have started submitting loans to the SBA for that process.
We've continued to see robust adoption of our online and mobile banking services and high customer satisfaction with our digital offerings.
And now Greg will review our results for the quarter and our outlook.
Turning to our third quarter results.
Consolidated earnings per share were $0.59 versus $0.58 in the same quarter last year.
At the utility, timing and management of O&M expenses had a positive impact.
At the bank, tighter lending margins and COVID-driven provisioning continued to affect results while non-interest income from core activities improved compared to the linked quarter.
While holding company loss is well in line with plan, we saw a modest increase due to lower income at Pacific Current and higher interest expense from higher short-term borrowing.
Consolidated trailing 12 month ROE remains healthy at 9.4%.
Utility ROE increased 80 basis points versus the same time last year to 8.4%.
Bank ROE, which we look at on an annualized rather than a trailing 12-month basis was 6.8% for the quarter down from last year due to the economic impacts of COVID and a low interest rate environment.
Turning to the next slide.
Utility earnings were $60.1 million compared to $46.8 million in the same quarter last year.
The most significant variance drivers were $10 million lower O&M expenses, primarily due to fewer generating unit overhauls, lower labor cost due to lower staffing levels and reduced over time and elevated vegetation management work in the third quarter of 2019.
The lower overhauls represented about $5 million of the $10 million O&M variance.
Of the $5 million, $2 million was due to an elevated number of overhauls in the third quarter of 2019, and the remaining $3 million was timing as some overhaul work will be performed later this year or in 2021.
We also had a $5 million revenue increase from higher rate adjustment mechanism revenues and a $1 million increase in major project interim recovery revenues for the West Loch PV and Grid Modernization projects.
These items were partially offset by the following after-tax items.
$1 million lower AFUDC as there were fewer long duration projects in construction work in progress.
$1 million higher savings from enterprise resource planning system implementation, which are to be returned to customers and $1 million higher depreciation due to increasing investments to integrate renewable energy and improve customer reliability and system efficiency.
Looking at the drivers of the utilities' financial performance for the rest of the year.
With the Commission's final decision in Hawaii Electric rate case, our rates, cost of capital and equity capitalization are now set across all three utilities.
Recall that we received a final decision in July for no base rate increase in the Hawaii Electric Light rate case and are not filing a request a rate case for Maui Electric.
The utilities multi-year efficiency program will help offset the lack of base rate increases and achieve the Management Audit customer savings commitment.
Cost savings initiatives are well under way with additional efficiency opportunities to be identified.
COVID-related expenses from March 17 to year end are being deferred for the commission order we received in June.
We've requested an extension of that deferral through at least June 30 of next year.
We'll have to file separately for recovery at a later date.
COVID related costs have been $12.4 million to date, mostly related to bad debt expense.
The suspension of customer disconnections remains in place until year end.
Lower fuel prices have been good for our customers with a typical 500-kilowatt hour residential monthly bill on Oahu in October was down $21 since March, due to fuel price savings for customers.
With these savings, the utility may qualify for a reward under the fossil fuel cost risk sharing mechanism.
On Slide 11, based on year-to-date information, we are forecasting $340 million to $350 million of capex in 2020, down from $360 million communicated last quarter, primarily due to unexpected delays from COVID-19 and completion of some of our work at lower cost.
Specifically COVID-19 delayed our smart meter deployment, completion of a generating unit overhaul on Maui and impacted transmission structural replacement work when a helicopter contractor went out of business due to COVID-19.
Fortunately, we were able to bring some of that work in-house and completed at lower cost.
We also saw some other delays related to permitting.
We are maintaining our longer-term capex and rate base guidance in the 2021 to 2022 period.
We still expect capex to average approximately $400 million per year or about 2 times depreciation.
While strategically important, we don't expect the recently approved Army Privatization contract to have a material impact on annual earnings, which will depend on a number of factors including the amount in timing of capital upgrades and capital replacements.
We continue to expect the utility to self-fund its forecasted capex through 2020 via retained earnings and access to the debt capital markets.
Turning to the bank on Slide 12.
American's net income was $12.2 million in the quarter compared to $14 million in the prior quarter.
Although yield on earning assets continued to be impacted by the low interest rate environment, we had improvements in a number of areas including record mortgage banking income, a record low cost of funds supporting net interest margin, increased fee income as we resumed certain fees suspended to help customers during the initial impact of COVID and lower non-interest expense.
We continue to see elevated provisioning this year given the ongoing COVID-19 related economic uncertainty, provision was down slightly versus the last quarter, which included amounts for unfunded commitments.
Improved non-interest income from core activities and expense controls were key drivers of bank net income during the quarter.
As you may recall, we had a large one-time impact in the second quarter from $9.3 million in gains on sale of securities on a pre-tax basis.
We were able to replace much of that amount through a combination of record mortgage projection generating mortgage banking income of $7.7 million versus $6.3 million last quarter and resumption of previously suspended fees driving $9.6 million in fee revenue compared to $7.2 million last quarter.
Expense controls were also helped to offset the second quarter's gain on sales.
In the second quarter, we incurred $3.7 million in COVID-19 related expenses consisting of additional -- paid to frontline employees, the payout of excess vacation days for employees unable to use vacation while working through the pandemic, purchases of PPE and sanitation supplies, the employee meals to promote employee safety and support Small Business restaurants.
In the third quarter, our COVID-19 related costs were down $3.1 million to $0.7 million consisting primarily of cleaning and sanitation costs.
On Slide 14, as expected ASB's net interest margin compressed more moderately in the third quarter than prior quarter, narrowing 9 basis points to 3.1%.
Record low cost of funds and lower FAS 91 amortization help to offset the impact of the low interest rate environment on asset yields.
Most of our adjustable-rate loans repriced in the second quarter while fixed price loans, which are driving most of the repricing now, reprice more gradually.
For the remainder of the year, we expect continued margin pressure, but at a moderate pace.
This includes pressure from continued low interest rates and from excess liquidity due to strong deposit growth and lower reinvestment yields.
For the full year, we expect to be within our previously guided NIM range of 3.35% to 3.25%, year-to-date net interest margin was 3.34%.
This quarter's provision was $14 million compared to $15.1 million in the linked quarter.
With uncertainty regarding if we will realize a sustained gradual reopening of tourism and strengthening of our economy, this quarter's provision included $12.3 million in additional reserves related to potential economic impacts from the pandemic.
Credit quality improved in our personal unsecured loan portfolio and we were able to release some reserves related to that portfolio during the quarter.
Net charge-offs also improved and were lower than the last two quarters.
With the economic picture still in flux we are still holding off on providing provision guidance.
Slide 16 provides an update on what we're seeing in our loan portfolio.
Overall, we have a high quality loan book that remains healthy with only 3% of our portfolio on active deferral at the end of the quarter.
76% of deferred loans have returned to payment.
Previously deferred loans, do have a somewhat higher delinquency rate of 1% compared to 0.3% for our portfolio as a whole.
We continue to carefully monitor our portfolio and are closely -- are working closely with our customers to understand their circumstances and outlook.
Given the enhanced monitoring, we have implemented for commercial loans as well as the overall quality of our loan book, we feel we are well-provisioned as of September 30.
As we continue -- ASB continues to maintain ample liquidity and healthy capital ratios.
The bank is over $3.2 billion in available liquidity from a combination of reliable sources.
ASB's Tier 1 leverage ratio of 8.35% was comfortably well above well capitalized levels as of the end of the quarter.
As a reminder, the bank is self-funding and we don't anticipate that it would need capital from the holding company even under more severe stress scenarios than we anticipate from COVID-19.
Turning to consolidated liquidity, we're well positioned to withstand the impacts of COVID.
As of September 30, we had $425 million of undrawn credit facility capacity, consisting of $150 million at the holding company and $275 million at the utility, with just $23 million in commercial paper outstanding, all of which was at the holding company.
We recently executed transactions to further enhance liquidity and pre-fund upcoming debt maturities.
At the holding company in September, we executed a $50 million private placement to pre-fund a March 21 maturity.
In October, we launched and priced a subsequent transaction to pre-fund a term loan maturity coming up in April, 21.
At the utility, in October we executed $115 million private placement, which we can draw on at any time leading up to its January funding date.
The utility has no long-term debt maturities in '21.
At the holding company, all long-term debt maturities in '21 are now pre-funded and we maintain solid liquidity and financial flexibility and strength heading into 2021.
And we remain committed to an investment-grade capital structure.
On the next slide, we expect our dividend from and the equity investment in the utility to be consistent with our earlier projections.
The utility continues to perform in line with plan, has sufficient retained earnings to support its capex and adequate liquidity to support growth in customer account receivable balances and payment programs for customers impacted by COVID.
Bank dividends received to date are sufficient to maintain HEI's strong consolidated capital structure and liquidity.
We expect to maintain our external dividend as reflected in HEI's recent dividend announcement.
On Slide 20, we've updated our guidance for the full year.
At the utility, we are reaffirming our guidance range of $1.46 to $1.54 per share, and expect the utility to be within the bottom half of that range.
While second quarter and third quarter utility results were strong, that was partially due to timing of expenses, some of which are expected to be incurred in the fourth quarter.
We're also working to offset the lack of the Hawaii Electric base rate increase and as mentioned, we're expecting capex to be $10 million to $20 million lower than previously anticipated.
At the bank, given economic uncertainty and its effect on provision, we're continuing to provide pre-tax pre-provision income guidance.
We've revised our pre-tax pre-provision income guidance upward to $105 million to $115 million versus the previous range of $90 million to $110 million or $10 million increase from mid-point to mid-point.
Our holding company guidance is unchanged at $0.27 to $0.29 loss.
Since bank provision remains uncertain, we're still not providing consolidated earnings per share guidance.
Overall, our companies continue to perform well during the pandemic.
Our financial stability has enabled us to deliver value for all our stakeholders.
In that vein, I'd like to close with a comment on ESG.
ESG has been a focus for us for a long time.
That's why we say ESG is in our DNA.
We just didn't call it ESG before.
We've long talked about the linkage between the health of our state and that of our companies.
Our renewable energy transition is central to our Company's strategy, and we talk about it on every call, along with the evolution of our regulatory framework to support that transition.
For our bank, key areas of focus include addressing affordable housing and financial fitness for our communities and customers as well as economic diversification and job creation.
And you'll recall that Pacific Current was formed to advance sustainability through infrastructure investments here in Hawaii.
We're formalizing our ESG approach, integrating it more deeply in our businesses to the extent material to value creation.
We published our first FASB aligned report in September and plan to expand future reporting to include TCFD aligned disclosures.
 Assistant:

Chosen response:
hawaiian electric industries q3 earnings per share $0.59.
q3 earnings per share $0.59.


Prompt:
Human: Now, Connie, will begin with her remarks.
In 2020, we achieved consolidated net income of $197.8 million and earnings per share of $1.81.
While down from 2019, our consolidated 2020 earnings include strong utility [Phonetic] results, driven by good regulatory mechanisms and the utilities focus on cost savings, while the bank performed well given pandemic-driven economic challenges.
Last week, our Board approved our third consecutive annual dividend, raising the quarterly dividend per share from $0.33 to $0.34.
This reflects our continued financial performance and our confidence in our future prospects.
I'm proud of the commitment of our employees as we work to support our customers through the challenges of 2020, protect fellow employees and care for our communities, all while continuing to deliver solid consolidated financial results and advance long-term priorities.
We have viewed our [Indecipherable] source of strength to help our state weather the challenges of COVID.
This has included extensive actions across our company, including at our utility suspending disconnections, providing payment options to help customers manage their bills and proposing to hold base rates flat on Oahu to help keep rates down.
In addition, based on the utility's strong financial results, at year-end, HEI provided $2 million for Hawaiian Electric to be the founding sponsor of the Aloha United Way, Hawaii Utility Bill Assistance Program to help families and all island pay utility bills.
Similarly, our bank offered loan deferrals, temporarily suspended fees and deployed $370 million in Paycheck Protection Program funding to support approximately 4,100 small businesses representing about 40,000 local jobs.
2020 was a record year for our charitable giving, including the Utility Bill Assistance Fund I just mentioned, our companies and employees together made charitable commitments of $5.5 million, more than double our typical level.
These actions reflect who we are as a company and our long-standing ESG focus.
In 2020, we issued our first validated ESG report, which is aligned with SASB guidance.
Despite the challenges presented by COVID, we remained focused on our strategic priorities, including at Hawaiian Electric, and those are to deliver a cost-effective clean energy portfolio, improve customer experience and offer innovative energy solutions, create a modern grid and technology platform, strengthen stakeholder relationships, work with stakeholders to align regulatory and market models, improve our company culture and ensure that we have the financial strength to deliver on our state's ambitious energy goals.
We outperformed our 2020 renewable energy portfolio milestone of 30% with 34.5% RPS for the year, while lower demand due to the pandemic contributed to that result, if electricity used had been the same as 2019, we would still have exceeded the milestone at 32%.
The RPS APM established in the performance base rate making docket incentivizes us to continue to focus on exceeding the statutory milestones, and we will talk about that in a moment.
We continue to aggressively advance renewable energy and storage procurement, filing nine Stage 2 RFP purchase power agreement.
Three of those have now been approved by the PUC.
We also filed applications for our two self-build storage projects and continued moving Stage 1 RFP projects forward.
Together, Stage 1 and 2 projects, if completed as planned, are expected to add about 650 megawatts of solar and about 3 gigawatt hours of storage to our system by the end of 2023.
Limited land, especially on Oahu, means that in addition to utility-scale projects, distributed energy resources' community-based projects and grid services are critical to achieving our goals.
20% of our residential customers and 36% of single-family homes on Oahu have rooftop solar, by far the leading rooftop solar uptake per capita in the nation.
The pace of new rooftop solar additions also picked up in 2020 with 55% more installed in 2020 than in the prior year.
Importantly, 78% of new rooftop solar applications also have battery storage.
This allows daytime excess solar production to be used to reduce fossil-based power at night.
We've launched our new Quick Connect program to enable customers to interconnect their rooftop solar faster, and we will soon launch our shared solar program, a new phase of community-based renewable energy to extend the benefits of clean energy to a wider range of residents, with priority to those who have been underrepresented in solar adoption, such as renters and customers with low-to-moderate incomes.
All of these clean energy efforts are contributing to our state's economic recovery and creating local jobs.
We continue to work together with our communities and stakeholders to find the best ways to achieve a clean energy future that's affordable, resilient and reliable.
Stakeholder engagement has been central to our integrated grid planning process, which is developing long-range plans to inform investment priorities for resilience, grid and generation resources.
Our utility focused heavily on cost savings in 2020.
Building on our One Company initiative, in 2020, we outlined a three-year program to reduce costs and increase efficiency, beginning well before the main management audit report that was part of our 2020 rate case.
In 2020, we achieved significant savings, including $7 million in O&M savings through better planning, coordination and execution of work; targeted staffing reductions; and continued efforts in strategic sourcing.
We also achieved the savings we committed to deliver to customers in connection with our Enterprise Resource Planning system, ERP.
Our cost management focus enabled us to adjust to the flat base rates we proposed for our Oahu rate case and positions the utility well to deliver on its management audit savings commitment, customer dividend and operate under PBR.
Our utilities' achievements in 2020 support our 2021 to 2025 strategic plan priorities, which include advancing decarbonization and resilience, both in our electric system and more broadly, in our state, driving a sustainable and equitable local economy, strengthening our company culture and demonstrating our commitment to safety and the highest level of performance in all that we do, engaging with our communities to develop solutions that are sustainable, reliable and affordable and ensuring we have the financial strength to invest in this decarbonized and sustainable future for our companies and our communities.
In December, the PUC issued its Phase 2 decision establishing the landmark PBR framework, capping a 2.5-year process that included extensive involvement by the utility and stakeholders.
Overall, we view the new framework is providing a balanced approach designed to provide value for customers and opportunities for the utility, as we continue one of the nation's most ambitious energy transformation.
The PBR framework is designed to balance a number of important interests, including those the PUC identified in its Phase 1 PBR decision last year.
For example, PBR promotes cost control and affordability through the inflationary adjustment and customer dividend component of the annual revenue adjustment or ARA mechanism, advances customer equity through incentives to collaborate on low-to-moderate income or LMI energy efficiency initiatives, encourages innovation through a new pilot project process, incentivizes accelerated renewable energy additions through the RPS-A performance incentive mechanism or PIM and supports utility financial integrity by eliminating elements of structural regulatory lag, establishing new revenue opportunities through PIM, the new pilot process and the ability to earn on O&M-based as well as capital-based projects through the new EPRM mechanism, providing safeguards against extreme results.
From an ESG standpoint, we view the PBR framework as providing a greater connection between our achievement of environmental and social goals and our financial performance.
As Greg will discuss further, 2021 is a transition year for the utility.
Our 2021 guidance and implied ROE reflect moderated assumptions for earnings and ROE with the initial implementation of PBR midyear this year.
Moving into 2022, we see strengthening financial opportunities for our company.
Among the key drivers of this 2021 transition are, first, most PBR elements, including the annual revenue adjustment, become effective June 1.
So we will see the full effect of PBR for the first time in 2022.
For example, the RAM lag we had will remain in 2021, but will be eliminated in 2022 and going forward.
Second, while we anticipate modest renewable energy additions in 2021, we expect that to pick up in 2022 and 2023 with more Stage 1 and Stage 2 RFP projects, which if completed as planned, will contribute to rewards under the new RPS-A PIM.
Third, with accelerated delivery of our management audit savings commitment to customers in 2021, we are adjusting to a higher level of cost containment this year than originally planned.
Finally, with our 2020 rate case settlement, a portion of 2019 and 2020 capital investment is not yet covered in rates and we will be working to address that.
We see increased opportunities for the company in 2022 and beyond as we work through these transition items and gain experience with the new PBR mechanism.
Turning to the bank, American performed very well in a challenging banking environment.
While its earnings were impacted by low interest rates and higher provision in light of COVID-driven economic uncertainty, the bank delivered solid profitability.
American had record mortgage production, gaining market share and new customer relationships.
The bank also worked to control costs to offset increased expenses related to COVID, while still investing in core priorities.
Throughout the pandemic, the bank is focused on delivering for its customers, including through deferrals, fee waivers and PPP funding.
American is now working on round two of PPP with new technology in place to streamline the process for both customers and the bank.
American worked hard for other stakeholders as well, enabling a successful program to deploy CARES Act funds to help both unemployed families and our restaurant industry during the pandemic and continuing to support its teammates with an excellent workplace culture.
As we look ahead, we expect low interest rates to continue to pressure margins for the bank, although a steepening of the curve could provide some tailwinds.
In low interest rate environments, cost management becomes all the more important and that will be a central focus for us.
At the same time, we will be investing in key areas to advance our anytime, anywhere, digital banking transformation.
We continue to manage credit conservatively.
While we are optimistic about the economy, there is still some near-term uncertainty, particularly in the first half of the year.
So we have maintained our strong provisioning to date.
That said, our loan portfolio remained strong with low net charge-offs and delinquencies.
The pandemic has altered customer behavior and expectations in profound ways.
We've seen a dramatic acceleration of customers migrating to our digital and self-service options.
Non-branch transactions such as online and ATM transactions have increased from 19% prior to COVID to 40% in December.
And we've been pleased to see very high levels of customer satisfaction with those options.
We want to continue our focus on making banking easy, be available to customers anytime, anywhere and encourage them to make American their primary bank.
We've rolled out new ATMs with increased capabilities, launched more online tools, including for mortgage applications in online deposit account opening.
With increased customer use of our digital channels, we've been able to consolidate eight branches and are introducing digital centers this spring.
These locations will leverage our digital capabilities, while still providing in-person interaction.
This refocusing of our branch network will provide savings over time.
As we enhance our digital offerings, deepening our relationships with our customers remains a cornerstone of our strategy.
We will also soon be launching additional online financial wellness tools for customers, empowering them with greater financial knowledge and providing increasing avenues engaged with and offer services to them.
And now, Greg will provide an update on the economy, our financial results and our outlook.
While 2020 was a challenging year for the Hawaii economy, there are signs of progress and our economy is on a path to recovery.
Daily visitor arrivals are currently around 8,000 and still well below the roughly 30,000 per day on average in 2019.
It represents a significant improvement from the 2,000 to 3,000 we were seeing before Hawaii's reopening to tourism in October.
Our state's pre-travel testing program has succeeded in keeping coronavirus cases low.
Hawaii's positivity rate is just 1% compared to the national average of 9.1%.
Arrivals are expected to continue improving with the nationwide roll-out of the vaccine.
Unemployment has also improved significantly to 9.3% in December of 2020, down markedly from 24% at the nadir of the pandemic.
Hawaii's housing market has remained resilient with single family home sales up 2.3% in 2020 and Oahu median prices for the full year 2020 rising 5.2% to $830,000.
Year-over-year sales volume and median prices remained strong in January at 14.7% and 9.8% respectively.
While GDP is expected to have declined by 10.2% in 2020, it is expected to return to growth beginning in '21 at 0.1% and strengthening to 5.2% in 2022.
Turning to our financial results.
In 2020, we achieved solid consolidated financial performance and advanced our longer-term priorities, despite the difficult economy.
Full-year 2020 earnings were $197.8 million or $1.81 per share compared to $217.9 million or $1.99 per share in 2019.
Utility earnings grew about 8% to $169.3 million and reflected efficiency improvements helping drive O&M lower.
ASB's full-year earnings were down $31 million or 35% versus a strong 2019 as financial results were impacted by both net interest margin compression and higher provision expense related to the economic shutdown.
However, the low interest rate environment helped drive record mortgage originations and sales and strong deposit growth, good expense control enabled management to offset costs related to COVID-19 while still investing in our priorities.
The holding company and other segment loss was higher than 2019, primarily due to higher charitable contribution expenses to support our community during COVID.
Our consolidated ROE for the last 12 months was 8.6%, down from 9.8% in 2019.
Utility ROE for the last 12 months improved 30 basis points despite the settled rate case that resulted in certain capital expenditures not being included in base rates and contributing to a 90 basis points drag unrealized ROE in 2020.
Bank ROE was down significantly due to the impacts from the mid-pandemic.
The utility had a solid year, delivering 8% net income growth during the pandemic as Hawaiian Electric executed on its commitment to reduce costs and deliver customer savings from opportunities identified in the PUC's management audit, while also adjusting to a no base rate increase from a 2020 Hawaiian Electric rate case settlement, which also resulted in no incremental rate recovery for certain above baseline capital investments in 2019 and 2020 that were expected to be addressed in a general rate case.
The utility's higher net income was primarily driven by the following items, $17 million in revenues under the annual rate adjustment mechanism or RAM, which funds investments in resilience, reliability and the integration of renewable energy; $6 million from lower O&M expenses primarily due to fewer generating facility overhauls, efficiency improvements in planning and execution of work and reduced staffing levels offset in part by higher environmental reserves; $3 million from lower interest expense due to debt refinancings; and $2 million from the recovery of West Loch PV and grid modernization projects under the MPIR mechanism, partially offset by lower Schofield MPIR revenues.
These items were also partially offset by $5 million higher depreciation expense, due to increasing investments to integrate renewable energy and improve customer reliability and system efficiency, $4 million from higher Enterprise Resource Planning system implementation benefits to be returned to customers and $4 million lower AFUDC as there were fewer long duration projects in construction work-in-progress.
In 20 -- turning to Slide 11, 2021 is a transition year for Hawaiian Electric as the newly adopted PBR framework is implemented over the coming months.
Most of the PBR mechanisms included in the annual revenue adjustment mechanism will become effective June 1 with the full effect of PBR in 2022.
Three new PIMs will be effective for the full year of '21, while additional new PIMs identified in the PUC's PBR order are planned to go into effect in -- on June 1.
Ongoing working group meetings will develop tariffs and flesh out many of the details needed to implement the new PBR framework.
Of note, the RAM lag, which in 2020 resulted in approximately 40 basis points of structural lag and in 2021, are projected -- a projected 20 basis points of ROE reduction or lag relative to authorized levels, will be eliminated beginning in 2022.
Although newly identified PIMs provide limited financial opportunity during 2021, the commission has indicated its intent to work with the utility and other stakeholders to increase and expand the incentive opportunity over time.
In addition, PBR is likely to evolve over the initial multi-year plan as the PUC monitors its functioning and plans for a comprehensive review in 2024.
Overall, we see PBR as a stable framework that can deliver reasonable earnings growth and returns, once fully implemented.
Management showed a strong ability to control expenses and deliver O&M reductions during 2020, while offsetting certain inflationary cost increases and costs incurred to achieve long-term savings.
We have a plan to deliver additional savings through improved scheduling leading to reduced over time, managed reductions in workforce, process improvements, strategic sourcing, and reducing our office footprint.
Under PBR, management's ability to effectively control expenses will be increasingly important in order to ensure strong financial performance over time.
While PBR provides inflationary adjustments through the new annual revenue adjustment formula, ongoing savings will be required to offset above inflationary cost increases.
In addition, in 2021, Hawaiian Electric has agreed to an acceleration of planned audit management savings, which were originally planned to be delivered over time as realized.
Under our Levelized Management Audit Savings commitment, we are delivering $6.6 million more in customer savings in 2021 than originally planned.
Our work to offset those customer savings through cost efficiencies is expected to be further reduced -- to further reduce O&M in 2021 resetting our base -- our O&M base.
Slide 13 shows the performance incentive mechanisms under PBR with the exception of the RPS-A PIM, which I'll touch on shortly.
Under PBR, the PIMs are an ongoing component of future-earning opportunities.
Performance incentives aren't new to us.
As you can see on the left of the chart, we've already had numerous PIMs in place for reliability, customer service and renewable energy procurement among others.
Under PBR, we now have PIMs that reward the utilities' ability to achieve faster interconnection times for new renewable resources, efficiently acquire grid services' capabilities from distributed energy resources, collaborate to deliver energy savings for low-to-moderate income customers and effectively deploy and enable advanced meters.
Only one of these new PIMs, the interconnection PIM has the possibility of a penalty.
While initial PIM opportunities in 2021 are modest and its December PBR order the PUC characterize the new PIMs is purposely conservative to make room for development of further PIMs, including in other dockets, such as the DER docket to potentially reach the 150 basis points to 200 basis points of opportunity referenced in the PBR docket.
Turning to Slide 14.
The new RPS-A PIM established under PBR will likely be the most impactful of the new PIMs over the next several years, particularly as renewable projects from our Stage 1 and Stage 2 RFPs start coming online in 2022 and 2023 time frames.
The RPS-A PIM rewards based on the -- rewards are based on the achievement of what the commission calls a corrected RPS calculation.
The statutory calculation is total renewable generation, including customer-sited generation as a percentage of utility sales.
Customer-sited generation is not included in utility sales.
You can see on the right side of this slide that the RPS-A PIM measures total renewable generation over total net generation where both generation numbers include customer-sited.
The annual milestones are still based on the statutory RPS goals even the -- even though the PBR-based RPS-A calculation makes them more difficult to achieve.
The annual targets are an interpolation of the RPS goals for the 2020, 2030, 2040 and 2045 dates.
We are rewarded for outperformance on a dollar per megawatt hour basis with the rewards starting at $20 per megawatt hour in 2021 and 2022 and declining to $10 per megawatt hour by 2024 and thereafter.
Based on our current projections, we think the reward this year could be up to $800,000.
Next year, it could be up to $5 million.
And in 2023, it could be up to as high as $14 million.
It's important to note that these projections are based on current assumptions surrounding our DER forecast, project commercial operation state's performance of third-party generators and many other variables.
In 2020, we invested $335 million in capital -- in utility capital investments.
We expect to be at or above this level in 2021 with over $300 million of baseline capital investments under way -- under the earning -- under the new annual revenue adjustment mechanism.
In addition, both the EPRM and renewable energy infrastructure recovery mechanisms provide for recovery of approved projects above the ARA and the EPRM allows recovery for value-added expense-based projects in addition to capital projects.
We have some large projects anticipated in 2022, including two self-build battery projects and a project to enable the retirement of a fossil fuel power plant on Mali.
Overall, 2021 and 2022 capex is expected to average just under $400 million annually.
We expect the utility to fund its forecasted capex through retained earnings, HEI equity contributions and access to debt capital markets.
Under PBR, our investments should drive average annual base earnings growth in the 4% to 5% area over the next several years, excluding any upside for performance incentive mechanism achievements.
Turning to the bank, higher provisioning and credit risk associated with the negative impacts of COVID-19 impacted 2020 earnings, which declined by about 35% year-over-year.
Both 2019 and 2020 included one-time gains.
2019 included net gains from the sales of properties the bank exited when moving to its new campus.
And 2020 included one-time gains from security sales.
Excluding both, earnings were still down about $31 million.
Although yield on earning assets was impacted by the low interest rate environment, we had strong performance in a number of areas, including record residential mortgage production, a record low cost of funds supporting net interest margin and strong loan and deposit growth.
On Slide 17, ASB's net interest margin or NIM stabilized in the fourth quarter, and full-year 2020 NIM remained healthy despite the challenging interest rate environment at 3.29%.
Record low cost of funds, along with PPP fees, helped soften the impact of low interest rate environment on asset yields.
The average cost of funds was 16 basis points for the full year 2020, 13 basis points lower than the prior year.
For the fourth quarter, the average cost of funds was a record low of 9 basis points.
On the loan side, in the current market, most of our adjustable-rate loans have already repriced at floors or market levels.
Ongoing declining loan yields are primarily driven by the differential between newly originated loans and existing prepaid or maturing loans.
We continue to -- we expect to continue to see pressure from low interest rates and from excess liquidity, due to strong deposit growth and lower reinvestment yields.
In 2021, we expect the net interest margin range -- to range from 2.9% to 3.15% for the full year.
Turning to credit, provision for the year was $50.8 million or approximately $50 million compared to $23.5 million in 2019.
The increase reflected additional credit risk associated with the negative economic impact of COVID-19.
Provision for the fourth quarter was $11.3 million, down from the $14 million in the third quarter, yet still elevated relative to $5.6 million in the same quarter last year.
We believe we are well provisioned going into 2021 given the uncertainty that remains as we continue to navigate through an expected multi-year recovery.
To date, we have not realized an elevated level of losses that have been provided for as 2020 net charge-offs were slightly lower than pre-COVID 2019 levels.
Slide 19 provides an update on what we're seeing in our loan portfolio.
Overall, we have a high-quality loan book that remains healthy with only 1% of our portfolio on active deferral at the end of the year.
Most deferred loans have returned to payment.
Previously deferred loans do have a somewhat higher delinquency rate of 1% compared to 40 basis points for our portfolio as a whole.
We continue to carefully monitor our portfolio and are working closely with customers to understand their circumstances and outlook.
ASB continues to maintain ample liquidity and healthy capital ratios.
The bank has approximately $3.7 billion in available liquidity from a combination of reliable sources.
ASB's Tier 1 leverage ratio of 8.4% was comfortably above well-capitalized levels as of the end of the fourth quarter.
As a reminder, the bank is self-funding and we don't expect that it would need capital from the holding company even under more severe stress scenarios that we have evaluated under COVID-19.
On Slide 21, our financing outlook for '21 for the year reflects our strong financial position.
The bank remains competitive and profitable and remains self-funding with high levels of liquidity.
We expect this to continue into '21.
In 2020, ASB's dividend to the holding company was $31 million and in 2021, we expect this to increase about 35% to approximately $42 million.
The utility is expected to continue to support a 65% industry average dividend payout ratio, which, in 2021, will amount to about $112 million in dividends to the holding company.
HEI remains well capitalized and will continue to ensure the utility has access to equity capital to meet its needs and maintain an investment-grade capital structure.
With improved cash distributions from the bank and utility, we do not anticipate the need to issue any external equity in 2021 unless we identify significant additional accretive investment opportunities.
Solid 2020 results and our improved earnings and cash flow outlook have allowed us to grow our HEI dividend, while managing our capital structure to maintain our investment-grade rating.
We are initiating our 2021 consolidated earnings guidance of $1.75 to $1.95 per share.
Our utility guidance of $1.53 to $1.61 per share assumes PBR implementation in June, consistent with the PUC's December order.
We also assume full recovery of COVID-19-related deferred expenses.
We expect utility capital investment to be at or above $335 million and mostly comprised of baseline capex covered by the ARA mechanism.
We do not expect PIMs to be a meaningful contributor to earnings this year given the conservative level of the initial PIM opportunity.
At the midpoint of our guidance range, we expect the utilities' realized ROE to be approximately 7.8% in 2021.
Once PBR is fully implemented in 2022 and we're able to effectively realize the benefit of the new ARA and EPRM mechanisms, along with existing mechanisms such as the renewable energy infrastructure mechanism, we expect average annual utility earnings growth of 4% to 5% with the potential for PIM achievement to enhance earnings growth and realized ROEs at the utility.
Our bank guidance of $0.52 to $0.62 per share reflects continued profitability in a low interest rate environment and more normalized provision levels.
As economic conditions and credit quality improve, release of loan loss reserves could provide some upside, but are not currently in our guidance range.
We expect flat to low-single-digit asset growth, and we expect net interest margin to be 290 basis points to 315 basis points.
We expect holding company losses to be consistent with 2020 levels.
And as we are continuing to build out the Pacific Current platform, we do not expect that it will contribute meaningfully to 2021 earnings.
We do not expect the need to -- for external equity in 2021.
And we are targeting consistent dividend growth, in line with earnings growth and a long-term dividend payout ratio range of 60% to 70%.
We are proud of the accomplishments we made in 2020 and we look forward to continuing to work with our customers, communities and employees as we progressed through recovery this year.
 Assistant:

Chosen response: quarterly dividend increase to $0.34 per share.