Relatively small Maui wildfire expenses ate into earnings of Hawaiian Electric and its parent company in the first three months of this year.

Hawaiian Electric Industries Inc., which owns the state’s largest utility, generated a $42.6 million first- quarter profit, down 23% from $55.2 million a year earlier.

The company said in its latest quarterly financial report, released Friday, that it continues to maintain liquidity for keeping near-term operations stable, though longer-term financial health is more uncertain.

HEI noted that the number of lawsuits filed against the company and its utility subsidiaries over the Aug. 8 Maui wildfires, which destroyed most of Lahaina and killed 101 people, has risen to roughly 400 currently from about 100 in mid-February.

Some attorneys have estimated that there could be more than 1,000 lawsuits filed against the utility company, given that around 2,700 buildings were damaged or destroyed. One rough estimate of property damage from the fires is $5.6 billion. An official cause of the fire has yet to be determined.

”There is no assurance that the company will be successful in the defense of the litigation or that insurance will be available or adequate to fund any potential settlements, judgments, or costs associated with the litigation,” HEI said in the report. “If any such losses were to be sufficiently high, the company may not have liquidity or the ability to access liquidity at levels necessary to satisfy such losses.”

HEI also said a stockpile of cash that it has swept together, along with cash generated from operations, is expected to be enough to meet short-term needs but that if further liquidity is needed, then the company could adjust. Such action, it said, includes reducing capital spending on nonessential projects and exploring asset sales.

In April, Bloomberg News reported that HEI was assessing moves with advisers that included possibly selling its American Savings Bank subsidiary. At the time, HEI declined to comment on what it called rumors or speculation.

On Friday, Scott Deghetto, HEI chief financial officer, reiterated the company’s position in response to a question about selling the bank during a conference call with stock analysts.

“We continue to not speculate on any strategic transactions or alternatives,” he said.

The bank generated $20.9 million in net income during the first quarter for HEI, up from $18.6 million a year earlier. On a tax basis, HEI values the bank at about $680 million.

Hawaiian Electric, which has about 471,000 customers on Oahu, in Maui County and on Hawaii island, contributed a first-quarter profit of $39.7 million, down from $47.5 million a year earlier.

Other HEI operations, which include a Hawaii island power plant that has been offline in recent months because of equipment problems, produced an $18 million loss that compared with a $10.9 million loss in 2023’s first quarter.

Hawaiian Electric and its parent have been trying since the Maui wildfires to bolster finances to handle extraordinary anticipated expenses largely from Maui wildfire litigation and statewide wildfire risk mitigation.

In late August they tapped $370 million from credit lines. HEI also suspended its stock dividend at the time, representing about $40 million in cash retention quarterly.

At the end of March, HEI and Hawaiian Electric reported having $257 million in cash on hand, up from $243 million at the end of 2023.

”We continue to prudently manage our liquidity as we work through the timing and impacts of litigation related to the Maui wildfires,” Deghetto said on the conference call.

Deghetto also said Hawaiian Electric is seeking a short-term credit facility up to $250 million secured by future revenue from customers. This financing is subject to state Public Utilities Commission approval. A decision is expected June 24.

The utility recently failed to convince key leaders in Hawaii’s Legislature to allow for potentially $2.5 billion in special financing to pay for wildfire risk mitigation.

Such legislation would have permitted Hawaiian Electric to sell low-cost bonds secured by ratepayer revenue over 30 years.

Under the arrangement, the debt would be repaid by ratepayers, subject to PUC approval. Hawaiian Electric said the secured bond financing would be less expensive for ratepayers because its cost for traditional debt rose after its credit rating was slashed from investment to junk grade due to the Maui fires. HEI also is in a poor position to raise capital by selling stock.

Shares of HEI closed Friday at $9.99 before the financial report’s release, down from $10.24 Thursday. HEI shares were at $37.36 the day before the Lahaina fire, and since then closed as low as $9.52 on April 16.

Scott Seu, HEI president and CEO, said on the conference call that he is more hopeful that legislation to permit securitized bond financing can pass in 2025.

In the meantime, Hawaiian Electric plans to spend $117 million this year on wildfire mitigation work and is seeking $450 million in federal matching grants to help fund $900 million in improvement projects to reduce fire risk.

The company also received a tentative $95 million federal grant award Aug. 30 to pay for half of a $190 million climate adaptation transmission and distribution resiliency plan the company proposed to the PUC in June 2022. Terms for using this grant are still being negotiated.

Expenses related to the Aug. 8 wildfires, which included two fires in Upcountry Maui that destroyed 19 homes, have had relatively small impacts on the bottom line for HEI so far.

The total since August through the end of March is $168.5 million, including $30 million in the first quarter. However, only $28.8 million of the total, including $9.6 million in the first quarter, has been outlaid by HEI because most of the expense has been covered by insurance or deferred for accounting purposes.

These expenses include $75 million from Hawaiian Electric insurance proceeds to help create a $175 million state-administered fund to compensate relatives of people killed by the fire and victims who were seriously injured if they forgo litigation.

HEI also said in its financial report that on May 4 it agreed to pay the state up to $18.4 million this year to settle indemnification claims asserted by the state related to costs for consultants advising the state on Maui wildfire issues.

“Our utility is committed to making the investments needed to mitigate wildfire risk and advance important safety and resilience work,” Seu said in a statement.