American Savings alters financials

The bank will take a $36 million charge in the second quarter

Two-thirds of the after-tax charge relates to fees from the early retirement of borrowings and the remainder is from losses on securities sales, the company said in a statement

The balance sheet "repositioning," done earlier this month, will allow American Savings to reduce the capital necessary to run the bank by nearly 20 percent as well as improve the bank's key profitability ratios of net interest margin and return on assets. The changes are subject to regulatory approval.

The bank expects to return $75 million to parent Hawaiian Electric Industries Inc., which will use the money to pay down debt, the company said, without "significant impact" on the bank's earnings or interest rate risk.

American Savings, the state's third-largest financial institution based on assets, said it also reduced the size of its noncustomer assets to levels "more consistent with industry averages," by selling $1.3 billion of high-quality investment securities with a weighted-average yield of 4.33 percent and retiring $1.2 billion of noncustomer borrowings with a weighted-average cost of 4.7 percent. The bank also purchased $300 million of short-term agency notes and entered into $200 million of Federal Home Loan Bank advances to facilitate the timing of the release of certain collateral.

HEI, which also owns three state utilities, said early last month its first-quarter profit grew fivefold to $34 million, or 41 cents a share, outpacing analysts' projections. Earnings from American Savings Bank in the quarter ending March 31 rose by $3 million to $14.6 million from $11.6 million. Bank revenue totaled $106 million in the quarter, up from $104 million a year ago, while expenses were $82 million, compared to $86 million.