American Savings Bank can see the future but is still teeming with uncertainty as it prepares to be spun off from its parent company, move into a new headquarters and become publicly traded on the New York Stock Exchange.
The state’s third-largest bank, which reported Thursday a 6.4 percent drop in first-quarter earnings, said it has been filing additional documents with the Securities and Exchange Commission in connection with becoming a stand-alone operation.
But the biggest obstacles standing in the bank’s way are the necessary approvals from a May 12 shareholder vote and a decision from the state Public Utilities Commission that would give the green light to Florida-based NextEra Energy Inc.’s $4.3 billion acquisition of Hawaiian Electric Industries Inc. As part of that deal, the state’s largest utility would need to spin off its American Savings Bank subsidiary.
"We’re preparing for that approval and making sure we’re ready to be spun out at the point in time when the PUC might finish (its process)," American Savings Bank President and CEO Rich Wacker said.
He said the bank’s intention is to be listed on the New York Stock Exchange under the ticker symbol ASBH.
"If the deal goes through, HEI shareholders who already own shares will receive shares in ASB Hawaii, and what we’ll be worth (in our stock price) will be based on the trading after that," Wacker said.
He said the bank also is still proceeding with plans to build a headquarters on a 62,595-square-foot parking lot next to Nuuanu Stream in Chinatown. The bank, which has been looking for several years to bring its support teams from six Oahu locations into one facility, bought the property on the corner of Beretania and Aala streets for $12 million on Nov. 24 from Pacific Constructors LLC.
"We are still in the process of gathering the costs together, and that’s still going to take us a couple of months before we have all the information to make that a go or no-go decision," Wacker said. "If everything works out, we hope to break ground later this year. We believe we’ll be able to go forward. We just need to make sure that the decision and the way we’re doing it meets our cost envelope. It’s more of a question of the timing of going than if we are going."
He declined to say whether HEI President and CEO Connie Lau would have any role at the stand-alone bank, reiterating a previous comment that Lau is giving all her attention to the NextEra-HEI deal. Wacker said any decisions about the makeup of American Savings’ future board of directors won’t happen until closer to the spinoff.
Wacker, who said the bank is targeting mid-single-digit loan growth, hit that mark in the first quarter as loans rose 6.2 percent to $4.45 billion from $4.19 billion in year-earlier quarter. Loans grew just 1 percent in the first quarter versus the fourth quarter of 2014.
"Some quarters are faster than other quarters, and the fourth quarter was a very strong quarter," Wacker said. "As the interest rates dipped, we decided the prudent action was to sell the new mortgage loan production, so loan growth in this (first) quarter was a little bit slower. But still the overall progress in loan growth is very, very good."
American Savings’ earnings are part of HEI’s overall financials, but the bank reports its earnings separately. HEI is due to report its earnings Wednesday.
The bank’s net income of $13.5 million in the first quarter was down from $14.4 million in the year-earlier period. Deposits rose 6.1 percent to $4.75 billion from $4.48 billion while assets rose 6.6 percent to $5.72 billion from $5.37 billion.
Net interest income — the spread between loans and deposits — rose 3.3 percent to $45.5 million from $44.1 million. Noninterest income, which includes service charges and fees, fell 4.8 percent to $16.1 million from $16.9 million.
