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Fair value measurements (Tables)

3 Months Ended

Mar. 31, 2021

Fair Value Disclosures [Abstract]

Schedule of estimated fair values of certain of the Company's financial instruments

The following table presents the carrying or notional amount, fair value and placement in the fair value hierarchy of the Company’s financial instruments.

												Estimated fair value
(in thousands)						Carrying or notional amount						Quoted prices in active markets for identical assets  (Level 1)						Significant  other observable  inputs  (Level 2)						Significant unobservable inputs  (Level 3)						Total
March 31, 2021
Financial assets
HEI consolidated
Available-for-sale investment securities						$	2,305,257					$	—					$	2,289,830					$	15,427					$	2,305,257
Held-to-maturity investment securities						295,046						—						285,599						—						285,599
Loans, net						5,241,925						—						23,637						5,352,496						5,376,133
Mortgage servicing rights						10,685						—						—						13,659						13,659
Derivative assets						103,077						340						745						—						1,085
Financial liabilities
HEI consolidated
Deposit liabilities						514,303						—						516,524						—						516,524
Short-term borrowings—other than bank						100,242						—						100,242						—						100,242
Other bank borrowings						102,685						—						102,684						—						102,684
Long-term debt, net—other than bank						2,229,738						—						2,492,539						—						2,492,539
Derivative liabilities						32,739						—						2,834						—						2,834
Hawaiian Electric consolidated
Long-term debt, net						1,675,863						—						1,904,613						—						1,904,613
December 31, 2020
Financial assets
HEI consolidated
Available-for-sale investment securities						$	1,970,417					$	—					$	1,943,232					$	27,185					$	1,970,417
Held-to-maturity investment securities						226,947						—						229,963						—						229,963
Loans, net						5,260,917						—						28,354						5,410,976						5,439,330
Mortgage servicing rights						10,020						—						—						10,705						10,705
Derivative assets						120,980						—						4,536						—						4,536
Financial liabilities
HEI consolidated
Deposit liabilities						548,830						—						552,800						—						552,800
Short-term borrowings—other than bank						129,379						—						129,379						—						129,379
Other bank borrowings						89,670						—						89,669						—						89,669
Long-term debt, net—other than bank						2,119,129						—						2,487,790						—						2,487,790
Derivative liabilities						137,500						500						4,530						—						5,030
Hawaiian Electric consolidated
Short-term borrowings						49,979						—						49,979						—						49,979
Long-term debt, net						1,561,302						—						1,890,490						—						1,890,490

Schedule of assets measured at fair value on a recurring basis

Assets and liabilities measured at fair value on a recurring basis were as follows:

						March 31, 2021																		December 31, 2020
						Fair value measurements using																		Fair value measurements using
(in thousands)						Level 1						Level 2						Level 3						Level 1						Level 2						Level 3
Available-for-sale investment securities (bank segment)
Mortgage-backed securities — issued or guaranteed by U.S. Government agencies or sponsored agencies						$	—					$	2,201,352					$	—					$	—					$	1,849,559					$	—
U.S. Treasury and federal agency obligations						—						57,647						—						—						62,322						—
Corporate bonds						—						30,831						—						—						31,351						—
Mortgage revenue bonds						—						—						15,427						—						—						27,185
						$	—					$	2,289,830					$	15,427					$	—					$	1,943,232					$	27,185
Derivative assets
Interest rate lock commitments (bank segment)1						$	—					$	456					$	—					$	—					$	4,536					$	—
Forward commitments (bank segment)1						340						—						—						—						—						—
Interest rate swap (Other segment)2						—						289						—						—						—						—
						$	340					$	745					$	—					$	—					$	4,536					$	—
Derivative liabilities
Interest rate lock commitments (bank segment)1						$	—					$	18					$	—					$	—					$	—					$	—
Forward commitments (bank segment)1						—						—						—						500						—						—
Interest rate swap (Other segment)2						—						2,816						—						—						4,530						—
						$	—					$	2,834					$	—					$	500					$	4,530					$	—

1     Derivatives are carried at fair value in other assets or other liabilities in the balance sheets with changes in value included in mortgage banking income.

2     Derivatives are included in other assets and other liabilities in the balance sheets.

Schedule of changes in Level 3 assets and liabilities measured at fair value on a recurring basis

The changes in Level 3 assets and liabilities measured at fair value on a recurring basis were as follows:

												Three months ended March 31
Mortgage revenue bonds															2021			2020
(in thousands)
Beginning balance															$	27,185		$	28,597
Principal payments received															(11,758)			—
Purchases															—			129
Unrealized gain (loss) included in other comprehensive income															—			—
Ending balance															$	15,427		$	28,726

Schedule of assets measured at fair value on a nonrecurring basis

The carrying value of assets measured at fair value on a nonrecurring basis were as follows:

												Fair value measurements using
(in thousands)						Balance						Level 1						Level 2						Level 3
March 31, 2021
Loans						$	69					$	—					$	—					$	69
Mortgage servicing rights						61						—						—						61
December 31, 2020
Loans						387						—						—						387
Mortgage servicing rights						3,001						—						—						3,001

Schedule of significant unobservable inputs used in the fair value measurement

Key assumptions used in estimating the fair value of ASB’s MSRs used in the impairment analysis were as follows:

(dollars in thousands)						March 31, 2021						December 31, 2020
Unpaid principal balance						$	1,505,963					$	1,450,312
Weighted average note rate						3.57		%				3.68		%
Weighted average discount rate						9.25		%				9.25		%
Weighted average prepayment speed						12.0		%				17.7		%

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring basis:

Significant unobservable  input value (1)

($ in thousands)

Fair value

Valuation technique

Significant unobservable input

Range

Weighted Average

March 31, 2021

Home equity lines of credit

$

69

Fair value of collateral

Appraised value less selling cost

N/A (2)

N/A (2)

Mortgage servicing rights

61

Discounted cash flow

Prepayment speed

17% - 24%

17

%

Discount rate

9.3

%

December 31, 2020

Commercial loan

$

387

Fair value of collateral

Appraised value less selling cost

N/A (2)

N/A (2)

Mortgage servicing rights

3,001

Discounted cash flow

Prepayment speed

15% - 22%

22

%

Discount rate

9.3

%

(1) Represents percent of outstanding principal balance.

(2) N/A - Not applicable. There is one asset in each fair value measurement type.

X

- Definition

Tabular disclosure of input and valuation technique used to measure fair value and change in valuation approach and technique for each separate class of asset and liability measured on recurring and nonrecurring basis.

+ References

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Tabular disclosure of assets and liabilities by class, including financial instruments measured at fair value that are classified in shareholders' equity, if any, that are measured at fair value on a nonrecurring basis in periods after initial recognition (for example, impaired assets). Disclosures may include, but are not limited to: (a) the fair value measurements recorded and the reasons for the measurements and (b) the level within the fair value hierarchy in which the fair value measurements are categorized in their entirety (levels 1, 2, 3).

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Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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Tabular disclosure of assets and liabilities, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3).

+ References

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