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Bank subsidiary (HEI only) (Tables)

12 Months Ended

Dec. 31, 2013

Statements of Income Data



Years ended December 31	2013		2012		2011
(in thousands)
Interest and dividend income
Interest and fees on loans	$	172,969	$	176,057	$	184,485
Interest and dividends on investment and mortgage-related securities	13,095		13,822		14,568
Total interest and dividend income	186,064		189,879		199,053
Interest expense
Interest on deposit liabilities	5,092		6,423		8,983
Interest on other borrowings	4,985		4,869		5,486
Total interest expense	10,077		11,292		14,469
Net interest income	175,987		178,587		184,584
Provision for loan losses	1,507		12,883		15,009
Net interest income after provision for loan losses	174,480		165,704		169,575
Noninterest income
Fees from other financial services	27,099		31,361		28,881
Fee income on deposit liabilities	18,363		17,775		18,026
Fee income on other financial products	8,405		6,577		6,704
Mortgage banking income	8,309		14,628		5,028
Gains on sale of securities	1,226		134		371
Other income, net	8,681		5,185		6,344
Total noninterest income	72,083		75,660		65,354
Noninterest expense
Compensation and employee benefits	82,910		75,979		71,137
Occupancy	16,747		17,179		17,154
Data processing	10,952		10,098		8,155
Services	9,015		9,866		7,396
Equipment	7,295		7,105		6,903
Office supplies, printing and postage	4,233		3,870		3,934
Marketing	3,373		3,260		3,001
Communication	1,864		1,809		1,764
Other expense	23,115		23,177		23,949
Total noninterest expense	159,504		152,343		143,393
Income before income taxes	87,059		89,021		91,536
Income taxes	29,525		30,384		31,693
Net income	$	57,534	$	58,637	$	59,843

Schedule of statements of comprehensive income data

Statements of Comprehensive Income



Years ended December 31	2013			2012			2011
(in thousands)
Net income	$	57,534		$	58,637		$	59,843
Other comprehensive income (loss), net of taxes:
Net unrealized gains (losses) on securities:
Net unrealized gains (losses) on securities arising during the period, net of (taxes) benefits of $9,037, ($631) and ($4,343), for 2013, 2012 and 2011, respectively	(13,686		)	956			6,578
Less: reclassification adjustment for net realized gains included in net income, net of taxes of $488, $53 and $148 for 2013, 2012 and 2011, respectively	(738		)	(81		)	(224		)
Retirement benefit plans:
Net gains (losses) arising during the period, net of (taxes) benefits of ($10,450), $5,240 and $6,577 for 2013, 2012 and 2011, respectively	15,826			(7,936		)	(9,960		)
Less: amortization of transition obligation, prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits of $1,187, $684 and $346 for 2013, 2012 and 2011, respectively	1,797			1,036			523
Other comprehensive income (loss), net of taxes	3,199			(6,025		)	(3,083		)
Comprehensive income	$	60,733		$	52,612		$	56,760

Schedule of balance sheets data

Balance Sheet Data



December 31				2013						2012
(in thousands)
Assets
Cash and cash equivalents				$	156,603					$	184,430
Available-for-sale investment and mortgage-related securities				529,007						671,358
Investment in stock of Federal Home Loan Bank of Seattle				92,546						96,022
Loans receivable held for investment				4,150,229						3,779,218
Allowance for loan losses				(40,116		)				(41,985		)
Loans receivable held for investment, net				4,110,113						3,737,233
Loans held for sale, at lower of cost or fair value				5,302						26,005
Other				268,063						244,435
Goodwill				82,190						82,190
Total assets				$	5,243,824					$	5,041,673
Liabilities and shareholder’s equity
Deposit liabilities–noninterest-bearing				$	1,214,418					$	1,164,308
Deposit liabilities–interest-bearing				3,158,059						3,065,608
Other borrowings				244,514						195,926
Other				105,679						117,752
Total liabilities				4,722,670						4,543,594
Commitments and contingencies (see “Litigation” below)
Common stock				336,054						333,712
Retained earnings				197,297						179,763
Accumulated other comprehensive loss, net of tax benefits
Net unrealized gains (losses) on securities	$	(3,663	)				$	10,761
Retirement benefit plans	(8,534		)	(12,197		)	(26,157		)	(15,396		)
Total shareholder’s equity				521,154						498,079
Total liabilities and shareholder’s equity				$	5,243,824					$	5,041,673
Other assets
Bank-owned life insurance				$	129,963					$	125,726
Premises and equipment, net				67,766						62,458
Prepaid expenses				3,616						13,199
Accrued interest receivable				13,133						13,228
Mortgage-servicing rights				11,687						10,818
Real estate acquired in settlement of loans, net				1,205						6,050
Other				40,693						12,956
				$	268,063					$	244,435
Other liabilities
Accrued expenses				$	19,989					$	17,103
Federal and state income taxes payable				37,807						35,408
Cashier’s checks				21,110						23,478
Advance payments by borrowers				9,647						9,685
Other				17,126						32,078
				$	105,679					$	117,752

Schedule of the book value and aggregate fair value by major security type



			Gross		Gross			Estimated		Gross unrealized losses
	Amortized		unrealized		unrealized			fair		Less than 12 months					12 months or longer
(dollars in thousands)	cost		gains		losses			value		Fair value		Amount			Fair value		Amount
December 31, 2013
Available-for-sale
Federal agency obligations	$	83,193	$	174	$	(2,394	)	$	80,973	$	70,799	$	(2.394	)	$	—	$	—
Mortgage-related securities- FNMA, FHLMC and GNMA	374,993		4,911		(10,460		)	369,444		228,543		(8,819		)	19,655		(1,641		)
Municipal bonds	76,904		1,826		(140		)	78,590		14,478		(140		)	—		—
	$	535,090	$	6,911	$	(12,994	)	$	529,007	$	313,820	$	(11,353	)	$	19,655	$	(1,641	)
December 31, 2012
Available-for-sale
Federal agency obligations	$	168,324	$	3,167	$	—		$	171,491	$	—	$	—		$	—	$	—
Mortgage-related securities- FNMA, FHLMC and GNMA	407,175		10,412		(204		)	417,383		32,269		(204		)	—		—
Municipal bonds	77,993		4,491		—			82,484		—		—			—		—
	$	653,492	$	18,070	$	(204	)	$	671,358	$	32,269	$	(204	)	$	—	$	—

Schedule of contractual maturities of available-for-sale securities

The contractual maturities of available-for-sale securities were as follows:



	Amortized		Fair
(in thousands)	Cost		value
Due in one year or less	$	—	$	—
Due after one year through five years	42,920		43,137
Due after five years through ten years	95,860		96,751
Due after ten years	21,317		19,675
	160,097		159,563
Mortgage-related securities-FNMA,FHLMC and GNMA	374,993		369,444
Total available-for-sale securities	$	535,090	$	529,007

Schedule of loans receivable

Loans receivable.



December 31	2013			2012
(in thousands)
Real estate loans:
Residential 1-4 family	$	2,006,007		$	1,866,450
Commercial real estate	440,443			375,677
Home equity line of credit	739,331			630,175
Residential land	16,176			25,815
Commercial construction	52,112			43,988
Residential construction	12,774			6,171
Total real estate loans	3,266,843			2,948,276
Commercial loans	783,388			721,349
Consumer loans	108,722			121,231
Total loans	4,158,953			3,790,856
Deferred loan fees, net and unamortized discounts	(8,724		)	(11,638		)
Allowance for loan losses	(40,116		)	(41,985		)
Total loans, net	$	4,110,113		$	3,737,233

Schedule of allowance for loan losses

The allowance for loan losses (balances and changes) and financing receivables were as follows:



(in thousands)	Residential 1-4 family			Commercial real estate		Home equity line of credit			Residential land			Commercial construction		Residential construction		Commer- cial loans			Consumer loans			Unallo- cated			Total
December 31, 2013
Allowance for loan losses:
Beginning balance	$	6,068		$	2,965	$	4,493		$	4,275		$	2,023	$	9	$	15,931		$	4,019		$	2,202		$	41,985
Charge-offs	(1,162		)	—		(782		)	(485		)	—		—		(3,056		)	(2,717		)	—			(8,202		)
Recoveries	1,881			—		358			868			—		—		1,089			630			—			4,826
Provision	(1,253		)	2,094		1,160			(2,841		)	374		10		1,839			435			(311		)	1,507
Ending balance	$	5,534		$	5,059	$	5,229		$	1,817		$	2,397	$	19	$	15,803		$	2,367		$	1,891		$	40,116
Ending balance: individually evaluated for impairment	$	642		$	1,118	$	—		$	1,332		$	—	$	—	$	2,246		$	—		$	—		$	5,338
Ending balance: collectively evaluated for impairment	$	4,892		$	3,941	$	5,229		$	485		$	2,397	$	19	$	13,557		$	2,367		$	1,891		$	34,778
Financing Receivables:
Ending balance	$	2,006,007		$	440,443	$	739,331		$	16,176		$	52,112	$	12,774	$	783,388		$	108,722		$	—		$	4,158,953
Ending balance: individually evaluated for impairment	$	20,317		$	4,604	$	1,179		$	10,577		$	—	$	—	$	21,225		$	19		$	—		$	57,921
Ending balance: collectively evaluated for impairment	$	1,985,690		$	435,839	$	738,152		$	5,599		$	52,112	$	12,774	$	762,163		$	108,703		$	—		$	4,101,032
December 31, 2012
Allowance for loan losses:
Beginning balance	$	6,500		$	1,688	$	4,354		$	3,795		$	1,888	$	4	$	14,867		$	3,806		$	1,004		$	37,906
Charge-offs	(3,183		)	—		(716		)	(2,808		)	—		—		(3,606		)	(2,517		)	—			(12,830		)
Recoveries	1,328			—		108			1,443			—		—		649			498			—			4,026
Provision	1,423			1,277		747			1,845			135		5		4,021			2,232			1,198			12,883
Ending balance	$	6,068		$	2,965	$	4,493		$	4,275		$	2,023	$	9	$	15,931		$	4,019		$	2,202		$	41,985
Ending balance: individually evaluated for impairment	$	384		$	535	$	—		$	3,221		$	—	$	—	$	2,659		$	—		$	—		$	6,799
Ending balance: collectively evaluated for impairment	$	5,684		$	2,430	$	4,493		$	1,054		$	2,023	$	9	$	13,272		$	4,019		$	2,202		$	35,186
Financing Receivables:
Ending balance	$	1,866,450		$	375,677	$	630,175		$	25,815		$	43,988	$	6,171	$	721,349		$	121,231		$	—		$	3,790,856
Ending balance: individually evaluated for impairment	$	25,279		$	6,751	$	1,560		$	18,563		$	—	$	—	$	20,298		$	22		$	—		$	72,473
Ending balance: collectively evaluated for impairment	$	1,841,171		$	368,926	$	628,615		$	7,252		$	43,988	$	6,171	$	701,051		$	121,209		$	—		$	3,718,383

Schedule of changes in allowance for loan losses

Changes in the allowance for loan losses were as follows:



(dollars in thousands)	2013			2012			2011
Allowance for loan losses, January 1	$	41,985		$	37,906		$	40,646
Provision for loan losses	1,507			12,883			15,009
Charge-offs, net of recoveries
Real estate loans	(678		)	3,828			10,733
Other loans	4,054			4,976			7,016
Net charge-offs	3,376			8,804			17,749
Allowance for loan losses, December 31	$	40,116		$	41,985		$	37,906
Ratio of net charge-offs to average loans outstanding	0.09		%	0.24		%	0.49		%

Schedule of credit risk profile by internally assigned grade for loans

The credit risk profile by internally assigned grade for loans was as follows:



December 31	2013						2012
(in thousands)	Commercial real estate		Commercial construction		Commercial		Commercial real estate		Commercial construction		Commercial
Grade:
Pass	$	375,217	$	52,112	$	703,053	$	314,182	$	39,063	$	638,854
Special mention	33,436		—		17,634		25,437		4,925		24,511
Substandard	28,020		—		59,663		29,308		—		53,538
Doubtful	3,770		—		3,038		6,750		—		4,446
Loss	—		—		—		—		—		—
Total	$	440,443	$	52,112	$	783,388	$	375,677	$	43,988	$	721,349

Schedule of credit risk profile based on payment activity for loans

The credit risk profile based on payment activity for loans was as follows:



(in thousands)	30-59 days past due		60-89 days past due		Greater than 90 days		Total past due		Current		Total financing receivables		Recorded Investment> 90 days and accruing
December 31, 2013
Real estate loans:
Residential 1-4 family	$	2,728	$	622	$	15,411	$	18,761	$	1,987,246	$	2,006,007	$	—
Commercial real estate	—		—		3,770		3,770		436,673		440,443		—
Home equity line of credit	765		312		960		2,037		737,294		739,331		—
Residential land	184		48		2,756		2,988		13,188		16,176		—
Commercial construction	—		—		—		—		52,112		52,112		—
Residential construction	—		—		—		—		12,774		12,774		—
Commercial loans	1,668		612		3,026		5,306		778,082		783,388		—
Consumer loans	436		158		304		898		107,824		108,722		—
Total loans	$	5,781	$	1,752	$	26,227	$	33,760	$	4,125,193	$	4,158,953	$	—
December 31, 2012
Real estate loans:
Residential 1-4 family	$	6,353	$	1,741	$	24,054	$	32,148	$	1,834,302	$	1,866,450	$	—
Commercial real estate	85		—		6,750		6,835		368,842		375,677		—
Home equity line of credit	1,077		142		1,319		2,538		627,637		630,175		—
Residential land	2,851		75		7,788		10,714		15,101		25,815		—
Commercial construction	—		—		—		—		43,988		43,988		—
Residential construction	—		—		—		—		6,171		6,171		—
Commercial loans	3,052		2,814		1,098		6,964		714,385		721,349		131
Consumer loans	598		348		424		1,370		119,861		121,231		242
Total loans	$	14,016	$	5,120	$	41,433	$	60,569	$	3,730,287	$	3,790,856	$	373

Schedule of credit risk profile based on nonaccrual loans, accruing loans 90 days or more past due

The credit risk profile based on nonaccrual loans and accruing loans 90 days or more past due was as follows:



December 31	2013				2012
	Nonaccrual loans		Accruing loans 90 days or more past due		Nonaccrual loans		Accruing loans 90 days or more past due
(in thousands)
Real estate loans:
Residential 1–4 family	$	19,679	$	—	$	26,721	$	—
Commercial real estate	4,439		—		6,750		—
Home equity line of credit	2,060		—		2,349		—
Residential land	3,161		—		8,561		—
Commercial construction	—		—		—		—
Residential construction	—		—		—		—
Commercial loans	18,781		—		20,222		131
Consumer loans	401		—		284		242
Total	$	48,521	$	—	$	64,887	$	373

Schedule of the carrying amount and the total unpaid principal balance of impaired loans

The total carrying amount and the total unpaid principal balance of impaired loans was as follows:



December 31	2013										2012
(in thousands)	Recorded investment		Unpaid principal balance		Related Allow- ance		Average recorded investment		Interest income recognized		Recorded investment		Unpaid principal balance		Related allow- ance		Average recorded investment		Interest income recognized
With no related allowance recorded
Real estate loans:
Residential 1-4 family	$	9,708	$	12,144	$	—	$	11,674	$	386	$	14,633	$	20,247	$	—	$	16,688	$	294
Commercial real estate	—		—		—		802		—		2,929		2,929		—		7,771		237
Home equity line of credit	672		1,227		—		623		2		581		1,374		—		632		1
Residential land	2,622		3,612		—		6,675		482		7,691		10,624		—		21,589		1,185
Commercial construction	—		—		—		—		—		—		—		—		—		—
Residential construction	—		—		—		—		—		—		—		—		—		—
Commercial loans	3,466		4,715		—		4,837		12		4,265		6,994		—		24,605		986
Consumer loans	19		19		—		20		—		21		21		—		23		—
	16,487		21,717		—		24,631		882		30,120		42,189		—		71,308		2,703
With an allowance recorded
Real estate loans:
Residential 1-4 family	6,216		6,236		642		6,455		372		4,803		4,803		384		4,204		250
Commercial real estate	4,604		4,686		1,118		5,745		152		3,821		3,840		535		1,295		—
Home equity line of credit	—		—		—		—		—		—		—		—		26		—
Residential land	7,452		7,623		1,332		6,844		409		9,984		10,364		3,221		7,428		575
Commercial construction	—		—		—		—		—		—		—		—		—		—
Residential construction	—		—		—		—		—		—		—		—		—		—
Commercial loans	17,759		20,640		2,246		15,635		139		16,033		16,912		2,659		8,429		23
Consumer loans	—		—		—		—		—		—		—		—		—		—
	36,031		39,185		5,338		34,679		1,072		34,641		35,919		6,799		21,382		848
Total
Real estate loans:
Residential 1-4 family	15,924		18,380		642		18,129		758		19,436		25,050		384		20,892		544
Commercial real estate	4,604		4,686		1,118		6,547		152		6,750		6,769		535		9,066		237
Home equity line of credit	672		1,227		—		623		2		581		1,374		—		658		1
Residential land	10,074		11,235		1,332		13,519		891		17,675		20,988		3,221		29,017		1,760
Commercial construction	—		—		—		—		—		—		—		—		—		—
Residential construction	—		—		—		—		—		—		—		—		—		—
Commercial loans	21,225		25,355		2,246		20,472		151		20,298		23,906		2,659		33,034		1,009
Consumer loans	19		19		—		20		—		21		21		—		23		—
	$	52,518	$	60,902	$	5,338	$	59,310	$	1,954	$	64,761	$	78,108	$	6,799	$	92,690	$	3,551

Schedule of loan modifications

Loan modifications that occurred were as follows for the indicated periods:



	2013					2012					2011
	Number	Outstanding recorded investment				Number	Outstanding recorded investment				Number	Outstanding recorded investment
(dollars in thousands)	of contracts	Pre-modification		Post-modification		of contracts	Pre-modification		Post-modification		of contracts	Pre-modification		Post-modification
Troubled debt restructurings
Real estate loans:
Residential 1-4 family	34	$	8,876	$	8,957	35	$	8,805	$	8,232	42	$	11,233	$	9,853
Commercial real estate	—	—		—		—	—		—		—	—		—
Home equity line of credit	5	637		390		—	—		—		1	93		93
Residential land	20	6,215		6,206		26	6,149		5,484		46	9,965		9,946
Commercial loans	7	4,646		4,646		19	2,583		2,583		56	35,349		35,349
Consumer loans	—	—		—		—	—		—		1	25		25
	66	$	20,374	$	20,199	80	$	17,537	$	16,299	146	$	56,665	$	55,266

Schedule of loans modified in TDRS that experienced a payment default of 90 days or more, and for which payment default occurred within one year of the modification

Loans modified in TDRs that experienced a payment default of 90 days or more in 2013, 2012 and 2011, and for which the payment default occurred within one year of the modification, were as follows:



	2013			2012			2011
(dollars in thousands)	Number of contracts	Recorded investment		Number of contracts	Recorded investment		Number of contracts	Recorded investment
Troubled debt restructurings that subsequently defaulted
Real estate loans:
Residential 1-4 family	—	$	—	—	$	—	—	$	—
Commercial real estate	—	—		—	—		—	—
Home equity line of credit	1	67		—	—		—	—
Residential land	—	—		—	—		1	528
Commercial loans	2	660		1	482		4	799
Consumer loans	—	—		—	—		—	—
	3	$	727	1	$	482	5	$	1,327

Schedule of deposit liabilities

Deposit liabilities.



December 31	2013				2012
(dollars in thousands)	Weighted-average stated rate		Amount		Weighted-average stated rate		Amount
Savings	0.06	%	$	1,826,907	0.06	%	$	1,758,547
Other checking
Interest-bearing	0.02		721,700		0.02		641,970
Noninterest-bearing	—		643,628		—		621,806
Commercial checking	—		570,790		—		542,502
Money market	0.13		182,546		0.13		191,398
Term certificates	0.80		426,906		0.86		473,693
	0.11	%	$	4,372,477	0.13	%	$	4,229,916

Schedule of interest expense on deposit liabilities by type

Interest expense on deposit liabilities by type of deposit was as follows:



(in thousands)	2013		2012		2011
Term certificates	$	3,702	$	4,865	$	6,393
Savings	1,052		1,128		1,756
Money market	232		319		650
Interest-bearing checking	106		111		184
	$	5,092	$	6,423	$	8,983

Schedule of securities sold under agreements to repurchase

The following tables present information about the securities sold under agreements to repurchase, including the related collateral received from or pledged to counterparties:



(in millions)	Gross amount of recognized liabilities		Gross amount offset in the Balance Sheet		Net amount of liabilities presented in the Balance Sheet
Repurchase agreements
December 31, 2013	$	145	$	—	$	145
December 31, 2012	146		—		146



	Gross amount not offset in the Balance Sheet
(in millions)	Net amount of liabilities presented in the Balance Sheet		Financial instruments		Cash collateral pledged		Net amount
December 31, 2013
Financial institution	$	51	$	51	$	—	$	—
Commercial account holders	94		94		—		—
Total	$	145	$	145	$	—	$	—
December 31, 2012
Financial institution	$	50	$	50	$	—	$	—
Commercial account holders	96		96		—		—
Total	$	146	$	146	$	—	$	—



December 31, 2013
Maturity	Repurchase liability			Weighted-average interest rate		Collateralized by mortgage-related securities and federal agency obligations– fair value plus accrued interest
(dollars in thousands)
Overnight	$	94,224		0.15	%	$	127,293
1 to 29 days	—			—		—
30 to 90 days	—			—		—
Over 90 days	50,290		¹	4.75		60,233
	$	144,514		1.75	%	$	187,526


¹	Callable quarterly at par until maturity in 2016.

Schedule of securities sold under agreements to repurchase, which provided for repurchase of identical securities

Information concerning securities sold under agreements to repurchase, which provided for the repurchase of identical securities, was as follows:



(dollars in millions)	2013			2012			2011
Amount outstanding as of December 31	$	145		$	146		$	183
Average amount outstanding during the year	$	147		$	173		$	183
Maximum amount outstanding as of any month-end	$	151		$	189		$	186
Weighted-average interest rate as of December 31	1.75		%	1.74		%	1.56		%
Weighted-average interest rate during the year	1.74		%	1.56		%	1.61		%
Weighted-average remaining days to maturity as of December 31	367			489			490

Schedule of advances from Federal Home Loan Bank

Advances from Federal Home Loan Bank.



December 31, 2013	Weighted-average stated rate		Amount
(dollars in thousands)
Due in
2014	—	%	$	—
2015	—		—
2016	—		—
2017	4.28		50,000		¹
2018	1.95		50,000
Thereafter	—		—
	3.12	%	$	100,000


¹	Callable quarterly at par until maturity in 2017.

Schedule of notional amounts and fair value of derivatives

The notional amount and fair value of ASB’s derivative financial instruments as of December 31, 2013 and 2012 were as follows:



	2013				2012
(dollars in thousands)	Notional amount		Fair value		Notional amount		Fair value
Interest rate lock commitments	$	25,070	$	464	$	60,428	$	—
Forward commitments	26,018		139		86,563		—

Schedule of derivative financial instruments, fair values, and balance sheet location

The following table presents ASB’s derivative financial instruments, their fair values, and balance sheet location as of December 31, 2013 and 2012:



Derivative Financial Instruments Not Designated
as Hedging Instruments ¹	2013				2012
(dollars in thousands)	Asset derivative		Liability derivative		Asset derivative		Liability derivative
Interest rate lock commitments	$	488	$	24	$	—	$	—
Forward commitments	141		2		—		—
	$	629	$	26	$	—	$	—

¹ Asset derivatives are included in other assets and liability derivatives are included in other liabilities in the balance sheets.

Schedule of derivative financial instruments and amount and location of net gains or losses

The following table presents ASB’s derivative financial instruments and the amount and location of the net gains or losses recognized in the statements of income for the years ended December 31, 2013, 2012 and 2011.



Derivative Financial Instruments Not Designated	Location of net gains
as Hedging Instruments	(losses) recognized in
(dollars in thousands)	the Statement of Income	2013		2012		2011
Interest rate lock commitments	Mortgage banking income	$	464	$	—	$	—
Forward commitments	Mortgage banking income	139		—		—
		$	603	$	—	$	—