Fair value measurements (Tables)

12 Months Ended

Dec. 31, 2016

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. For stock in Federal Home Loan Bank, the carrying amount is a reasonable estimate of fair value because it can only be redeemed at par. For bank-owned life insurance, the carrying amount is the cash surrender value of the insurance policies, which is a reasonable estimate of fair value. For financial liabilities such as noninterest-bearing demand, interest-bearing demand, and savings and money market deposits, the carrying amount is a reasonable estimate of fair value as these liabilities have no stated maturity.



			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
December 31, 2016
Financial assets
HEI consolidated
Money market funds	$	13,085	$	—	$	13,085	$	—	$	13,085
Available-for-sale investment securities	1,105,182		—		1,089,755		15,427		1,105,182
Stock in Federal Home Loan Bank	11,218		—		11,218		—		11,218
Loans receivable, net	4,701,977		—		13,333		4,839,493		4,852,826
Mortgage servicing rights	9,373		—		—		13,216		13,216
Bank-owned life insurance	143,197		—		143,197		—		143,197
Derivative assets	23,578		—		453		—		453
Financial liabilities
HEI consolidated
Deposit liabilities	5,548,929		—		5,546,644		—		5,546,644
Other bank borrowings	192,618		—		193,991		—		193,991
Long-term debt, net—other than bank	1,619,019		—		1,704,717		—		1,704,717
Derivative liabilities	53,852		129		823		—		952
Hawaiian Electric consolidated
Long-term debt, net	1,319,260		—		1,399,490		—		1,399,490
Derivative liabilities	20,734		—		743		—		743
December 31, 2015
Financial assets
HEI consolidated
Money market funds	$	10	$	—	$	10	$	—	$	10
Available-for-sale investment securities	820,648		—		820,648		—		820,648
Stock in Federal Home Loan Bank	10,678		—		10,678		—		10,678
Loans receivable, net	4,570,412		—		4,639		4,744,886		4,749,525
Mortgage servicing rights	8,884		—		—		11,790		11,790
Bank-owned life insurance	138,139		—		138,139		—		138,139
Derivative assets	22,616		—		385		—		385
Financial liabilities
HEI consolidated
Deposit liabilities	5,025,254		—		5,024,500		—		5,024,500
Short-term borrowings—other than bank	103,063		—		103,063		—		103,063
Other bank borrowings	328,582		—		333,392		—		333,392
Long-term debt, net—other than bank*	1,578,368		—		1,669,087		—		1,669,087
Derivative liabilities	23,269		15		15		—		30
Hawaiian Electric consolidated
Long-term debt, net*	1,278,702		—		1,363,766		—		1,363,766

* See Note 1 for the impact to prior period financial information of the adoption of ASU No. 2015-03.

Schedule of assets and liabilities measured at fair value on a recurring basis

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



December 31	2016						2015
	Fair value measurements using						Fair value measurements using
(in thousands)	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Money market funds (“other” segment)	$	—	$	13,085	$	—	$	—	$	10	$	—
Available-for-sale investment securities (bank segment)
Mortgage-related securities-FNMA, FHLMC and GNMA	$	—	$	897,474	$	—	$	—	$	607,689	$	—
U.S. Treasury and federal agency obligations	—		192,281		—		—		212,959		—
Mortgage revenue bond	—		—		15,427		—		—		—
	$	—	$	1,089,755	$	15,427	$	—	$	820,648	$	—
Derivative assets (bank segment) ¹
Interest rate lock commitments	$	—	$	445	$	—	$	—	$	384	$	—
Forward commitments	—		8		—		—		1		—
	$	—	$	453	$	—	$	—	$	385	$	—
Derivative liabilities
Interest rate lock commitments (bank segment) ¹	$	—	$	24	$	—	$	—	$	—	$	—
Forward commitments (bank segment) ¹	129		56		—		15		15		—
Window forward contracts (electric utility segment)²	—		743		—		—		—		—
	$	129	$	823	$	—	$	15	$	15	$	—


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


²	Liability derivatives are included in other current liabilities in the balance sheets.

Schedule of 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:



(in thousands)	Mortgage revenue bond
Balance at December 31, 2015	$	—
Principal payments received	—
Purchases	15,427
Unrealized gain (loss) included in other comprehensive income	—
Balance at December 31, 2016	$	15,427

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
December 31, 2016
Loans	$	2,767	$	—	$	—	$	2,767
Real estate acquired in settlement of loans	1,189		—		—		1,189
December 31, 2015
Loans	178		—		—		178
Real estate acquired in settlement of loans	1,030		—		—		1,030

Schedule of significant unobservable inputs used in the fair value measurement

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



December 31	2016			2015
(dollars in thousands)
Unpaid principal balance	$	1,188,380		$	1,097,314
Weighted average note rate	3.96		%	4.05		%
Weighted average discount rate	9.4		%	9.6		%
Weighted average prepayment speed	8.5		%	9.3		%

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)
(dollars in thousands)	Fair value		Valuation technique	Significant unobservable input	Range	Weighted Average
December 31, 2016
Residential loans	$	2,468	Sales price	Sales price	95-100%	97%
Residential loans	287		Fair value of property or collateral	Appraised value less 7% selling cost	42-65%	61%
Home equity lines of credit	12		Fair value of property or collateral	Appraised value less 7% selling cost		N/A (2)
Total loans	$	2,767

Real estate acquired in settlement of loans	$	1,189	Fair value of property or collateral	Appraised value less 7% selling cost	100%	100%
December 31, 2015
Residential loans	$	50	Fair value of property or collateral	Appraised value less 7% selling cost		N/A (2)
Home equity lines of credit	128		Fair value of property or collateral	Appraised value less 7% selling cost		N/A (2)
Total loans	$	178

Real estate acquired in settlement of loans	$	1,030	Fair value of property or collateral	Appraised value less 7% selling cost	100%	100%


(1)	Represent percent of outstanding principal balance.


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