Dive Brief:

• Power company Hawaiian Electric Industries said Tuesday it has sold a 90.1% stake in its bank subsidiary American Savings Bank to independent investors via separate agreements, in a transaction valued at $450 million.  
• Investors paid $405 million in cash for the bank’s common stock, and the transaction closed Tuesday, HEI said in a news release. The Honolulu-based bank will keep its current management team, branding and branches.
• No investor owns more than 9.9% of the bank’s common stock. That includes HEI, which retains a 9.9% stake. Investors include all of ASB’s executive team and independent directors, the bank said. 

Dive Insight:

The sale enables Hawaiian Electric Industries “to enhance our focus on the utility as we work to help our state recover from the 2023 Maui wildfires and strengthen the financial and strategic position of our company,” HEI CEO Scott Seu said in the news release. 

HEI was hit with a wave of lawsuits stemming from the Maui wildfires in 2023, which investigators determined resulted from a downed power line, The Wall Street Journal reported. The wind-driven fires killed more than 100 people. Last year, HEI said it had entered into definitive agreements to settle litigation related to the wildfires and would put close to $2 billion toward the settlement.

The sale follows HEI’s board undertaking a strategic review of options related to the bank last year. The company bought the bank in 1988. 

HEI’s board “evaluated numerous potential paths forward for the bank and considered a range of factors including transaction certainty, proceeds, timeline to completion, regulatory considerations and potential stakeholder impacts,” the release said. 

Seu noted it’s a “dynamic time in the banking industry.” Holding 9.9% of the bank’s common stock, “it is expected that HEI will no longer be subject to regulation as a savings and loan holding company,” the release noted. 

The sale offers efficiency opportunities, HEI said. 

“We intend to use the proceeds to reduce holding company debt, increasing flexibility for how HEI funds the HEI and Hawaiian Electric wildfire settlement contributions and key utility initiatives,” Seu said.

American Savings Bank, Hawaii’s third-largest lender, has about $9.3 billion in assets. CEO Ann Teranishi said the sale “represents the best outcome for ASB, our customers, employees, and the communities we’ve served since 1925 as we focus on the next 100 years.”