Facing wildfire costs, Hawaiian Electric sells control of American Savings Bank

HONOLULU (HawaiiNewsNow) – Hawaiian Electric Industries has sold its control of American Savings Bank in a $400 million deal.

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The transaction is a direct result of wildfires that will cost the company billions in damages to victims.

Life of the Land president Henry Curtis, a close observer of Hawaiian Electric, said it’s extremely unusual for an electric utility to own a bank, and that this transaction is probably good for both companies.

“I think the wildfire was a wake-up call that they need to really focus on their main issue, their main thing, which is energy,” Curtis said.

Curtis said collecting over $400 million from the sale and shedding responsibility for American Savings will enable Hawaiian Electric to concentrate on improvements and maintenance, and build a buffer against wildfire lawsuit costs that could rise if the settlement, to which it’s already committed nearly $2 billion, falls apart.

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“HEI might be on the hook for another billion dollars,” Curtis said, if insurance companies win a ruling in the state Supreme Court, which would allow them to file their own actions against HEI and other defendants.

The court has scheduled oral arguments on whether the insurers can sue for February 2025.

In a statement, Hawaiian Electric Industries CEO Scott Seu said, “The sale allows HEI 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.”

State Sen. Jarrett Keohokalole, who chairs the Consumer Protection Committee, said the move will help HEI politically as well.

“They needed to do everything they possibly could to stabilize themselves first before asking for help from taxpayers,” the senator said.

Keohokalole resisted HEI’s request this year for authority to surcharge ratepayers to pay for wildfire prevention programs. Now, he says, with the potential settlement, a plan for improvement, and the sale of stock and the Bank, he’s more open to helping.

“The main one is how do you harden the grid in a way that is not outrageously expensive to rate payers but provides some assurance that the grid is safer and will not be the cause of future wildfires,” he said.

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At nearly 100 years old, American Savings Bank is the third largest bank in Hawaii. It was purchased by a group of 24 investors, including its current board of directors and top executives. Some of the investors are from outside Hawaii, but neither company released their names.

They are paying $405 million for 90 percent of shares. Hawaiian Electric will keep just under 10 percent, putting ASB in full control.

Ann Teranishi, president and CEO of American Savings, said it will be “business as usual” for the bank’s customers and employees.

She said a number of the new investors have community banking expertise, which will be an important contribution.

“For us, this really provides us an opportunity to have a little bit more flexibility and capacity to continue to grow and support our customers,” she said.

“For both companies, it’s an opportunity for us to really focus on our core business and hopefully continue to better serve our Hawaii community for the bank,” Teranishi added.

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