Fair value measurements (Tables)

9 Months Ended

Sep. 30, 2018

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. 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 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
	Carrying or notional amount		Quoted prices in active markets for identical assets		Significant  other observable  inputs		Significant unobservable inputs
(in thousands)			(Level 1)		(Level 2)		(Level 3)		Total
September 30, 2018
Financial assets
HEI consolidated
Available-for-sale investment securities	$	1,387,571	$	—	$	1,368,487	$	19,084	$	1,387,571
Held-to-maturity investment securities	102,498		—		99,929		—		99,929
Stock in Federal Home Loan Bank	8,158		—		8,158		—		8,158
Loans, net	4,701,268		—		1,031		4,671,635		4,672,666
Mortgage servicing rights	8,426		—		—		13,443		13,443
Financial liabilities
HEI consolidated
Deposit liabilities1	805,117		—		791,753		—		791,753
Short-term borrowings—other than bank	203,359		—		203,359		—		203,359
Other bank borrowings	71,110		—		71,107		—		71,107
Long-term debt, net—other than bank	1,782,242		—		1,805,682		—		1,805,682
Derivative liabilities	3,023		—		27		—		27
Hawaiian Electric consolidated
Short-term borrowings	85,913		—		85,913		—		85,913
Long-term debt, net	1,468,624		—		1,503,508		—		1,503,508
Derivative liabilities-window forward contracts	3,023		—		27		—		27
December 31, 2017
Financial assets
HEI consolidated
Available-for-sale investment securities	1,401,198		—		1,385,771		15,427		1,401,198
Held-to-maturity investment securities	44,515		—		44,412		—		44,412
Stock in Federal Home Loan Bank	9,706		—		9,706		—		9,706
Loans, net	4,628,381		—		11,254		4,770,497		4,781,751
Mortgage servicing rights	8,639		—		—		12,052		12,052
Derivative assets	17,812		—		393		—		393
Hawaiian Electric consolidated
Derivative assets-window forward contracts	3,240		—		256		—		256
Financial liabilities
HEI consolidated
Deposit liabilities1	5,890,597		—		5,884,071		—		5,884,071
Short-term borrowings—other than bank	117,945		—		117,945		—		117,945
Other bank borrowings	190,859		—		190,829		—		190,829
Long-term debt, net—other than bank	1,683,797		—		1,813,295		—		1,813,295
Derivative liabilities	13,562		20		10		—		30
Hawaiian Electric consolidated
Short-term borrowings	4,999		—		4,999		—		4,999
Long-term debt, net	1,368,479		—		1,497,079		—		1,497,079

¹  Deposit liabilities as of December 31, 2017 include noninterest-bearing demand, interest-bearing demand, and savings and money market deposits, for which the carrying amount represents a reasonable estimate of fair value, as such liabilities have no stated maturity. The fair value of such financial liabilities are not included as of September 30, 2018 as a result of the Company’s adoption of ASU No. 2016-01.

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:

	September 30, 2018						December 31, 2017
	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-related securities-FNMA, FHLMC and GNMA	$	—	$	1,148,690	$	—	$	—	$	1,201,473	$	—
U.S. Treasury and federal agency obligations	—		170,414		—		—		184,298		—
Corporate bonds	—		49,383		—		—		—		—
Mortgage revenue bonds	—		—		19,084		—		—		15,427
	$	—	$	1,368,487	$	19,084	$	—	$	1,385,771	$	15,427
Derivative assets
Interest rate lock commitments (bank segment) 1	$	—	$	—	$	—	$	—	$	133	$	—
Forward commitments (bank segment) 1	—		—		—		—		4		—
Window forward contracts (electric utility segment)2	—		—		—		—		256		—
	$	—	$	—	$	—	$	—	$	393	$	—
Derivative liabilities
Interest rate lock commitments (bank segment) 1	$	—	$	—	$	—	$	—	$	2	$	—
Forward commitments (bank segment) 1	—		—		—		20		8		—
Window forward contracts (electric utility segment)2	—		27		—		—		—		—
	$	—	$	27	$	—	$	20	$	10	$	—

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 Derivatives are included in regulatory assets and/or 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 September 30				Nine months ended September 30
Mortgage revenue bonds	2018		2017		2018		2017
(in thousands)
Beginning balance	$	15,427	$	15,427	$	15,427	$	15,427
Principal payments received	—		—		—		—
Purchases	3,657		—		3,657		—
Unrealized gain (loss) included in other comprehensive income	—		—		—		—
Ending balance	$	19,084	$	15,427	$	19,084	$	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
(in thousands)	Balance		Level 1		Level 2		Level 3
Loans
September 30, 2018	$	77	$	—	$	—	$	77
December 31, 2017	2,621		—		—		2,621

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)	September 30, 2018			December 31, 2017
Unpaid principal balance	$	1,206,025		$	1,195,454
Weighted average note rate	3.98		%	3.94		%
Weighted average discount rate	10.0		%	10.0		%
Weighted average prepayment speed	7.0		%	9.0		%

The following table summarizes the assumptions used to determine the fair value of the LTIP awards linked to TSR and the resulting fair value of LTIP awards granted:

	2018		2017
Risk-free interest rate	2.29	%	1.46	%
Expected life in years	3		3
Expected volatility	17.0	%	20.1	%
Range of expected volatility for Peer Group	15.1% to 26.2%		15.4% to 26.0%
Grant date fair value (per share)	$38.20		$39.51

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
September 30, 2018
Home equity lines of credit	$	77	Fair value of collateral	Appraised value less 7% selling cost		N/A (2)
Total loans	$	77
December 31, 2017
Residential loans	$	613	Fair value of collateral	Appraised value less 7% selling cost	71-92%	84%
Commercial loans	2,008		Fair value of collateral	Appraised value	71-76%	75%
Total loans	$	2,621

(1) Represent percent of outstanding principal balance.

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