Bank segment (HEI only)

12 Months Ended

Dec. 31, 2022

Bank Segment Disclosure [Abstract]

Bank segment (HEI only)

Note 4 · Bank segment (HEI only)

Selected financial information

American Savings Bank, F.S.B.

Statements of Income and Comprehensive Income Data

Years ended December 31	2022		2021		2020
(in thousands)
Interest and dividend income
Interest and fees on loans	$	207,830	$	198,802	$	214,134
Interest and dividends on investment securities	58,044		43,464		30,529
Total interest and dividend income	265,874		242,266		244,663
Interest expense
Interest on deposit liabilities	7,327		4,981		10,654
Interest on other borrowings	5,974		59		460
Total interest expense	13,301		5,040		11,114
Net interest income	252,573		237,226		233,549
Provision for credit losses	2,037		(25,825)		50,811
Net interest income after provision for credit losses	250,536		263,051		182,738
Noninterest income
Fees from other financial services	19,830		21,225		16,447
Fee income on deposit liabilities	18,762		16,663		16,059
Fee income on other financial products	10,291		8,770		6,381
Bank-owned life insurance	2,533		7,318		6,483
Mortgage banking income	1,692		9,305		23,734
Gain on sale of real estate	1,778		—		—
Gain on sale of investment securities, net	—		528		9,275
Other income, net	2,086		851		(256)
Total noninterest income	56,972		64,660		78,123
Noninterest expense
Compensation and employee benefits	113,839		113,970		104,443
Occupancy	24,026		20,584		21,573
Data processing	17,681		17,634		14,769
Services	10,679		10,327		11,121
Equipment	10,100		9,510		9,001
Office supplies, printing and postage	4,398		4,239		4,623
Marketing	3,968		3,870		3,435
FDIC insurance	3,591		3,235		2,342
Other expense1	16,985		13,783		20,283
Total noninterest expense	205,267		197,152		191,590
Income before income taxes	102,241		130,559		69,271
Income taxes	22,252		29,325		11,688
Net income	79,989		101,234		57,583
Other comprehensive income (loss), net of taxes	(298,833)		(52,728)		23,608
Comprehensive income (loss)	$	(218,844)	$	48,506	$	81,191

1 2020, included approximately $5.1 million of certain direct and incremental COVID-19 related costs, including $2.5 million of compensation expense and $2.0 million of enhanced cleaning and sanitation costs.

Reconciliation to amounts per HEI Consolidated Statements of Income*:

Years ended December 31	2022		2021		2020
(in thousands)
Interest and dividend income	$	265,874	$	242,266	$	244,663
Noninterest income	56,972		64,660		78,123
Less: Gain on sale of real estate	1,778		—		—
Less: Gain on sale of investment securities, net	—		528		9,275
*Revenues-Bank	321,068		306,398		313,511
Total interest expense	13,301		5,040		11,114
Provision for credit losses	2,037		(25,825)		50,811
Noninterest expense	205,267		197,152		191,590
Less: Retirement defined benefits expense (credit)—other than service costs	(723)		(1,828)		1,813
Add: Gain on sale of real estate	1,778		—		—
*Expenses-Bank	219,550		178,195		251,702
*Operating income-Bank	101,518		128,203		61,809
Add back: Retirement defined benefits expense (credit)—other than service costs	(723)		(1,828)		1,813
Add back: Gain on sale of investment securities, net	—		528		9,275
Income before income taxes	$	102,241	$	130,559	$	69,271

Balance Sheets Data

December 31			2022				2021
(in thousands)
Assets
Cash and due from banks			$	153,042			$	100,051
Interest-bearing deposits			3,107				151,189
Cash and cash equivalents			156,149				251,240
Investment securities
Available-for-sale, at fair value			1,429,667				2,574,618
Held-to-maturity, at amortized cost (fair value of $1,150,971 and $510,474 at December 31, 2022 and 2021, respectively)			1,251,747				522,270
Stock in Federal Home Loan Bank, at cost			26,560				10,000
Loans held for investment			5,978,906				5,211,114
Allowance for credit losses			(72,216)				(71,130)
Net loans			5,906,690				5,139,984
Loans held for sale, at lower of cost or fair value			824				10,404
Other			692,143				590,897
Goodwill			82,190				82,190
Total assets			$	9,545,970			$	9,181,603
Liabilities and shareholder’s equity
Deposit liabilities–noninterest-bearing			$	2,811,077			$	2,976,632
Deposit liabilities–interest-bearing			5,358,619				5,195,580
Other borrowings			695,120				88,305
Other			212,269				193,268
Total liabilities			9,077,085				8,453,785
Commitments and contingencies
Common stock			1				1
Additional paid in capital			355,806				353,895
Retained earnings			449,693				411,704
Accumulated other comprehensive loss, net of tax benefits
Net unrealized losses on securities	$	(328,904)			$	(32,037)
Retirement benefit plans	(7,711)		(336,615)		(5,745)		(37,782)
Total shareholder’s equity			468,885				727,818
Total liabilities and shareholder’s equity			$	9,545,970			$	9,181,603

December 31	2022		2021
(in thousands)
Other assets
Bank-owned life insurance	$	182,986	$	177,566
Premises and equipment, net	195,324		202,299
Accrued interest receivable	25,077		20,854
Mortgage servicing rights	9,047		9,950
Low-income housing investments	106,978		110,989
Deferred tax asset	116,441		7,699
Real estate acquired in settlement of loans, net	115		—
Other	56,175		61,540
	$	692,143	$	590,897
Other liabilities
Accrued expenses	$	97,295	$	87,905
Federal income taxes payable	863		—
Cashier’s checks	36,401		33,675
Advance payments by borrowers	9,637		9,994
Other	68,073		61,694
	$	212,269	$	193,268

Bank-owned life insurance is life insurance purchased by ASB on the lives of certain key employees, with ASB as the beneficiary. The insurance is used to fund employee benefits through tax-free income from increases in the cash value of the policies and insurance proceeds paid to ASB upon an insured’s death.

Investment securities. The major components of investment securities were as follows:

									Gross unrealized losses
			Gross unrealized gains		Gross unrealized losses		Estimated fair value		Less than 12 months					12 months or longer
(dollars in thousands)	Amortized cost								Number of issues	Fair value		Amount		Number of issues	Fair value		Amount
December 31, 2022
Available-for-sale
U.S. Treasury and federal agency obligations	$	88,344	$	—	$	(7,281)	$	81,063	12	$	41,201	$	(2,120)	4	$	39,862	$	(5,161)
Mortgage-backed securities*	1,530,582		—		(237,614)		1,292,968		113	455,836		(56,999)		70	837,132		(180,615)
Corporate bonds	44,377		—		(3,643)		40,734		4	29,644		(2,028)		1	11,090		(1,615)
Mortgage revenue bonds	14,902		—		—		14,902		—	—		—		—	—		—
	$	1,678,205	$	—	$	(248,538)	$	1,429,667	129	$	526,681	$	(61,147)	75	$	888,084	$	(187,391)
Held-to-maturity
U.S. Treasury and federal agency obligations	$	59,894	$	—	$	(8,478)	$	51,416	1	$	16,874	$	(3,222)	2	$	34,542	$	(5,256)
Mortgage-backed securities*	1,191,853		2,670		(94,968)		1,099,555		22	183,629		(10,593)		51	567,250		(84,375)
	$	1,251,747	$	2,670	$	(103,446)	$	1,150,971	23	$	200,503	$	(13,815)	53	$	601,792	$	(89,631)
December 31, 2021
Available-for-sale
U.S. Treasury and federal agency obligations	$	89,714	$	803	$	(427)	$	90,090	4	$	44,827	$	(427)	—	$	—	$	—
Mortgage-backed securities*	2,482,618		6,511		(51,206)		2,437,923		120	1,845,243		(38,321)		18	271,012		(12,885)
Corporate bonds	30,625		655		(102)		31,178		1	12,780		(102)		—	—		—
Mortgage revenue bonds	15,427		—		—		15,427		—	—		—		—	—		—
	$	2,618,384	$	7,969	$	(51,735)	$	2,574,618	125	$	1,902,850	$	(38,850)	18	$	271,012	$	(12,885)
Held-to-maturity
U.S. Treasury and federal agency obligations	$	59,871	$	168	$	(170)	$	59,869	2	$	39,594	$	(170)	—	$	—	$	—
Mortgage-backed securities*	462,399		1,480		(13,274)		450,605		22	290,883		(7,665)		7	106,483		(5,609)
	$	522,270	$	1,648	$	(13,444)	$	510,474	24	$	330,477	$	(7,835)	7	$	106,483	$	(5,609)

* Issued or guaranteed by U.S. Government agencies or sponsored agencies

ASB does not believe that the investment securities that were in an unrealized loss position as of December 31, 2022, represent a credit loss. Total gross unrealized losses were primarily attributable to change in market conditions. On a quarterly basis the investment securities are evaluated for changes in financial condition of the issuer. Based upon ASB’s evaluation, all securities held within the investment portfolio continue to be rated investment grade by one or more agencies. The contractual cash flows of the U.S. Treasury, federal agency obligations and agency mortgage-backed securities are backed by the full faith and credit guaranty of the United States government or an agency of the government. ASB does not intend to sell the securities before the recovery of its amortized cost basis and there have been no adverse changes in the timing of the contractual cash flows for the securities. ASB’s investment securities portfolio did not require an allowance for credit losses as of December 31, 2022.

U.S. Treasury, federal agency obligations, corporate bonds, and mortgage revenue bonds have contractual terms to maturity. Mortgage-backed securities have contractual terms to maturity, but require periodic payments to reduce principal. In addition, expected maturities will differ from contractual maturities because borrowers have the right to prepay the underlying mortgages.

The contractual maturities of investment securities were as follows:

	Amortized		Fair
December 31, 2022	Cost		value
(in thousands)
Available-for-sale
Due in one year or less	$	1,193	$	1,171
Due after one year through five years	106,628		98,871
Due after five years through ten years	39,802		36,657
Due after ten years	—		—
	147,623		136,699
Mortgage-backed securities — issued or guaranteed by U.S. Government agencies or sponsored agencies	1,530,582		1,292,968
Total available-for-sale securities	$	1,678,205	$	1,429,667
Held-to-maturity
Due in one year or less	$	—	$	—
Due after one year through five years	—		—
Due after five years through ten years	59,894		51,416
Due after ten years	—		—
	59,894		51,416
Mortgage-backed securities — issued or guaranteed by U.S. Government agencies or sponsored agencies	1,191,853		1,099,555
Total held-to-maturity securities	$	1,251,747	$	1,150,971

The proceeds, gross gains and losses from sales of available-for-sale securities were as follows:

Years ended December 31	2022		2021		2020
(in thousands)
Proceeds	$	—	$	197,354	$	169,157
Gross gains	—		975		9,275
Gross losses	—		(447)		—
Tax expense on realized gains	—		142		2,486

Interest income from taxable and non-taxable investment securities were as follows:

Years ended December 31	2022		2021		2020
(in thousands)
Taxable	$	56,731	$	42,534	$	29,760
Non-taxable	1,313		930		769
	$	58,044	$	43,464	$	30,529

ASB pledged securities with a market value of approximately $929 million and $416 million as of December 31, 2022 and 2021, respectively, as collateral for public funds and other deposits, mortgage pipeline hedge margin, automated clearinghouse transactions, the Federal Reserve Bank of San Francisco discount window and bankruptcy account, and the Federal Home Loan Bank of Des Moines advance line. In addition, ASB pledged securities with a market value of $327 million and $161 million as of December 31, 2022 and 2021, respectively, as collateral for securities sold under agreements to repurchase.

Transfer of available-for-sale securities to held-to-maturity. In October 2022, ASB transferred 66 available-for-sale investment securities with a fair value of $755 million to the held-to-maturity category. On the date of transfer, these securities had a total unrealized loss of $206 million. There was no impact to net income as a result of the transfer.

These transfers were executed to mitigate the potential future impact to capital through accumulated other comprehensive loss and the impact of rising rates on the market value of the investment securities. ASB believes that it maintains sufficient liquidity for future business needs and it has the positive intent and ability to hold these securities to maturity.

Stock in FHLB.  As of December 31, 2022 and 2021, ASB’s stock in FHLB was carried at cost ($26.6 million and $10.0 million, respectively) because it can only be redeemed at par and it is a required investment based on measurements of ASB’s capital, assets and borrowing levels.

Quarterly and as conditions warrant, ASB reviews its investment in the stock of the FHLB for impairment. ASB evaluated its investment in FHLB stock for credit losses as of December 31, 2022, consistent with its accounting policy. ASB did not recognize any credit losses for 2022, 2021 and 2020 based on its evaluation of the underlying investment.

Future deterioration in the FHLB’s financial position and/or negative developments in any of the factors considered in ASB’s impairment evaluation may result in future impairment losses.

Loans. The components of loans were summarized as follows:

December 31	2022		2021
(in thousands)
Real estate:
Residential 1-4 family	$	2,479,637	$	2,299,212
Commercial real estate	1,358,123		1,056,982
Home equity line of credit	1,002,905		835,663
Residential land	20,679		19,859
Commercial construction	88,489		91,080
Residential construction	20,788		11,138
Total real estate	4,970,621		4,313,934
Commercial	779,691		793,304
Consumer	254,709		113,966
Total loans	6,005,021		5,221,204
Less: Deferred fees and discounts	(26,115)		(10,090)
Allowance for credit losses	(72,216)		(71,130)
Total loans, net	$	5,906,690	$	5,139,984

ASB’s policy is to require private mortgage insurance on all real estate loans when the loan-to-value ratio of the property exceeds 80% of the lower of the appraised value or purchase price at origination. For non-owner occupied residential property purchases, the loan-to-value ratio may not exceed 75% of the lower of the appraised value or purchase price at origination.

ASB services real estate loans for investors (principal balance of $1.5 billion, $1.5 billion and $1.5 billion as of December 31, 2022, 2021 and 2020, respectively), which are not included in the accompanying balance sheets data. ASB reports fees earned for servicing such loans as income when the related mortgage loan payments are collected and charges loan servicing cost to expense as incurred.

As of December 31, 2022 and 2021, ASB had pledged loans with an amortized cost of approximately $3.0 billion and $2.8 billion, respectively, as collateral to secure advances from the FHLB.

As of December 31, 2022 and 2021, the aggregate amount of loans to directors and executive officers of ASB and its affiliates and any related interests (as defined in Federal Reserve Board (FRB) Regulation O) of such individuals, was $10.7 million and $13.1 million, respectively. As of December 31, 2022 and 2021, there was a loan to a related interest of a director of ASB for $10.0 million. The loan was made at ASB’s normal credit terms.

Allowance for credit losses.  As discussed in Note 1, ASB must maintain an allowance for credit losses that is adequate to absorb estimated expected credit losses associated with its loan portfolio.

The allowance for credit losses (balances and changes) and financing receivables by portfolio segment were as follows:

(in thousands)	Residential 1-4 family			Commercial real estate			Home equity line of credit			Residential land			Commercial construction			Residential construction			Commercial			Consumer			Total
December 31, 2022
Allowance for credit losses:
Beginning balance	$	6,545		$	24,696		$	5,657		$	646		$	2,186		$	18		$	15,798		$	15,584		$	71,130
Charge-offs	(13)			—			—			—			—			—			(563)			(6,254)			(6,830)
Recoveries	79			—			71			104			—			—			1,288			3,837			5,379
Net (charge-offs) recoveries	66			—			71			104			—			—			725			(2,417)			(1,451)
Provision	(341)			(2,798)			397			(33)			(991)			28			(4,097)			10,372			2,537
Ending balance	$	6,270		$	21,898		$	6,125		$	717		$	1,195		$	46		$	12,426		$	23,539		$	72,216
Average loans outstanding	$	2,331,473		$	1,204,756		$	918,563		$	21,442		$	90,021		$	18,317		$	710,658		$	161,722		$	5,456,952
Net charge-offs (recoveries) to average loans	—		%	—		%	(0.01		%)	(0.49		%)	—		%	—		%	(0.10		%)	1.49		%	0.03		%
December 31, 2021
Allowance for credit losses:
Beginning balance	$	4,600		$	35,607		$	6,813		$	609		$	4,149		$	11		$	25,462		$	23,950		$	101,201
Charge-offs	(67)			—			(45)			—			—			—			(1,561)			(8,027)			(9,700)
Recoveries	92			—			113			61			—			—			1,468			4,320			6,054
Net (charge-offs) recoveries	25			—			68			61			—			—			(93)			(3,707)			(3,646)
Provision	1,920			(10,911)			(1,224)			(24)			(1,963)			7			(9,571)			(4,659)			(26,425)
Ending balance	$	6,545		$	24,696		$	5,657		$	646		$	2,186		$	18		$	15,798		$	15,584		$	71,130
Average loans outstanding	$	2,155,322		$	1,046,276		$	885,759		$	18,227		$	111,711		$	11,361		$	856,226		$	135,609		$	5,220,491
Net charge-offs (recoveries) to average loans	—		%	—		%	(0.01		%)	(0.33		%)	—		%	—		%	0.01		%	2.73		%	0.07		%
December 31, 2020
Allowance for credit losses:
Beginning balance, prior to adoption of ASU No. 2016-13	$	2,380		$	15,053		$	6,922		$	449		$	2,097		$	3		$	10,245		$	16,206		$	53,355
Impact of adopting ASU No. 2016-13	2,150			208			(541)			(64)			289			14			922			16,463			19,441
Charge-offs	(7)			—			(77)			(351)			—			—			(5,819)			(19,900)			(26,154)
Recoveries	394			—			63			38			—			—			872			3,381			4,748
Net (charge-offs) recoveries	387			—			(14)			(313)			—			—			(4,947)			(16,519)			(21,406)
Provision	(317)			20,346			446			537			1,763			(6)			19,242			7,800			49,811
Ending balance	$	4,600		$	35,607		$	6,813		$	609		$	4,149		$	11		$	25,462		$	23,950		$	101,201
Average loans outstanding	$	2,148,848		$	861,096		$	1,060,444		$	13,799		$	93,740		$	10,703		$	935,663		$	215,994		$	5,340,287
Net charge-offs (recoveries) to average loans	(0.02)		%	—		%	—		%	2.27		%	—		%	—		%	0.53		%	7.65		%	0.40		%

Allowance for loan commitments.  The allowance for loan commitments by portfolio segment were as follows:

(in thousands)	Home equity  line of credit		Commercial construction		Commercial loans		Total
Year ended December 31, 2022
Allowance for loan commitments:
Beginning balance	$	400	$	3,700	$	800	$	4,900
Provision	—		(1,100)		600		(500)
Ending balance	$	400	$	2,600	$	1,400	$	4,400
Year ended December 31, 2021
Allowance for loan commitments:
Beginning balance	$	300	$	3,000	$	1,000	$	4,300
Provision	100		700		(200)		600
Ending balance	$	400	$	3,700	$	800	$	4,900
Year ended December 31, 2020
Allowance for loan commitments:
Beginning balance, prior to adoption of ASU No. 2016-13	$	392	$	931	$	418	$	1,741
Impact of adopting ASU No. 2016-13	(92)		1,745		(94)		1,559
Provision	—		324		676		1,000
Ending balance	$	300	$	3,000	$	1,000	$	4,300

Credit quality.  ASB performs an internal loan review and grading on an ongoing basis. The review provides management with periodic information as to the quality of the loan portfolio and effectiveness of its lending policies and procedures. The objectives of the loan review and grading procedures are to identify, in a timely manner, existing or emerging credit trends so that appropriate steps can be initiated to manage risk and avoid or minimize future losses. Loans subject to grading include commercial, commercial real estate and commercial construction loans.

Each commercial and commercial real estate loan is assigned an Asset Quality Rating (AQR) reflecting the likelihood of repayment or orderly liquidation of that loan transaction pursuant to regulatory credit classifications:  Pass, Special Mention, Substandard, Doubtful, and Loss. The AQR is a function of the probability of default model rating, the loss given default, and possible non-model factors which impact the ultimate collectability of the loan such as character of the business owner/guarantor, interim period performance, litigation, tax liens and major changes in business and economic conditions. Pass exposures generally are well protected by the current net worth and paying capacity of the obligor or by the value of the asset or underlying collateral. Special Mention loans have potential weaknesses that, if left uncorrected, could jeopardize the liquidation of the debt. Substandard loans have well-defined weaknesses that jeopardize the liquidation of the debt and are characterized by the distinct possibility that ASB may sustain some loss. An asset classified Doubtful has the weaknesses of those classified Substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. An asset classified Loss is considered uncollectible and has such little value that its continuance as a bankable asset is not warranted.

The credit risk profile by vintage date based on payment activity or internally assigned grade for loans was as follows:

	Term loans by origination year												Revolving loans
(in thousands)	2022		2021		2020		2019		2018		Prior		Revolving loans		Converted to term loans		Total
December 31, 2022
Residential 1-4 family
Current	$	432,707	$	755,056	$	423,455	$	113,096	$	51,860	$	698,354	$	—	$	—	$	2,474,528
30-59 days past due	—		—		—		—		448		1,098		—		—		1,546
60-89 days past due	—		—		268		—		—		90		—		—		358
Greater than 89 days past due	—		—		—		—		809		2,396		—		—		3,205
	432,707		755,056		423,723		113,096		53,117		701,938		—		—		2,479,637
Home equity line of credit
Current	—		—		—		—		—		—		959,131		40,814		999,945
30-59 days past due	—		—		—		—		—		—		1,103		209		1,312
60-89 days past due	—		—		—		—		—		—		209		226		435
Greater than 89 days past due	—		—		—		—		—		—		587		626		1,213
	—		—		—		—		—		—		961,030		41,875		1,002,905
Residential land
Current	5,245		9,010		5,222		203		522		477		—		—		20,679
30-59 days past due	—		—		—		—		—		—		—		—		—
60-89 days past due	—		—		—		—		—		—		—		—		—
Greater than 89 days past due	—		—		—		—		—		—		—		—		—
	5,245		9,010		5,222		203		522		477		—		—		20,679
Residential construction
Current	7,986		11,624		1,178		—		—		—		—		—		20,788
30-59 days past due	—		—		—		—		—		—		—		—		—
60-89 days past due	—		—		—		—		—		—		—		—		—
Greater than 89 days past due	—		—		—		—		—		—		—		—		—
	7,986		11,624		1,178		—		—		—		—		—		20,788
Consumer
Current	199,574		21,330		5,543		7,580		527		140		10,810		4,782		250,286
30-59 days past due	1,110		287		65		239		30		—		81		167		1,979
60-89 days past due	756		163		88		137		19		—		45		107		1,315
Greater than 89 days past due	621		105		37		176		28		—		20		142		1,129
	202,061		21,885		5,733		8,132		604		140		10,956		5,198		254,709
Commercial real estate
Pass	390,206		177,130		283,321		51,542		63,084		278,280		8,235		—		1,251,798
Special Mention	—		11,250		3,446		40,423		—		24,466		—		—		79,585
Substandard	—		—		665		11,357		—		14,718		—		—		26,740
Doubtful	—		—		—		—		—		—		—		—		—
	390,206		188,380		287,432		103,322		63,084		317,464		8,235		—		1,358,123
Commercial construction
Pass	15,094		47,478		44		—		—		—		25,873		—		88,489
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
	15,094		47,478		44		—		—		—		25,873		—		88,489
Commercial
Pass	239,852		185,013		85,220		68,161		46,142		53,192		60,871		13,964		752,415
Special Mention	—		—		—		2,374		—		645		9,005		8		12,032
Substandard	3,322		2,305		401		1,304		1,346		3,849		1,664		1,053		15,244
Doubtful	—		—		—		—		—		—		—		—		—
	243,174		187,318		85,621		71,839		47,488		57,686		71,540		15,025		779,691
Total loans	$	1,296,473	$	1,220,751	$	808,953	$	296,592	$	164,815	$	1,077,705	$	1,077,634	$	62,098	$	6,005,021

	Term loans by origination year												Revolving loans
(in thousands)	2021		2020		2019		2018		2017		Prior		Revolving loans		Converted to term loans		Total
December 31, 2021
Residential 1-4 family
Current	$	791,758	$	461,683	$	133,345	$	64,421	$	124,994	$	712,452	$	—	$	—	$	2,288,653
30-59 days past due	—		—		—		809		—		2,210		—		—		3,019
60-89 days past due	—		—		—		—		—		1,468		—		—		1,468
Greater than 89 days past due	—		—		2,987		—		—		3,085		—		—		6,072
	791,758		461,683		136,332		65,230		124,994		719,215		—		—		2,299,212
Home equity line of credit
Current	—		—		—		—		—		—		794,518		39,116		833,634
30-59 days past due	—		—		—		—		—		—		296		313		609
60-89 days past due	—		—		—		—		—		—		16		70		86
Greater than 89 days past due	—		—		—		—		—		—		838		496		1,334
	—		—		—		—		—		—		795,668		39,995		835,663
Residential land
Current	10,572		6,794		1,116		532		267		181		—		—		19,462
30-59 days past due	—		—		—		—		—		—		—		—		—
60-89 days past due	—		—		—		—		—		—		—		—		—
Greater than 89 days past due	—		—		—		—		—		397		—		—		397
	10,572		6,794		1,116		532		267		578		—		—		19,859
Residential construction
Current	7,856		3,019		—		—		263		—		—		—		11,138
30-59 days past due	—		—		—		—		—		—		—		—		—
60-89 days past due	—		—		—		—		—		—		—		—		—
Greater than 89 days past due	—		—		—		—		—		—		—		—		—
	7,856		3,019		—		—		263		—		—		—		11,138
Consumer
Current	37,563		15,488		29,383		10,897		302		238		12,740		4,157		110,768
30-59 days past due	202		181		517		234		15		—		156		70		1,375
60-89 days past due	59		127		392		183		8		—		7		106		882
Greater than 89 days past due	14		93		387		192		27		—		141		87		941
	37,838		15,889		30,679		11,506		352		238		13,044		4,420		113,966
Commercial real estate
Pass	173,794		275,242		49,317		56,490		33,581		259,583		11,602		—		859,609
Special Mention	19,600		3,529		42,935		30,870		20,788		32,824		—		—		150,546
Substandard	—		684		13,936		1,859		1,805		28,543		—		—		46,827
Doubtful	—		—		—		—		—		—		—		—		—
	193,394		279,455		106,188		89,219		56,174		320,950		11,602		—		1,056,982
Commercial construction
Pass	17,140		43,261		—		11,342		—		—		19,337		—		91,080
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
	17,140		43,261		—		11,342		—		—		19,337		—		91,080
Commercial
Pass	266,087		96,963		79,329		56,497		31,019		66,570		96,673		15,510		708,648
Special Mention	40		27,336		10,071		202		439		8,966		15,303		18		62,375
Substandard	427		184		3,737		1,777		4,457		2,961		7,083		1,655		22,281
Doubtful	—		—		—		—		—		—		—		—		—
	266,554		124,483		93,137		58,476		35,915		78,497		119,059		17,183		793,304
Total loans	$	1,325,112	$	934,584	$	367,452	$	236,305	$	217,965	$	1,119,478	$	958,710	$	61,598	$	5,221,204

Revolving loans converted to term loans during 2022 in the commercial, home equity line of credit and consumer portfolios were $1.9 million, $15.6 million and $3.5 million, respectively.

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, 2022
Real estate:
Residential 1-4 family	$	1,546	$	358	$	3,205	$	5,109	$	2,474,528	$	2,479,637	$	—
Commercial real estate	508		217		—		725		1,357,398		1,358,123		—
Home equity line of credit	1,312		435		1,213		2,960		999,945		1,002,905		—
Residential land	—		—		—		—		20,679		20,679		—
Commercial construction	—		—		—		—		88,489		88,489		—
Residential construction	—		—		—		—		20,788		20,788		—
Commercial	614		18		77		709		778,982		779,691		—
Consumer	1,979		1,315		1,129		4,423		250,286		254,709		—
Total loans	$	5,959	$	2,343	$	5,624	$	13,926	$	5,991,095	$	6,005,021	$	—
December 31, 2021
Real estate:
Residential 1-4 family	$	3,019	$	1,468	$	6,072	$	10,559	$	2,288,653	$	2,299,212	$	—
Commercial real estate	—		—		—		—		1,056,982		1,056,982		—
Home equity line of credit	609		86		1,334		2,029		833,634		835,663		—
Residential land	—		—		397		397		19,462		19,859		—
Commercial construction	—		—		—		—		91,080		91,080		—
Residential construction	—		—		—		—		11,138		11,138		—
Commercial	700		313		48		1,061		792,243		793,304		—
Consumer	1,375		882		941		3,198		110,768		113,966		—
Total loans	$	5,703	$	2,749	$	8,792	$	17,244	$	5,203,960	$	5,221,204	$	—

The credit risk profile based on nonaccrual loans were as follows:

	December 31, 2022						December 31, 2021
(in thousands)	With a related ACL		Without a related ACL		Total		With a related ACL		Without a related ACL		Total
Real estate:
Residential 1-4 family	$	4,198	$	2,981	$	7,179	$	16,045	$	3,703	$	19,748
Commercial real estate	—		—		—		14,104		1,221		15,325
Home equity line of credit	3,654		1,442		5,096		4,227		1,294		5,521
Residential land	420		—		420		97		300		397
Commercial construction	—		—		—		—		—		—
Residential construction	—		—		—		—		—		—
Commercial	2,183		—		2,183		1,446		692		2,138
Consumer	1,588		—		1,588		1,845		—		1,845
Total	$	12,043	$	4,423	$	16,466	$	37,764	$	7,210	$	44,974

The credit risk profile based on loans whose terms have been modified and accruing interest were as follows:

(in thousands)	December 31, 2022		December 31, 2021
Real estate:
Residential 1-4 family	$	8,821	$	6,949
Commercial real estate	9,477		3,055
Home equity line of credit	4,404		6,021
Residential land	782		980
Commercial construction	—		—
Residential construction	—		—
Commercial	6,596		7,860
Consumer	50		52
Total troubled debt restructured loans accruing interest	$	30,130	$	24,917

ASB did not recognize interest on nonaccrual loans for 2022, 2021 and 2020.

Troubled debt restructurings.  A loan modification is deemed to be a TDR when the borrower is determined to be experiencing financial difficulties and ASB grants a concession it would not otherwise consider. When a borrower experiencing financial difficulty fails to make a required payment on a loan or is in imminent default, ASB takes a number of steps to improve the collectability of the loan and maximize the likelihood of full repayment. At times, ASB may modify or restructure a loan to help a distressed borrower improve its financial position to eventually be able to fully repay the loan, provided the borrower has demonstrated both the willingness and the ability to fulfill the modified terms. TDR loans are considered an alternative to foreclosure or liquidation with the goal of minimizing losses to ASB and maximizing recovery.

ASB may consider various types of concessions in granting a TDR including maturity date extensions, extended amortization of principal, temporary deferral of principal payments, and temporary interest rate reductions. ASB rarely grants principal forgiveness in its TDR modifications. Residential loan modifications generally involve interest rate reduction, extending the amortization period, or capitalizing certain delinquent amounts owed not to exceed the original loan balance. Land loans at origination are typically structured as a three-year term, interest-only monthly payment with a balloon payment due at maturity. Land loan TDR modifications typically involve extending the maturity date up to three years and converting the payments from interest-only to principal and interest monthly, at the same or higher interest rate. Commercial loan modifications generally involve extensions of maturity dates, extending the interest only or amortization period, and temporary deferral or reduction of principal payments. ASB generally does not reduce the interest rate on commercial loan TDR modifications. Occasionally, additional collateral and/or guaranties are obtained.

The allowance for credit losses on TDR loans that do not share risk characteristics are individually evaluated based on the present value of expected future cash flows discounted at the loan’s effective original contractual rate or based on the fair value of collateral less cost to sell. The financial impact of the estimated loss is an increase to the allowance associated with the modified loan. When available information confirms that specific loans or portions thereof are uncollectible (confirmed losses), these amounts are charged off against the allowance for credit losses.

Loan modifications that occurred during 2022, 2021, and 2020 were as follows:

(dollars in thousands)	Number of contracts	Outstanding recorded  investment  (as of period end)1		Related allowance (as of period end)
Year ended December 31, 2022
Real estate:
Residential 1-4 family	5	$	1,475	$	164
Commercial real estate	—	—		—
Home equity line of credit	—	—		—
Residential land	1	203		42
Commercial construction	—	—		—
Residential construction	—	—		—
Commercial	3	2,634		497
Consumer	—	—		—
	9	$	4,312	$	703
Year ended December 31, 2021
Real estate:
Residential 1-4 family	14	$	8,379	$	442
Commercial real estate	—	—		—
Home equity line of credit	—	—		—
Residential land	3	799		38
Commercial construction	—	—		—
Residential construction	—	—		—
Commercial	7	2,931		205
Consumer	—	—		—
	24	$	12,109	$	685
Year ended December 31, 2020
Real estate:
Residential 1-4 family	1	$	144	$	6
Commercial real estate	6	20,714		4,439
Home equity line of credit	3	85		11
Residential land	4	668		54
Commercial construction	—	—		—
Residential construction	—	—		—
Commercial	54	5,380		869
Consumer	—	—		—
	68	$	26,991	$	5,379

1     The period end balances reflect all paydowns and charge-offs since the modification period. TDRs fully paid off, charged-off, or foreclosed upon by period end are not included.

Loans modified in TDRs that experienced a payment default of 90 days or more in 2022, 2021, and 2020 and for which the payment default occurred within one year of the modification, were as follows:

Years ended December 31	2022			2021			2020
(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:
Residential 1-4 family	—	$	—	1	$	474	—	$	—
Commercial real estate	—	—		—	—		—	—
Home equity line of credit	—	—		—	—		—	—
Residential land	—	—		—	—		—	—
Commercial construction	—	—		—	—		—	—
Residential construction	—	—		—	—		—	—
Commercial	—	—		1	9		—	—
Consumer	—	—		—	—		—	—
	—	$	—	2	$	483	—	$	—

If a loan modified in a TDR subsequently defaults, ASB evaluates the loan for further impairment. Based on its evaluation, adjustments may be made in the allocation of the allowance or partial charge-offs may be taken to further write-down the carrying value of the loan. Commitments to lend additional funds to borrowers whose loan terms have been modified in a TDR totaled nil at December 31, 2022 and 2021.

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provides that a financial institution may elect to suspend the requirements under GAAP for certain loan modifications that would otherwise be categorized as a TDR and any related impairment for accounting purposes.

In response to the COVID-19 pandemic, the Board of Governors of the FRB, the FDIC, the National Credit Union Administration, the OCC, and the Consumer Financial Protection Bureau, in consultation with the state financial regulators (collectively, the “agencies”) issued a joint interagency statement (issued March 22, 2020; revised statement issued April 7, 2020). Some of the provisions applicable to the Company include, but are not limited to accounting for loan modifications, past due reporting and nonaccrual status and charge-offs.

Loan modifications that do not meet the conditions of the CARES Act may still qualify as a modification that does not need to be accounted for as a TDR. The agencies confirmed with the FASB staff that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not TDRs. This includes short-term (e.g., six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or insignificant delays in payment. Financial institutions are not expected to designate loans with deferrals granted due to COVID-19 as past due because of the deferral. A loan’s payment date is governed by the due date stipulated in the legal agreement. If a financial institution agrees to a payment deferral, these loans would not be considered past due during the period of the deferral. Lastly, during short-term COVID-19 modifications, these loans generally should not be reported as nonaccrual or as classified.

Collateral-dependent loans. A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment of the loan is expected to be provided substantially through the operation or sale of the collateral.

Loans considered collateral-dependent were as follows:

	December 31, 2022			December 31, 2021
	Amortized cost		Collateral type	Amortized cost		Collateral type
(in thousands)
Real estate:
Residential 1-4 family	$	3,959	Residential real estate property	$	3,493	Residential real estate property
Commercial real estate	—			1,221		Commercial real estate property
Home equity line of credit	1,425		Residential real estate property	1,294		Residential real estate property
Residential land	—			300		Residential real estate property
Total real estate	5,384			6,308
Commercial	—			692		Business assets
Total	$	5,384		$	7,000

ASB had $4.2 million and $3.4 million of consumer mortgage loans collateralized by residential real estate property that were in the process of foreclosure at December 31, 2022 and 2021, respectively.

Mortgage servicing rights (MSRs). In its mortgage banking business, ASB sells residential mortgage loans to government-sponsored entities and other parties, who may issue securities backed by pools of such loans. ASB retains no beneficial interests in these loans other than the servicing rights of certain loans sold.

ASB received $136.5 million, $364.8 million and $567.7 million of proceeds from the sale of residential mortgages in 2022, 2021, and 2020, respectively, and recognized gains on such sales of $1.7 million, $9.3 million, and $23.7 million in 2022, 2021, and 2020, respectively.

There was one repurchased mortgage loan for 2022 and no repurchased mortgage loans for 2021 and 2020. The repurchase reserve was $0.1 million as of December 31, 2022 and 2021.

Mortgage servicing fees, a component of other income, net, were $3.7 million, $3.8 million and $3.4 million for the years ended December 31, 2022, 2021, and 2020, respectively.

Changes in the carrying value of MSRs were as follows:

(in thousands)	Gross carrying amount		Accumulated amortization		Valuation allowance		Net carrying amount
December 31, 2022	$	19,544	$	(10,497)	$	—	$	9,047
December 31, 2021	$	18,674	$	(8,724)	$	—	$	9,950

Changes related to MSRs were as follows:

(in thousands)	2022		2021		2020
Mortgage servicing rights
Balance, January 1	$	9,950	$	10,280	$	9,101
Amount capitalized	1,130		3,404		5,096
Amortization	(2,033)		(3,734)		(3,917)
Sale of mortgage servicing rights	—		—		—
Other-than-temporary impairment	—		—		—
Carrying amount before valuation allowance, December 31	9,047		9,950		10,280
Valuation allowance for mortgage servicing rights
Balance, January 1	—		260		—
Provision	—		(260)		260
Other-than-temporary impairment	—		—		—
Balance, December 31	—		—		260
Net carrying value of mortgage servicing rights	$	9,047	$	9,950	$	10,020

The estimated aggregate amortization expenses of MSRs for 2023, 2024, 2025, 2026 and 2027 are $1.2 million, $1.1 million, $1.0 million, $0.9 million and $0.8 million, respectively.

ASB capitalizes MSRs acquired upon the sale of mortgage loans with servicing rights retained. On a monthly basis, ASB compares the net carrying value of the MSRs to its fair value to determine if there are any changes to the valuation allowance and/or other-than-temporary impairment for the MSRs.

ASB uses a present value cash flow model to estimate the fair value of MSRs. Impairment is recognized through a valuation allowance for each stratum when the carrying amount exceeds fair value, with any associated provision recorded as a component of loan servicing fees included in “Revenues - bank” in the consolidated statements of income. A direct write-down is recorded when the recoverability of the valuation allowance is deemed to be unrecoverable.

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

December 31	2022			2021
(dollars in thousands)
Unpaid principal balance	$	1,451,322		$	1,481,899
Weighted average note rate	3.38		%	3.38		%
Weighted average discount rate	10.00		%	9.25		%
Weighted average prepayment speed	6.56		%	9.77		%

The sensitivity analysis of fair value of MSRs to hypothetical adverse changes of 25 and 50 basis points in certain key assumptions was as follows:

December 31	2022		2021
(in thousands)
Prepayment rate:
25 basis points adverse rate change	$	(92)	$	(714)
50 basis points adverse rate change	(214)		(1,608)
Discount rate:
25 basis points adverse rate change	(182)		(129)
50 basis points adverse rate change	(361)		(256)

The effect of a variation in certain assumptions on fair value is calculated without changing any other assumptions. This analysis typically cannot be extrapolated because the relationship of a change in one key assumption to the changes in the fair value of MSRs typically is not linear.

Deposit liabilities. The summarized components of deposit liabilities were as follows:

December 31	2022				2021
(dollars in thousands)	Weighted-average stated rate		Amount		Weighted-average stated rate		Amount
Savings	0.03	%	$	3,198,329	0.03	%	$	3,234,646
Checking
Interest-bearing	0.17		1,359,519		0.02		1,344,049
Noninterest-bearing	—		1,453,937		—		1,472,727
Commercial checking	—		1,357,140		—		1,503,905
Money market	0.82		189,053		0.06		192,909
Time certificates	2.39		611,718		0.67		423,976
	0.24	%	$	8,169,696	0.05	%	$	8,172,212

As of December 31, 2022 and 2021, time certificates of $250,000 or more totaled $346.9 million and $87.6 million, respectively.

The approximate scheduled maturities of time certificates outstanding at December 31, 2022 were as follows:

(in thousands)
2023	$	495,577
2024	59,493
2025	34,360
2026	11,224
2027	8,327
Thereafter	2,737
	$	611,718

Overdrawn deposit accounts are classified as loans and totaled $1.5 million and $1.3 million at December 31, 2022 and 2021, respectively.

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

Years ended December 31	2022		2021		2020
(in thousands)
Time certificates	$	5,372	$	3,805	$	7,944
Savings	860		802		1,774
Money market	330		132		465
Interest-bearing checking	765		242		471
	$	7,327	$	4,981	$	10,654

Other borrowings.

Securities sold under agreements to repurchase.  Securities sold under agreements to repurchase are accounted for as financing transactions and the obligations to repurchase these securities are recorded as liabilities in the consolidated balance sheets. ASB pledges investment securities as collateral for securities sold under agreements to repurchase. All such agreements are subject to master netting arrangements, which provide for conditional right of set-off in case of default by either party; however, ASB presents securities sold under agreements to repurchase on a gross basis in the balance sheet. 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 Sheets		Net amount of  liabilities presented in the Balance Sheets
Repurchase agreements
December 31, 2022	$	281	$	—	$	281
December 31, 2021	88		—		88

	Gross amount not offset in the Balance Sheets
(in millions)	Net amount of  liabilities presented in the Balance Sheets		Financial instruments		Cash collateral pledged
Commercial account holders
December 31, 2022	$	281	$	327	$	—
December 31, 2021	88		161		—

The securities underlying the agreements to repurchase are book-entry securities and were delivered by appropriate entry into the counterparties’ accounts or into segregated tri-party custodial accounts at the FHLB. The securities underlying the agreements to repurchase continue to be reflected in ASB’s asset accounts. The counterparties or tri-parties may determine that additional collateral is required based on movements in the fair value of the collateral. Typically, a five percent discount is taken from the fair value of the investment securities to determine the value of the collateral pledged for the repurchase agreements.

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

(dollars in thousands)	2022			2021			2020
Amount outstanding as of December 31	$	281,120		$	88,305		$	89,670
Average amount outstanding during the year	127,170			88,405			73,738
Maximum amount outstanding as of any month-end	284,040			129,665			100,580
Weighted-average interest rate as of December 31	3.02		%	0.02		%	0.02		%
Weighted-average interest rate during the year	0.99		%	0.02		%	0.42		%
Weighted-average remaining days to maturity as of December 31	1			1			1

Securities sold under agreements to repurchase were summarized as follows:

December 31	2022						2021
Maturity	Repurchase liability		Weighted-average interest rate		Collateralized by  mortgage-backed securities and federal agency obligations at fair value plus  accrued interest		Repurchase liability		Weighted-average interest rate		Collateralized by  mortgage-backed securities and federal agency obligations at fair value plus  accrued interest
(dollars in thousands)
Overnight	$	281,120	3.02	%	$	326,841	$	88,305	0.02	%	$	160,847
1 to 29 days	—		—	%	—		—		—	%	—
30 to 90 days	—		—	%	—		—		—	%	—
Over 90 days	—		—	%	—		—		—	%	—
	$	281,120	3.02	%	$	326,841	$	88,305	0.02	%	$	160,847

Advances from Federal Home Loan Bank. Outstanding FHLB advances were $414 million and nil as of December 31, 2022 and 2021, respectively. ASB and the FHLB are parties to an Advances, Pledge and Security Agreement (Advances Agreement), which applies to currently outstanding and future advances, and governs the terms and conditions under which ASB borrows and the FHLB makes loans or advances from time to time. Under the Advances Agreement, ASB agrees to abide by the FHLB’s credit policies, and makes certain warranties and representations to the FHLB. Upon the occurrence of and during the continuation of an “Event of Default” (which term includes any event of nonpayment of interest or principal of any advance when due or failure to perform any promise or obligation under the Advances Agreement or other credit arrangements between the parties), the FHLB may, at its option, declare all indebtedness and accrued interest thereon, including any

prepayment fees or charges, to be immediately due and payable. Advances from the FHLB are collateralized by loans, investment securities and stock in the FHLB. As of December 31, 2022 and 2021, ASB’s available FHLB borrowing capacity was $1.6 billion, and $2.0 billion, respectively. In February 2020, the FHLB of Des Moines notified its members that certain assets, which included high-quality home equity lines of credit that were priced off a variable index with a fixed rate option, would no longer qualify as collateral for FHLB Advances and effective October 1, 2020, the FHLB of Des Moines no longer accepted the fixed rate portion of any home equity lines of credit as collateral. In addition, effective July 13, 2020, the FHLB of Des Moines lowered their Loan to Value (LTV), a system-wide percentage applied to eligible pledged collateral to determine borrowing capacity, to reflect ongoing risks in the market due to COVID-19. The lower LTV reduced ASB’s collateral value of the existing pledged loans and the borrowing capacity. To increase the borrowing capacity at the FHLB of Des Moines, ASB pledged commercial real estate loans and is evaluating other assets to pledge as collateral to increase its reserve borrowing capacity with the FHLB.

ASB is required to obtain and hold a specific number of shares of capital stock of the FHLB. ASB was in compliance with all Advances Agreement requirements as of December 31, 2022 and 2021.

Common stock equity.  ASB is regulated and supervised by the OCC. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on ASB’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, ASB must meet specific capital guidelines that involve quantitative measures of ASB’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

The prompt corrective action provisions impose certain restrictions on institutions that are undercapitalized. The restrictions imposed become increasingly more severe as an institution’s capital category declines from “undercapitalized” to “critically undercapitalized.” The regulators have substantial discretion in the corrective actions they might direct and could include restrictions on dividends and other distributions that ASB may make to ASB Hawaii and the requirement that ASB develop and implement a plan to restore its capital. In 1988, HEI agreed with the OTS predecessor regulatory agency at the time, to contribute additional capital to ASB up to a maximum aggregate amount of approximately $65.1 million (Capital Maintenance Agreement). As of December 31, 2022, as a result of capital contributions in prior years, HEI’s maximum obligation to contribute additional capital under the Capital Maintenance Agreement has been reduced to approximately $28.3 million. In addition to OCC oversight, federal law and Federal Reserve Board policy require that HEI, as a savings and loan holding company, serve as a source of financial and managerial strength for any FDIC-insured depository institution that it controls. Accordingly, if ASB were to be in financial distress or to otherwise be viewed by the regulators as in unsatisfactory condition, HEI could be required to provide additional capital or liquidity support or take other action, in support of ASB.

To be categorized as “well capitalized,” ASB must maintain minimum total capital, Tier 1 capital, and Tier 1 leverage ratios as set forth in the table below. As of December 31, 2022, and 2021 ASB was in compliance with the minimum capital requirements under OCC regulations, and was categorized as “well capitalized” under the regulatory framework for prompt corrective action. There are no conditions or events that management believes have changed the institution’s category under the capital guidelines.

The tables below set forth actual and minimum required capital amounts and ratios:

	Actual				Minimum required				Required to be well capitalized
(dollars in thousands)	Capital		Ratio		Capital		Ratio		Capital		Ratio
December 31, 2022
Tier 1 leverage	$	750,851	7.78	%	$	386,265	4.00	%	$	482,831	5.00	%
Common equity tier 1	750,851		12.15	%	278,076		4.50	%	401,665		6.50	%
Tier 1 capital	750,851		12.15	%	370,767		6.00	%	494,356		8.00	%
Total capital	811,729		13.14	%	494,356		8.00	%	617,946		10.00	%
December 31, 2021
Tier 1 leverage	714,789		7.86	%	363,630		4.00	%	454,538		5.00	%
Common equity tier 1	714,789		13.29	%	242,072		4.50	%	349,659		6.50	%
Tier 1 capital	714,789		13.29	%	322,762		6.00	%	430,350		8.00	%
Total capital	769,836		14.31	%	430,350		8.00	%	537,937		10.00	%

In 2022, ASB paid cash dividends of $42.0 million to HEI, compared to cash dividends of $59.0 million in 2021. The FRB and OCC approved the dividends.

Related-party transactions. HEI charged ASB $1.9 million, $2.1 million and $2.3 million for general management and administrative services in 2022, 2021 and 2020, respectively. The amounts charged by HEI for services performed by HEI employees to its subsidiaries are allocated primarily on the basis of time expended in providing such services. All amounts charged to ASB were settled as a capital contribution by HEI to ASB.

Derivative financial instruments. ASB enters into interest rate lock commitments (IRLCs) with borrowers, and forward commitments to sell loans or to-be-announced mortgage-backed securities to investors to hedge against the inherent interest rate and pricing risks associated with selling loans.

ASB enters into IRLCs for residential mortgage loans, which commit ASB to lend funds to a potential borrower at a specific interest rate and within a specified period of time. IRLCs that relate to the origination of mortgage loans that will be held for sale are considered derivative financial instruments under applicable accounting guidance. Outstanding IRLCs expose ASB to the risk that the price of the mortgage loans underlying the commitments may decline due to increases in mortgage interest rates from inception of the rate lock to the funding of the loan. The IRLCs are free-standing derivatives which are carried at fair value with changes recorded in mortgage banking income.

ASB enters into forward commitments to hedge the interest rate risk for rate locked mortgage applications in process and closed mortgage loans held for sale. These commitments are primarily forward sales of to-be-announced mortgage backed securities. Generally, when mortgage loans are closed, the forward commitment is liquidated and replaced with a mandatory delivery forward sale of the mortgage to a secondary market investor. In some cases, a best-efforts forward sale agreement is utilized as the forward commitment. These commitments are free-standing derivatives which are carried at fair value with changes recorded in mortgage banking income.

Changes in the fair value of IRLCs and forward commitments subsequent to inception are based on changes in the fair value of the underlying loan resulting from the fulfillment of the commitment and changes in the probability that the loan will fund within the terms of the commitment, which is affected primarily by changes in interest rates and the passage of time.

The notional amount and fair value of ASB’s derivative financial instruments were as follows:

December 31	2022				2021
(in thousands)	Notional amount		Fair value		Notional amount		Fair value
Interest rate lock commitments	$	1,720	$	9	$	39,377	$	638
Forward commitments	1,500		18		38,000		(11)

ASB’s derivative financial instruments, their fair values, and balance sheet location were as follows:

Derivative Financial Instruments Not Designated
as Hedging Instruments 1
December 31	2022				2021
(in thousands)	Asset derivatives		Liability derivatives		Asset derivatives		Liability derivatives
Interest rate lock commitments	$	9	$	—	$	638	$	—
Forward commitments	18		—		—		11
	$	27	$	—	$	638	$	11

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

The following table presents ASB’s derivative financial instruments and the amount and location of the net gains or losses recognized in ASB’s statements of income:

Derivative Financial Instruments Not Designated	Location of net gains
as Hedging Instruments	(losses) recognized in	Years ended December 31
(in thousands)	the Statements of Income	2022		2021		2020
Interest rate lock commitments	Mortgage banking income	$	(629)	$	(3,898)	$	4,239
Forward commitments	Mortgage banking income	29		489		(458)
		$	(600)	$	(3,409)	$	3,781

Commitments. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the commitments. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since certain commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. ASB minimizes its exposure to loss under these commitments by requiring that customers meet certain conditions prior to disbursing funds. The amount of collateral, if any, is based on a credit evaluation of the borrower and may include residential real estate, accounts receivable, inventory and property, plant and equipment.

Letters of credit are conditional commitments issued by ASB to guarantee payment and performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. ASB holds collateral supporting those commitments for which collateral is deemed necessary.

The following is a summary of outstanding off-balance sheet arrangements:

December 31	2022		2021
(in thousands)
Unfunded commitments to extend credit:
Home equity line of credit	$	1,264,320	$	1,181,496
Commercial and commercial real estate	692,989		612,158
Consumer	85,768		62,090
Residential 1-4 family	20,546		44,262
Commercial and financial standby letters of credit	15,521		11,723
Total	$	2,079,144	$	1,911,729

Federal Deposit Insurance Corporation assessment. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) raised the minimum reserve ratio for the Deposit Insurance Fund to 1.35 percent but required the Federal Deposit Insurance Corporation (FDIC) to offset the effect of the increase in the minimum reserve ratio on small institutions (generally insured depository institutions with total consolidated assets of $10 billion or less) when setting assessments. In September 2018, the reserve ratio reached 1.36 percent and the FDIC awarded the small institutions an assessment credit, which was applied to a portion of the 2019 and 2020 assessments for these banks. For the years ended December 31, 2022, 2021 and 2020 ASB’s FDIC insurance expenses were $3.6 million, $3.2 million and $2.3 million, respectively.