Wednesday, American Savings Bank, F.S.B., a subsidiary of Hawaiian Electric Industries Inc. (HE) sold all but $0.6 million of its private-issue mortgage-related securities or PMRS portfolio. The PMRS were purchased primarily to manage liquidity and interest rate risk. With the unprecedented decline in the national real estate market over the last year, the credit quality of the PMRS portfolio declined causing management to evaluate strategies to reduce credit risk from this portfolio.
The company noted that as of December 1, it sold $225 million of PMRS with a weighted-average yield of 5.19% as of October 31, 2009. The bank will report an after-tax charge of $19 million in HEI's fourth quarter 2009 earnings, consistent with the $19 million of after-tax unrealized losses on the PMRS portfolio previously recorded in the bank's equity as of September 30, 2009.
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