4 things to watch as Hawaii's American Savings Bank goes public

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Tina Yuen

Rich Wacker, president and CEO of American Savings Bank, is seen at PBN's Business Leadership Hawaii event in this file photo. A University of Hawaii professor says the bank's spinoff from parent company Hawaiian Electric Industries Inc. will make operations and goals clearer for both the bank and analysts.

Jason Ubay

Reporter- Pacific Business News

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A University of Hawaii professor said this week's recent announcement that American Savings Bank will be spun off by parent company Hawaiian Electric Industries Inc. will make operations and goals clearer for both the bank and analysts.

Eric Mais, a professor of finance at the UH Shidler College of Business, said there are four things to keep an eye on as American Savings Bank becomes an independent, publicly traded company.

1. The bank will now have increased corporate focus regarding its operations since it will no longer be tied to the utility.

2. The bank executives will have better compensation tied to what they do and not what they do on the utility side.

3. It's a pure play for investors.

4. As an independent bank and not part of a conglomerate, it's now more transparent for analysts to see the bank's operations and balance sheet.

Mais has followed the company for years, and he always thought it was odd that a utility would purchase a bank.

"Why would you buy two companies that are in really highly regulated industries?" he said.

He posed the question to Robert Clarke, CEO of Hawaiian Electric Industries (NYSE: HE) during the 1990s. (HEI purchased American Savings Bank in 1988, then purchased Bank of America's Hawaii operations in 1997.) Clarke told him it was available at a good price.

The split is similar to the situation with Alexander & Baldwin (NYSE: ALEX) and Matson Inc. (NYSE: MATX), Mais said. Like HEI and ASB, there wasn't much synergy in the operations. Now A&B and Matson are faring well as independent companies, Mais said.

Another thing to watch is that ASB might be a good acquisition prospect for a Mainland bank, Mais said. However, a Mainland bank may not be interested in Hawaii because of its distance, and regulatory issues could prevent a local bank acquisition, PBN previously reported.

ASB has stated that it will remain based in Hawaii.

Jason Ubay covers tourism and finance for Pacific Business News.