UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
x ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
or
¨ TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-8503
AMERICAN SAVINGS BANK 401(K) PLAN
Hawaiian Electric Industries, Inc.
1001 Bishop Street, Suite 2900, Honolulu, Hawaii 96813
REQUIRED INFORMATION
Financial Statements. The statements of net assets available for benefits at December 31, 2020 and 2019, and the statement of changes in net assets available for benefits for the year ended December 31, 2020, Schedule H, Line 4i – Schedule of Assets (Held at End of Year) at December 31, 2020, together with notes to financial statements, and Accuity LLP’s Report of Independent Registered Public Accounting Firms thereon, are filed as a part of this annual report, as listed in the accompanying index.
Exhibit. The written consent of Accuity LLP with respect to the incorporation by reference of the Plan's financial statements and supplemental schedule in registration statement No. 333-232361 and No. 333-159000 on Form S-8 of Hawaiian Electric Industries, Inc. is filed as a part of this annual report and attached hereto as Exhibit 23.1.
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
| AMERICAN SAVINGS BANK 401(K) PLAN | ||
| Date: June 29, 2021 | By: | HAWAIIAN ELECTRIC INDUSTRIES, INC. |
| PENSION INVESTMENT COMMITTEE | ||
| Its Named Fiduciary | ||
| By: | /s/ Gregory C. Hazelton | |
| Gregory C. Hazelton | ||
| Its Chairman | ||
| By: | /s/ Kurt K. Murao | |
| Kurt K. Murao | ||
| Its Secretary | ||
American Savings Bank
401(k) Plan
Financial Statements and Supplemental Schedule
December 31, 2020 and 2019
American Savings Bank
401(k) Plan
Index
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Administrator
American Savings Bank 401(k) Plan and
Audit Committee and Pension Investment Committee of
Hawaiian Electric Industries, Inc.
Opinion on the Financial Statements
We have audited the accompanying statements of net assets available for benefits of the American Savings Bank 401(k) Plan (the Plan) as of December 31, 2020 and 2019, and the related statement of changes in net assets available for benefits for the year ended December 31, 2020, and the related notes and schedule (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2020 and 2019, and the changes in net assets available for benefits for the year ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on the Plan’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Supplemental Information
The supplemental information contained in the Schedule of Assets (Held at End of Year) has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental information is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole.
1
/s/ Accuity LLP
We have served as the Plan’s auditors since 2017.
Honolulu, Hawaii
June 29, 2021
2
American Savings Bank
401(k) Plan
Statements of Net Assets Available for Benefits
| December 31 | 2020 | 2019 | ||||||
| Assets | ||||||||
| Plan interest in Master Trust investments, at fair value | $ | 181,012,209 | $ | 161,054,893 | ||||
| Notes receivable from participants | 3,695,638 | 3,565,075 | ||||||
| Participant contributions receivable | 80,821 | 397 | ||||||
| Employer contributions receivable | 54,994 | 1,675,372 | ||||||
| Due from Fidelity | 4,788 | 5,137 | ||||||
| Total assets | 184,848,450 | 166,300,874 | ||||||
| Liabilities | ||||||||
| Accounts payable | 3,006 | 3,667 | ||||||
| Net assets available for benefits | $ | 184,845,444 | $ | 166,297,207 | ||||
The accompanying notes are an integral part of these financial statements.
3
American Savings Bank
401(k) Plan
Statement of Changes in Net Assets Available for Benefits
| Year Ended December 31 | 2020 | |||
| Additions | ||||
| Plan interest in Master Trust investment income | $ | 21,665,239 | ||
| Interest from notes receivable from participants | 217,559 | |||
| Revenue credit | 19,026 | |||
| Contributions | ||||
| Participants | 6,837,974 | |||
| Employer | 2,810,360 | |||
| Rollover | 478,041 | |||
| Total contributions | 10,126,375 | |||
| Total additions | 32,028,199 | |||
| Deductions | ||||
| Distributions to participants | (13,444,373 | ) | ||
| Administrative expenses and other | (35,589 | ) | ||
| Total deductions | (13,479,962 | ) | ||
| Net increase | 18,548,237 | |||
| Net assets available for benefits | ||||
| Beginning of year | 166,297,207 | |||
| End of year | $ | 184,845,444 | ||
The accompanying notes are an integral part of these financial statements.
4
American Savings Bank
401(k) Plan
December 31, 2020 and 2019
| 1. | Plan Description |
The American Savings Bank 401(k) Plan (the “Plan” or “ASB 401(k) Plan”) was established by American Savings Bank, F.S.B. (“ASB” or the “Bank”) effective January 1, 2008. The Plan is a defined contribution 401(k) plan that provides certain tax-qualified retirement benefits to eligible employees. ASB is the only participating employer in the Plan at this time.
The following description of the Plan provides only general information. Participants should refer to the Plan document for its detailed provisions, which are also summarized in the most recent prospectus for the Plan and in the summary plan description:
| a. | Plan Administration |
ASB is the Administrator of the Plan. The board of directors of Hawaiian Electric Industries, Inc. (“HEI”), which is the parent corporation of the controlled group of which ASB is a part, has established the Hawaiian Electric Industries, Inc. Pension Investment Committee (the “PIC”) to oversee the administration of the Plan and the investment options offered under the Plan. The PIC has appointed an Administrative Committee to oversee the day-to-day administration of the Plan, which includes the discretionary authority to interpret the Plan’s provisions. The PIC has also appointed an Investment Committee to oversee the day-to-day financial affairs of the Plan. The members of the Administrative and Investment Committees are employees of HEI and its subsidiaries, and the Administrative and Investment Committees are chaired by a member of the PIC.
ASB and the Plan pay the Plan’s administrative fees. The Plan’s trustee and certain of the mutual funds offered under the Plan provide revenue credits to the Plan, which are used to help pay for Plan administration, including recordkeeping. Participants are currently charged fees to initiate and maintain Plan loans and for certain distributions. Participants may also be charged fees for other activities that they or their spouses or other beneficiaries initiate, such as determinations with respect to domestic relations orders and the administration of qualified domestic relations orders.
| b. | Eligibility |
For purposes of salary reduction (“401(k)”) contributions, all common law employees of ASB (other than leased employees) are eligible to participate in the Plan upon one hour of service. Participation in the 401(k) portion of the Plan is voluntary for eligible employees.
| c. | 401(k) Contributions |
Employees may make 401(k) contributions of up to 100% of available eligible compensation (i.e., compensation that is available after payroll taxes and other applicable withholdings) subject to a federal tax limit of $19,500 in 2020.
Participants who are age 50 or older, or who attain age 50 during the year, may elect to make catch-up 401(k) contributions, subject to a federal tax limit of $6,500 in 2020.
For purposes of calculating contributions to the Plan, compensation is defined as Box 1, W-2 earnings, modified to (a) exclude fringe benefits, employer nonelective contributions to a cafeteria plan, reimbursements, moving and other expense allowances, special executive compensation, signing bonuses, retention bonuses, service awards, and similar nonperformance based awards; and (b) include pre-tax elective contributions made by ASB to the Plan, a cafeteria plan or a transportation spending plan. Special executive compensation is noncash compensation and/or nonqualified deferred compensation, available only to a select group of management employees.
5
American Savings Bank
401(k) Plan
December 31, 2020 and 2019
Federal tax law limits the amount of annual compensation that may be taken into account in determining contributions to the Plan. The maximum limit was $285,000 in 2020.
A participant may designate all or a portion of the participant’s 401(k) contributions as Roth after-tax contributions. To the extent a participant does not affirmatively designate a contribution as a Roth contribution, such contribution will constitute a pre-tax contribution.
| d. | Rollover Contributions |
A participant or an eligible employee (whether or not a participant) may make a direct rollover to the Plan of an eligible rollover distribution from another qualified defined benefit or defined contribution plan. The Plan may accept direct rollovers of after-tax amounts from qualified retirement plans. The Administrative Committee may consider traditional rollovers by eligible employees. To protect the tax-qualified status of the Plan, the Administrative Committee may ask the eligible employee to provide an opinion of counsel or other evidence to establish that the requirements for a traditional rollover have been satisfied.
| e. | Matching Contributions |
After one year of service, ASB matches employee 401(k) contributions at the rate of 100% of the first 4% of eligible compensation deferred. These matching contributions are known as “AmeriMatch” contributions. For AmeriMatch contributions, compensation is defined in the same way it is defined for 401(k) contributions as described in Note 1.c. above; however, compensation earned prior to an employee becoming eligible for AmeriMatch is not included.
For 2020, ASB made AmeriMatch contributions to the Plan of $2,810,360.
| f. | Employer Discretionary Contributions |
The Plan also includes an annual discretionary profit sharing feature (known as “AmeriShare”). All employees employed on the last day of any Plan year are eligible to share in any AmeriShare allocation for that year. Exceptions to the “last-day requirement” are made for those who die, become disabled, or retire during the year. Retirement is defined as termination of employment either after (i) attaining age 65 or (ii) attaining age 55 and completing 10 years of service with ASB, HEI or any HEI subsidiary. ASB did not make an AmeriShare contribution in 2021 for the 2020 Plan year.
| g. | Participant Accounts |
Each participant has an individual account in the Plan, which may include one or more subaccounts. Each participant is always 100% vested in his or her total account, including all subaccounts. A participant’s benefits equal the vested balance in the participant’s account at the time of distribution. Each participant’s account is credited with the participant’s elective contributions, AmeriMatch and AmeriShare contributions, if applicable, rollover contributions, if any, and allocations of Plan earnings and gains or losses (whether realized or unrealized), and charged with an allocation of any administrative expenses paid by the Plan or charged directly to the participant’s account. Administrative expenses, such as recordkeeping expenses, are paid in part through investment level expenses that are borne by participants in proportion to their investments in the designated investment options that generate revenue credits for the Plan. Individual expenses, such as fees associated with loans and distributions, are charged directly to a participant’s individual account. Participant accounts are valued at the end of each day that the New York Stock Exchange is open.
6
American Savings Bank
401(k) Plan
December 31, 2020 and 2019
The Plan is intended to be an Employee Retirement Income Security Act (“ERISA”) Section 404(c) plan, under which the fiduciaries of the Plan are relieved of liability for any losses that are the direct and necessary result of a participant’s or beneficiary’s exercise of control over the investments in his or her individual account. Participants are responsible for directing the investment of all amounts in their accounts using investment options offered under the Plan and for the performance of such investments. As of December 31, 2020, the Plan offered various mutual funds and target-date funds and directed investments in HEI common stock. Participants may change their investment elections at any time. If a participant does not choose an investment option for any portion of the participant’s account, such amounts are automatically invested in the age-appropriate Fidelity Freedom Index Fund or such other investment as the PIC may direct, pending other direction by the participant.
The portion of the Plan that is invested in HEI common stock is designated as an employee stock ownership plan (“ESOP”). Amounts contributed to the Plan for investment in HEI common stock or transferred to investments in HEI common stock from other investment options become part of the ESOP component of the Plan.
Participants are not required to make any investment in HEI common stock, and there are two limitations on the amount a participant may invest in HEI common stock. First, a participant may not direct more than 20% of any contribution to HEI common stock. Second, participants and beneficiaries are prohibited from making transfers or exchanges from other investment options into HEI common stock if the transfer or exchange would cause the participant’s or beneficiary’s investment in HEI common stock to exceed 20% of the participant’s or beneficiary’s total account balance.
| h. | Distributions |
Distributions from participants’ accounts are generally made upon retirement, death, permanent disability or other termination of employment. Distributions may be made in a single lump sum, or a retired or terminated participant may elect to receive partial distributions (once per year) until the participant’s account has been distributed in full or the participant elects to receive a single-sum distribution of the remaining account balance. Retired participants may also receive required minimum distributions from the Plan.
Account balances of $5,000 or less are automatically distributed upon termination of employment. Any automatic distribution of more than $1,000 (but not more than $5,000) is made in the form of an automatic direct rollover to an Individual Retirement Account (“IRA”) designated by the Administrative Committee, unless the participant requests a cash distribution or a direct rollover to an IRA or tax-qualified retirement plan of the participant’s choosing.
Distributions with respect to HEI common stock are made in HEI common stock, unless requested in cash.
The participant’s account will be reduced by any unpaid note balance at the time of distribution. However, unless rolled over, the balance of the unpaid note will be taxable to the participant.
7
American Savings Bank
401(k) Plan
December 31, 2020 and 2019
| i. | Death Benefits |
Upon the death of a participant, the full value of the participant’s vested account balance (reduced by any outstanding loans) is payable as a death benefit to the participant’s designated beneficiary.
| j. | Withdrawals While Employed |
Prior to termination of employment, 401(k) and certain other contributions (and the associated investment earnings) may be withdrawn in the event of hardship.
Participants who elect to invest in HEI common stock (the ESOP component of the Plan), may elect to receive cash distributions of periodic dividends attributable to such investments or may elect to have such dividends reinvested through the Plan.
A participant who is age 59½ or older may elect to receive an in-service distribution from his or her vested account balance once per year.
In April 2020, the Plan implemented certain provisions under the Coronavirus Aid, Relief & Economic Security Act (“CARES Act”), allowing eligible participants to take COVID-19 related distributions. Through December 30, 2020, qualified participants were permitted to take a CARES Act distribution of up to $100,000 from the Plan due to adverse financial consequences related to the COVID-19 pandemic. The Plan also waived its requirement for minimum required distributions to be made in 2020.
| k. | Notes Receivable from Participants |
Participants may borrow from their accounts. All loans must be on commercially reasonable terms and be evidenced by a note. The minimum note amount is $1,000, and the maximum amount of all notes under the Plan is limited to the lesser of $50,000, reduced by the highest outstanding note balance during the prior 12 months minus the outstanding note balance from the Plan on the date the note is made, or 50% of the participant’s vested account balance. The term of a note generally may not exceed 5 years, except that a note used to purchase a principal residence may have a term of up to 15 years. The interest rate on a note is set at the time a participant applies for the note. The interest rate for 2020 and 2019 was 2 percentage points above the Federal Reserve prime rate of interest as of the last working day of the month preceding the month the note was made. All outstanding notes are collateralized by 50% of the participant’s vested account balance, determined when a note is approved. No allowance for credit losses has been recorded as of December 31, 2020 or 2019. If a participant ceases to make loan repayments and the Plan Administrator deems the participant loan to be in default, the default will be a deemed distribution. However, the participant’s account will not be reduced until a distributable event occurs under the terms of the Plan. Notes outstanding at December 31, 2020 bear interest at various rates ranging from 4.25% to 9.25%. Principal and interest payments are made ratably through payroll deductions. Participants are allowed up to two notes outstanding at any one time from the Plan.
In April 2020, the Plan implemented CARES Act provisions for loan relief to 1) allow delay of repayments on existing loans through December 31, 2020 and 2) offer increased loan limits of up to $100,000 for COVID-19 related loans.
| l. | Vesting |
Participants are 100% vested in their account balances at all times.
8
American Savings Bank
401(k) Plan
December 31, 2020 and 2019
| 2. | Summary of Significant Accounting Policies |
| a. | Basis of Accounting |
The Plan prepares its financial statements under the accrual method of accounting.
| b. | Use of Estimates |
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires the Plan Administrator to make estimates and assumptions that affect the reported amounts of assets, liabilities, and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
| c. | Investment Valuation and Income Recognition |
The Plan’s investments are reported at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The PIC is responsible for the Plan’s valuation principles and utilizes information provided by the Plan’s investment advisors and trustee. See Note 3 for a discussion of fair value measurements. Net appreciation or depreciation in the fair value of investments includes realized and unrealized changes in the values of investments bought, sold and held during the year.
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
| d. | Notes Receivable from Participants |
Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid interest. Interest income is recorded on the accrual basis. Related fees are recorded as administrative expenses and are expensed when they are incurred. If a participant ceases to make loan repayments and the Plan Administrator deems the participant loan to be in default, the participant loan balance is treated as a deemed distribution. However, the participant’s account will not be reduced until a distributable event occurs under the terms of the Plan.
| e. | Payment of Benefits |
The Plan records benefits when they are paid.
| f. | Expenses |
Certain expenses of maintaining the Plan, such as recordkeeping, consulting, legal and audit fees, are paid by the Bank and are excluded from these financial statements. Fees related to the administration of notes receivable from participants and distributions are charged directly to the participant’s account and are included in administrative expenses. Investment related expenses are included in the current year’s net change in fair value of investments.
| g. | Risks and Uncertainties |
The Plan may invest in various types of investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and such changes could materially affect the amounts reported in the Statements of Net Assets Available for Benefits.
9
American Savings Bank
401(k) Plan
December 31, 2020 and 2019
At December 31, 2020 and 2019, approximately 7% and 10%, respectively, of the Plan’s net assets available for benefits consisted of HEI common stock, respectively.
| h. | Recent Accounting Pronouncements |
The Plan adopted ASU 2018-13, Disclosure Framework: Changes to the Disclosure Requirements for Fair Value Measurement, on January 1, 2020. ASU 2018-13 eliminated the disclosure requirement of the amount of, reasons for and policy on transfers between Level 1 and Level 2 of the fair value hierarchy and modified certain disclosure requirements related to Level 3 recurring and nonrecurring fair value measurements. This standard was adopted retrospectively and had no material impact on the Plan’s net assets or changes in net assets.
| i. | Subsequent Events |
The Plan Administrator has evaluated subsequent events through June 29, 2021, the date the financial statements were issued.
| 3. | Fair Value Measurements |
| a. | Fair Value of Financial Instruments |
The following is a description of the valuation methodologies used for assets measured at fair value:
Mutual Funds
Valued using a market approach based on the daily closing price as reported on the active market in which the fund is traded. Mutual funds held by the Plan are open-end mutual funds that are registered with the Securities and Exchange Commission. These funds are required to publish their daily Net Asset Value (“NAV”) and to transact at that price. The mutual funds held by the Plan are deemed to be actively traded.
HEI Common Stock
Valued using a market approach based on the daily closing price as reported on the active market in which the stock is traded. The HEI common stock held by the Plan is deemed to be actively traded.
The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values, which may be materially affected by market conditions and other circumstances. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
| b. | Fair Value Hierarchy |
Accounting Standards Codification 820, Fair Value Measurements and Disclosures, provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The following are the three levels of the fair value hierarchy under this standard:
Level 1 Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Plan has the ability to access at the measurement date.
10
American Savings Bank
401(k) Plan
December 31, 2020 and 2019
Level 2 Inputs are quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; inputs other than quoted prices that are observable for the asset or liability; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.
Level 3 Inputs are unobservable inputs for the asset or liability.
The level in the fair value hierarchy within which a fair measurement in its entirety falls is based on the lowest level of input that is significant to the fair value measurement in its entirety.
| 4. | Interest in Master Trust |
All the invested assets of the Hawaiian Electric Industries Retirement Savings Plan are held together with all the invested assets of the ASB 401(k) Plan in a master trust (the “Master Trust”) pursuant to a Master Trust Agreement between ASB and HEI and Fidelity Management Trust Company (the “Trustee”). Each participating plan has a divided interest in the mutual funds and HEI common stock in the Master Trust.
The value of the Plan’s interest in the Master Trust is based on the beginning of the year value of the Plan’s interest in the Master Trust plus actual contributions, transfers and allocated investment income or loss, less actual distributions and allocated administrative expenses. Investment income and administrative expenses relating to the Master Trust are allocated to the individual plans based upon the daily valuation of the balances invested by each plan.
The net assets of the Master Trust and the Plan’s interest in the Master Trust net assets were as follows:
| 2020 | ||||||||
| December 31 | Master Trust | Plan Interest in the Master Trust | ||||||
| Mutual funds | $ | 802,027,880 | $ | 168,410,919 | ||||
| HEI common stock | 76,960,305 | 12,601,290 | ||||||
| Net assets of the Master Trust | $ | 878,988,185 | $ | 181,012,209 | ||||
| 2019 | ||||||||
| December 31 | Master Trust | Plan Interest in the Master Trust | ||||||
| Mutual funds | $ | 691,868,782 | $ | 144,387,839 | ||||
| HEI common stock | 105,109,717 | 16,667,054 | ||||||
| Net assets of the Master Trust | $ | 796,978,499 | $ | 161,054,893 | ||||
11
American Savings Bank
401(k) Plan
December 31, 2020 and 2019
The investment income of the Master Trust was as follows:
| Year ended December 31 | 2020 | |||
| Net appreciation in fair value of investments, in the Master Trust | $ | 81,300,367 | ||
| Dividends and interest | 24,500,612 | |||
| Total investment income | $ | 105,800,979 | ||
The Master Trust’s investments at fair value by level within the fair value hierarchy in each investment type were as follows:
| December 31, 2020 | Quoted Prices in (Level 1) | Significant Other Observable Inputs (Level 2) | Total | |||||||||
| Investments | ||||||||||||
| Mutual funds | $ | 802,027,880 | $ | - | $ | 802,027,880 | ||||||
| HEI common stock | 76,960,305 | - | 76,960,305 | |||||||||
| $ | 878,988,185 | $ | - | $ | 878,988,185 | |||||||
| December 31, 2019 | Quoted Prices in (Level 1) | Significant Other Observable Inputs (Level 2) | Total | |||||||||
| Investments | ||||||||||||
| Mutual funds | $ | 691,868,782 | $ | - | $ | 691,868,782 | ||||||
| HEI common stock | 105,109,717 | - | 105,109,717 | |||||||||
| $ | 796,978,499 | $ | - | $ | 796,978,499 | |||||||
There were no Level 3 investments held by the Master Trust as of December 31, 2020 or 2019.
| 5. | Plan Termination |
Although it has not expressed any intent to do so, ASB has the right under the Plan to discontinue its contributions at any time or to terminate the Plan.
| 6. | Federal Income Taxes |
The Plan and Master Trust are qualified under the Internal Revenue Code (“Code”) and are exempt from federal income taxes under Sections 401(a) and 501(a) of the Code. On October 22, 2013, the Internal Revenue Service (“IRS”) issued the latest favorable determination letter covering the Plan. This latest determination letter does not cover amendments made to the Plan since January 1, 2013. Because of changes in the IRS’s determination letter program, ASB will not be able to apply for periodic determination letters in the future. ASB and its outside ERISA/tax counsel believe that the amendments made since January 1, 2013 meet applicable federal tax law requirements.
12
American Savings Bank
401(k) Plan
December 31, 2020 and 2019
ASB is not aware of any Code or ERISA violations that would jeopardize the Plan’s tax exempt status and, as of December 31, 2020 and 2019, has concluded that there are no uncertain tax positions taken or expected to be taken that would require recognition of a liability or disclosure in the financial statements. The Plan is periodically audited by the IRS and the U.S. Department of Labor; however, there are currently no audits in progress. ASB believes that the Plan is no longer subject to income tax examinations for tax years prior to 2017.
| 7. | Party-in-Interest Transactions |
Certain Plan investments represent shares of mutual funds managed by Fidelity Management and Research Company (“FMR”). Fidelity Management Trust Company (“FMTC”), an affiliate of FMR, is the Trustee of the Plan, and therefore, transactions with FMR qualify as party-in-interest transactions under the prohibited transaction rules of ERISA for which a prohibited transaction exemption exists.
Effective January 1, 2012, a revenue credit program (“RCP”) for the Plan was implemented by FMTC under which credits are provided for the payment of expenses. Certain recordkeeping, consulting, legal and audit fees incurred by the Plan may be included as administrative expenses in the Statement of Changes in Net Assets Available for Benefits because they are paid through the RCP. During the year ended December 31, 2020, the RCP credits used to pay expenses amounted to approximately $22,000. During the year ended December 31, 2020, fees for recordkeeping services provided by Fidelity Investments Institutional Operations Company, Inc., an affiliate of both FMR and FMTC, amounted to approximately $14,100, and were paid through the RCP, and any amounts owing in excess of the revenue credits were paid by ASB.
Plan participants may elect to invest in HEI common stock. Since ASB is a wholly owned, indirect subsidiary of HEI, investments in HEI common stock are party-in-interest transactions under the prohibited transaction rules of ERISA for which a statutory exemption exists. During the year ended December 31, 2020, the Plan made purchases of approximately 30,000 shares of HEI common stock for a total purchase price of approximately $1.2 million and sales of approximately 29,000 shares of HEI common stock for total sales proceeds of approximately $1.2 million.
13
American Savings Bank 401(k) Plan
EIN: 99-0208097, Plan: 004
Schedule of Assets (Held at End of Year)
December 31, 2020
| (c) | ||||||||
| (b) | Description of Investment Including | (e) | ||||||
| Identity of Issue, Borrower, | Maturity Date, Rate of Interest, | Current | ||||||
| (a) | Lessor, or Similar Party | Collateral, Par, or Maturity Value | Value | |||||
| * | Plan interest in the Master Trust | $ | 181,012,209 | |||||
| * | Participant Loans | 428 loans with interest rates from 4.25% to 9.25%, maturing 2021 through 2033 | 3,695,638 | |||||
| $ | 184,707,847 | |||||||
| * | Party in interest |
NOTE:
Participant loans are legally held by the American Savings Bank 401(k) Plan and Hawaiian Electric Industries Retirement Savings Plan Master Trust (“DFE”), however Form 5500 Instructions and the Department of Labor’s electronic filing system require that the participant loans be reported at the individual plan level. As such, the participant loans and attendant interest are reported in the individual plan's Form 5500 and not in the DFE’s Form 5500.
14