The parent of American Savings Bank will take a $36 million after-tax charge in the second quarter as a result of the bank's sale of more than $1 billion in government-backed mortgage securities this month.

American Savings said the move was part of a "balance sheet repositioning" that aims to improve the company's productivity.

The sale of the securities reduced American Savings' assets from $6.8 billion to $5.7 billion and dropped the bank into a virtual tie with Central Pacific Financial Corp. as the state's third-largest financial institution.

"This reduces their size but makes them more flexible," said analyst Jim Bellessa, of D.A. Davidson & Co.

"It doesn't eat into the muscle of the company."

Shares of American Saving's parent, Hawaiian Electric Industries Inc., slipped 41 cents yesterday to close at $25.23 on the New York Stock Exchange.

American Savings President Timothy Schools said the company is in the process of transforming itself from a traditional thrift into a full-service bank.

The bank said it is revamping its commercial real estate, purchasing functions, and uses of technology and equipment.

Earlier this month, American Savings said, it sold $1.3 billion in mortgage securities backed by government agencies such as Freddie Mac and Fannie Mae.

American Savings said the investments that were sold were "high-quality, investment securities" whose values were not affected by the subprime lending crisis.

Most of the $36 million charge stems from fees relating to the sale.

Pending regulatory approval, American Savings said, it will upstream about $75 million to its parent HEI, which will use much of the money to pay down debt.

The sale also will reduce the amount of capital need to run the bank by 20 percent.

"These transactions position the bank for improved performance while maintaining our safety and soundness, and the quality of our customer service," Schools said.

American Savings isn't the only local bank to take a large write-down this year.

Central Pacific took a $48 million noncash charge during its fourth quarter due in part to problem loans to California developers hard hit by the meltdown in the subprime market.

CPB said the noncash charge reflected the diminishing value of the "goodwill" associated with loans to the California developers.