American Savings Bank's investments in securities backed by Mainland mortgages is going to cost the bank $19 million.

The company said yesterday it is taking the after-tax charge after it recently sold $225 million worth of private-issue mortgage-related securities.

The move reduces American Savings' holdings in such securities to about $600,000.

"The securities were backed by Mainland mortgages, and it was unclear when Mainland residential markets might recover," said Constance Lau, HEI's chief executive officer.

The bank will report an after-tax charge of $19 million in the fourth-quarter earnings of parent Hawaiian Electric Industries Inc. Before taxes, the loss was $32 million.

Shares of HEI rose 27 cents to close at $20.17 on the New York Stock Exchange yesterday.

As a result of the sale, American Savings said, it will suspend its first-quarter 2010 dividend payment to its parent Hawaiian Electric Industries Inc.

The bank regularly upstreams its income to HEI. Year-to-date, American Savings has paid $50.1 million in dividends to HEI.

The company said it expects to resume the dividend payments in the second quarter of 2010.

Lau said the sale of the securities will reduce the company's credit risk and could improve prospects for more consistent future earnings.

The private-issue mortgage-related securities are based on pools of Mainland mortgage loans that have been packaged by banks and sold to investors.

The bank said the securities, which paid an average yield of about 5.19 percent, initially were purchased to manage the bank's liquidity and interest-rate risk.

"Despite the charge on the sale of the securities, the bank's operations are performing well, and core profitability has improved," said Lau.