American Savings Bank Boosts Profits Despite Cutbacks in Loans

Gains in investment securities helped Hawaii’s third-largest financial institution, American Savings Bank, increase third-quarter profits 58%.

The company, owned by Hawaiian Electric Industries Inc., said in a financial report on Friday that it earned $ 19.3 million in the July-September period, up from $ 12.2 million a year earlier.

American Savings said much of the gain was due to interest and dividend income on investment securities which reached $ 12 million in the third quarter, from $ 7.2 million a year earlier.

This contribution was part of the bank’s net interest income, which comes mainly from interest and loan charges after expenses, which totaled $ 60.3 million in the third quarter and up from $ 57.3 million. one year earlier.

Another positive contribution to the bank’s bottom line was withdrawing $ 1.7 million from a pool to cover potential loan losses due to improved credit strength in commercial real estate loans, commercial mortgage lending commercial and consumer loan repayments. In the third quarter of 2020, American Savings increased its allowance for credit losses by $ 14 million.

The bank’s non-interest income, which includes fees and commissions, fell in the third quarter to $ 14.8 million from $ 19 million a year earlier. This decrease is mainly attributable to the drop in mortgage banking income.

Ann Teranishi, President and CEO of American Savings, described the bank’s overall third quarter performance as good.

“We are satisfied with our financial results for the third quarter, which reflect a strong and continuous performance and good credit quality, the latter having resulted in an additional release of reserves,” she said in a statement.

Loans held by American Savings stood at $ 5.12 billion at the end of the third quarter, down 6.6% from $ 5.48 billion a year earlier.

The bank said the drop was due to $ 111 million in federal loans canceled under the Paycheck Protection Program, as well as declining home equity lines of credit and consumer wallets, partially offset by growth in residential, commercial and commercial real estate loans.

Deposits totaled $ 8 billion, up from $ 7 billion a year earlier.

American Savings also said it paid $ 12 million in third-quarter dividends to HEI, which is due to release its third-quarter financial results on Friday.