American Savings’ earnings jump 16.5% but loans decline

American Savings Bank posted a 16.5 percent increase in third-quarter earnings but saw its loan portfolio dip from the year-earlier period as it scaled back on its commercial lending exposure.

The state’s third-largest bank said today that net income rose to $17.6 million from $15.1 million as deposits increased 6.9 percent to $5.75 billion and net interest income — the difference between what the bank pays its customers on deposits and the interest customers pay it on loans — gained 8.2 percent to $56.1 million. Net income received a big boost by the bank setting aside $5.3 million less than a year ago for potential loan losses.

American Savings’ decision to reduce its commercial portfolio resulted in loans overall declining 1.3 percent to $4.68 billion from the year-earlier quarter. That decrease left the bank’s loans down 1.3 percent since the start of the year.

“Overall loan growth lagged (in the third quarter) as we continued to reduce our commercial lending exposure to national syndicated credits (a package of multiple loans sold and bought on the secondary market) and resolve specific problem loans that paid in full, offsetting the continued good growth in other segments of the loan portfolio,” American Savings President and CEO Rich Wacker said in a statement.

American Savings said the decrease in its commercial loan portfolio was partially offset by growth in home equity lines of credit, and the bank’s consumer and residential loan portfolios.

The bank added just $490,000 to its loan-loss reserve in the third quarter compared with $5.7 million in the year-earlier quarter. The higher provision in the third quarter of 2016 was largely due to reserves for specific commercial credits.