American Savings Bank’s net income fell 6.6 percent in the April-June period primarily due to a one-time insurance gain a year ago.

The state’s third-largest bank said Monday it had earnings of $14.2 million compared with $15.2 million in the second quarter of 2011.

While earnings fell, the bank’s loan portfolio grew for the seventh consecutive quarter. Loans increased 3 percent to $3.75 billion from $3.63 billion in the year-earlier period.

"We target that low- to mid-single-digit (loan) growth in our Hawaii market, which is a relatively low growth market," American Savings President and CEO Richard Wacker said. "I wouldn’t expect us to have a much faster loan growth than that, so we’re happy with that."

American Savings also set aside just $2.4 million for potential loan losses compared with $2.6 million a year ago.

"Our credit quality is good," Wacker said. "We continue to strengthen the balance sheet."

Like other Hawaii bank CEOs, Wacker says a pickup in construction on the Leeward side and in Kakaako could stimulate the economy beyond the boost it’s getting now from record tourism levels.

"If people can see a sustained improvement (in the economy), I think we can get higher confidence in those projects moving forward," he said. "There is a lot more activity in (development) planning today, and we just have to get those to pull through."

Analyst Jim Bellessa Jr. said American Savings’ results came in near his expectations with the bank’s loan-loss provision about $1 million less than he had projected and the earnings about $200,000 more than he had forecast.

"They’re holding their own in this environment," said Bellessa, of Great Falls, Mont.-based investment firm D.A. Davidson & Co. "The loan-loss provision was against an already low provision last year."

American Savings, a subsidiary of Hawaiian Electric Industries Inc., reported earnings ahead of its parent company to coincide with a new regulatory deadline that mandates federally regulated banks file their financial results no less than 30 days after the quarter ends. HEI, which also owns the state’s largest utility, will release its earnings Thursday.

American Savings’ net interest margin, the spread between its lending rates and deposit rates, slipped to 3.97 percent last quarter from 4.07 percent a year ago and 4.04 percent in the first quarter.

"The company has a low-interest-rate environment it’s working with," Bellessa said. "They’re making assumptions that the interest rates are not going to stay down forever, so they’re not going to take big bets in their portfolio by locking in low-interest loans. They’re going to minimize the amount of low-interest-rate loans they have in their books."

The nonrecurring insurance gain from a year ago came from bank-owned life insurance. Acting as the beneficiary, American Savings buys insurance on the lives of certain key employees, and received about $1 million on the death of a former officer. The company declined to identify the former officer. Altogether, noninterest income, which also includes service charges and fees, rose 0.4 percent last quarter to $17 million from $16.9 million in the second quarter of 2011.

In other categories, assets rose 1.5 percent to $4.96 billion from $4.89 billion, and deposits increased 2 percent to $4.14 billion from $4.05 billion.

Net interest income fell 1.8 percent to $44.9 million from $45.7 million a year ago.

Shares of HEI rose 17 cents to $28.90 Monday on the New York Stock Exchange.

The results were announced after the stock market closed.