American Savings Bank posted an 8.5 percent increase in fourth-quarter earnings but cautioned it expects construction loan volume to level off this year due to the completion and sale of large condominium projects.

The state’s third-largest bank also said, in conjunction with its earnings release Monday, that a groundbreaking ceremony for its new headquarters in Chinatown will be held next month, with actual construction work to start sometime in the first quarter.

“We closed 2016 with a strong fourth quarter and positioned the bank to deliver for our customers and shareholders in 2017,” American Savings President and CEO Rich Wacker said in an email.

American Savings’ net income increased to $16.2 million from $15 million in the year-earlier quarter.

Deposits jumped 10.4 percent to $5.55 billion while loans rose 2.6 percent to $4.74 billion.

For the year, American Savings’ earnings rose 4.7 percent to $57.3 million from $54.7 million in 2015.

“We believe we are past the peak of the cycle for new construction lending growth and expect construction loan volume to level off in 2017,” Wacker said. “We have modest loan growth expectations and are expecting low- to mid-single-digit loan growth (overall) in 2017.”

American Savings, which like all banks sets aside money for potential loan losses amid a growing loan portfolio, took a loan-loss provision of $1.5 million last quarter compared with $839,000 in the year-earlier period.

American Savings’ net interest income, the difference between the interest American Savings pays on deposits and the interest it receives on loans, rose 8.8 percent to $53 million from $48.7 million. Its net interest margin improved to 3.59 percent from 3.55 percent in the year-earlier period.

The bank’s noninterest income, which includes serv­ice charges and fees, fell 2.2 percent, to $16.5 million from $16.8 million.

Construction of American Savings’ new headquarters had been stalled since February, when iwi, or human remains, were discovered. The bank, which consulted with the Oahu Island Burial Council, was given the green light to proceed with the project after agreeing to make certain modifications on the site at 300 N. Beretania St.

“ASB has long focused on creating a world-class employee experience, and the campus (headquarters) gives us the opportunity to bring together teammates from multiple locations around Oahu to work collaboratively, efficiently and innovatively,” Wacker said.

About half of the company’s 1,200 employees will be relocated from the bank’s downtown headquarters on Fort Street Mall, the Mililani service center and a couple of other locations near downtown. The building will have five floors of parking and five floors of offices along with a new branch on the ground floor.

Hawaiian Electric Industries Inc., which owns the bank as well as the state’s largest utility, will report overall financial results Feb. 14. HEI’s stock rose 18 cents Monday to close at $32.90. The bank’s earnings were announced after the stock market closed.