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Lower interest rates and higher costs cut into the second-quarter profit of Hawaii’s third-largest bank.
American Savings Bank reported Tuesday that its income for the three months ended June 30 decreased 17.5% to $17 million from $20.6 million in the same quarter last year.
The bank, a subsidiary of local utility operator Hawaiian Electric Industries Inc., reported gains in loans, deposits and income from customers. But higher expenses along with lower-than-expected interest rates that produced “volatility” in the bank’s investment portfolio pulled down the company’s bottom line.
One aspect of increased expenses was tied to buildings the bank vacated earlier this year upon completion of a $100 million Honolulu headquarters that opened in April. This, along with employee costs, primarily pushed up expenses unrelated to interest rates by 9% to $48 million in the second quarter from $44.2 million a year earlier.
Still, American Savings said it’s seeing many benefits it anticipated from consolidating personnel into its new 11-story complex.
Deposits at the bank grew to $6.3 billion in the second quarter from $6.1 billion a year earlier.
Loans totaled $5 billion, up from $4.8 billion in the same period. However, the bank increased reserves for loan losses to $7.7 million in the second quarter from $2.8 million a year earlier in connection with its personal unsecured loan portfolio.
Most of the bank’s income is derived from interest payments. Net interest income, or the difference between what American Savings pays customers for deposits and the interest customers pay for loans, rose to $61.5 million in the second quarter from $59.6 million a year earlier.
Noninterest income, which includes service charges and fees, rose to $15.5 million in the second quarter from $13.8 million a year earlier, primarily due to bank-owned life insurance proceeds received in the recent quarter.
American Savings includes many more details of its operations in quarterly financial reports filed by Hawaiian Electric Industries.
HEI is scheduled to release that information along with details on its second-quarter financial performance Friday.
SECOND-QUARTER NET
$17 million
YEAR-EARLIER NET
$20.6 million
72