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American Savings Bank achieved its strongest full-year loan growth in over a decade and recorded improved margins as it benefited from the rising interest rate environment.
The state’s third-largest bank reported Monday that loans jumped 14.7% to $6 billion in the fourth quarter from $5.21 billion in the year-earlier period. The bank’s net interest margin, which is the difference between what it generates from loans and pays out in deposits, rose 12 basis points to 2.91% from 2.79% in the year-earlier quarter.
“We … saw the strongest loan growth in recent memory, reflecting great work by our team and the resilience of Hawaii’s consumers and businesses,” American Savings President and CEO Ann Teranishi said in a statement..
The bank, which is a subsidiary of Hawaiian Electric Industries Inc., saw its net income fall 19.1% in the fourth quarter to $17.9 million from $22.1 million in the year-earlier period. But the earnings were impacted by $2.7 million it set aside in the fourth quarter for potential loan losses, compared with a year ago when it returned $3.5 million from its loan-loss reserve to its income statement.
For the year, American Savings earnings fell 21% to $80 million from $101.2 million in 2021. Similar to the fourth quarter, the earnings were affected by $2 million the bank set aside for potential loan losses during the year, compared with $25.8 million it released from its loan-loss reserve in 2021. The net income for 2022 also included $2.9 million in Paycheck Protection Program fee income in 2022 versus $14.3 million in PPP income in 2021. The bank’s 0.03% net charge-off ratio, which measures the proportion of debt owed that is unlikely to be paid back, was the lowest since 2014.
“We are pleased with our 2022 results, which reflect strong execution by our team, solid credit quality and a healthy Hawaii economy,” Teranishi said. “Excluding unique pandemic recovery-related items that benefited our 2021 net income, we saw meaningful growth in earnings year over year. …
“We continued to see positive credit trends despite the inflationary environment, and rising interest rates benefited our net interest margin and profitability.”
The bank’s net interest income rose 11.9% to $66.1 million in the fourth quarter from the year-earlier period.
Noninterest income, which includes charges and fees, fell 2% to $15.3 million as the bank’s mortgage banking income decreased $1.7 million from the year-earlier period.
Deposits were virtually flat at $8.17 billion compared with the year-earlier quarter.
Parent company HEI will announce its fourth-quarter results Feb. 14. HEI’s stock fell 17 cents to $41.47 before American Savings’ results were announced.
FOURTH-QUARTER NET
$17.9 million
YEAR-EARLIER NET
$22.1 million
74