American Savings Bank has targeted its loans to increase this year at a percent rate in the mid-single digits.

But the state’s third-largest bank is well on its way to exceeding its own expectations.

Strong loan growth helped boost American Savings’ earnings 7.5 percent to $15.3 million in the third quarter, primarily driven by increases in commercial lending, commercial real estate portfolios, home equity lines of credit and residential mortgages. Overall, loans rose 7.9 percent to $4.1 billion from $3.8 billion and are now up 9.3 percent since the start of the year.

"We have worked really hard to quickly respond to our customers’ needs for new loans or refinancing to lower their borrowing costs, and the result has shown up in good loan growth," American Savings President and CEO Richard Wacker said Wednesday. "We’ve seen it in both commercial lending as well as consumer lending where we have held our No. 1 share in home equity lines of credit. Certainly the new commercial real estate project activity is helping, and that gives us confidence in the direction of the local economy."

The bank’s earnings also were boosted by $2 million less — after taxes — that the bank needed to set aside for potential loan losses, a $1 million net gain on the sale of its credit card portfolio and $1 million in higher fee income from other financial products.

With the economy improving, the bank’s nonperforming assets — loans delinquent 90 or more days or not accruing interest — have declined 24 percent since the end of last year, and net loan charge-offs have fallen 75 percent over the same period.

The improved credit quality last quarter helped offset the impact to American Savings from the recently enacted Durbin Amendment that puts a cap on the swipe fees that banks charge to merchants every time a customer pays with a debit card.

American Savings, which during the second quarter earned an average of 49 cents per electronic debit transaction, now will be able to receive only 21 to 24 cents per transaction under the new law, which was designed to lower costs for merchants and, subsequently, consumers.

The bank took in $1 million less after taxes from those fees last quarter than it did in the year-earlier quarter.

The Durbin Amendment applies to financial institutions and their affiliates that have $10 billion or more in assets, and even though American Savings has roughly half that amount in assets, it went into effect for the bank on July 1 because parent company HEI Industries Inc. finished 2012 with more than $10 billion in assets.

The bank, looking to enhance its credit card offerings, completed the sale on Aug. 1 of its $25 million credit card portfolio to First Bankcard, a division of First National Bank of Omaha. As part of the agreement, through First Bankcard, American Savings is able to offer its customers more business and consumer credit card products, an enhanced rewards program and regular marketing support.

"With our new partner, we have a full lineup of credit cards with a better set of rewards options and, in most cases, better pricing for our customers," Wacker said. "We also now offer better solutions for our business customers, large and small."

American Savings’ net interest margin — the spread between lending and deposit rates — declined last quarter to 3.73 percent from 3.92 percent primarily due to lower yields on interest-earning assets. Net interest income fell 1.5 percent to $43.9 million from $44.6 million.

Noninterest income declined 3 percent to $18.7 million from $19.3 million due to $2 million less in mortgage banking income as refinanced mortgages slowed. The reduction in swipe fees also facilitated the decline.

American Savings ended the quarter with assets of $5.2 billion, up 4.2 percent from $5 billion a year ago. Deposits rose 4.5 percent to $4.3 billion from $4.1 billion.

HEI Industries Inc., the parent company of American Savings and the state’s largest utility, will release its full earnings report on Nov. 7. Its stock closed Wednesday down 13 cents at $26.63 on the New York Stock Exchange.

American Savings announced its financial results after the market closed.