American Savings Bank’s profits jumped 41.3% in the fourth quarter amid double-digit growth in deposits and the release of $3.5 million from its loan loss reserve.
The state’s third-largest bank, which is owned by Hawaiian Electric Industries Inc., reported net income of $22.1 million today, down from $15.7 million a year ago, when it had set aside $11.3 million for potential loan losses.
For the year, American Savings’ net income jumped 75.8% to $101.2 million, from $57.6 million in 2020. That increase was helped by $25.8 million that were released from its loan loss reserve in 2021, compared to $50.8 million that was put in its reserve in 2020 for potential loan losses.
American Savings said it released funds set aside for possible defaults due to favorable credit trends and a continued improvement in the economy, as well as a slight change in the composition of the loan portfolio. with growth of the guaranteed real estate portfolio. Banks are required to consider potential defaults and expenses to ensure they present an accurate assessment of their overall financial health.
“We are pleased with our 2021 results, which reflect strong performance from our teammates, solid credit quality, an improving Hawaiian economy and robust growth in earning assets,” said the president and chief executive officer. ‘American Savings, Ann Teranishi, in a statement. “We have made significant progress in our digital transformation and remain focused on making banking easy anytime, anywhere for our customers.”
The bank’s deposits rose 10.6% to $8.2 billion from $7.4 billion, while total asset income jumped 11.4% to $8.5 billion. .
Loans fell 2.3% to $5.21 billion from $5.33 billion in 2020. The bank attributed the decline to a net reduction of $231 million in program loans paycheck protection, as well as declines in the home equity line of credit and consumer portfolios.
“Our strong performance has been matched by our continued commitment to supporting the recovery of our community. We are especially proud of the efforts of our ASB teammates to build on the momentum of 2020 and lead the Hawaii Restaurant Card — Business Holiday Card program again in the fourth quarter. The statewide campaign resulted in the sale of 14,000 prepaid cards, totaling over $750,000, in direct support of our restaurant and food supply industries.
The bank’s net interest income, which is the difference between what it originates in loans and what it disburses in deposits, rose 1% to $59.1 million from the quarter. of the previous year. Its net interest margin deteriorated by 38 basis points to 2.91% from 3.29%.
Non-interest income, which includes charges and fees, fell 22.5% to $15.7 million as mortgage among mortgages. banking income which decreased by $6 million compared to the corresponding quarter of the previous fiscal year.
Parent company HEI will announce its fourth quarter and full year results on February 14. Shares of HEI rose 67 cents to $41.84 on Friday ahead of the American Savings earnings release.