American Savings Bank boosts earnings 88%, pares loan-loss reserve


American Savings Bank's earnings rose nearly 88% in the first quarter as the company posted record growth in deposits and released $ 8.4 million from its loan loss provisions in an improving economy.

The state's third largest bank, a subsidiary of Hawaiian Electric Industries Inc., reported today that net income rose to $ 29.6 million from $ 15.8 million in the same period last year, when American Savings reported $ 10.4 million has put potential credit losses in its reserve. Reserving funds for loan losses reduces a company's income.

Deposits increased 21.3% to $ 7.75 billion from the same period last year and 4.9% from the December quarter.

"Our financial results reflect good execution in an environment that continues to challenge bank profitability," said Rich Wacker, president and CEO of American Savings, in a statement. “Our strong residential mortgage production and the new ASB CARES or Paycheck Protection programs are bright spots, but record deposit growth continues to outpace lending opportunities at this early stage of Hawaii's economic recovery. Our results benefited from a reduction in the provision for loan losses as certain commercial loans increased in value and our exposure to riskier unsecured consumer loans decreased. "

The bank's mortgage lending income remained strong as it more than doubled to $ 4.3 million in the first quarter, from $ 2 million in the year-ago period. Mortgage lending income includes refinancing fees and gains on mortgage sales to Fannie Mae and Freddie Mac.

Loans grew just 2.5% to $ 5.31 billion from $ 5.18 billion a year ago, and declined 0.4% from the December quarter. The bank said its loans were lower compared to the previous quarter, mainly due to declines in residential mortgage and home loan portfolios.

American Savings said that while residential mortgage production continued to be strong, residential mortgage production continued to be sold in the secondary market. The bank said the decline in residential mortgage and home loan portfolios was partially offset by growth in the ASB CARES (Paycheck Protection Program) and commercial property portfolios. During the quarter, American Savings raised $ 150 million in ASB CARES loans to help small businesses and their employees.

The bank's net interest income, which is the difference between what it generates from loans and cash out on deposits, decreased 6.5% from $ 61.1 million to $ 57.1 million. The net interest margin worsened by 77 basis points from 3.72% to 2.95%.

Noninterest income, including fees and charges, increased 29% from $ 14.8 million to $ 19 million, mainly driven by higher banking revenues.

The parent company HEI will announce the results of the first quarter on May 7th. HEI stock rose 14 cents to $ 43.06 on Friday before American Savings announced results.


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https://businessservicesnews.ca/american-savings-bank-boosts-earnings-88-pares-loan-loss-reserve/

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