This news is developing. Check back here for updates.

American Bancorp in Minneapolis posted higher profits in the third quarter, but sales fell 2.4%, held back by lackluster lending.

The bank with $686 billion in assets‘s average total loans fell 1% from the previous year’s quarter, led by a decline in commercial lending. Declines in business lending and commercial real estate more than offset increases in credit card balances and increases in residential mortgages.

American Bancorp said net interest income of $4.1 billion was down 2% from a year earlier. The net interest margin decreased by seven basis points to 2.74%.

The bank, like many of its peers, has been trying to navigate a lending landscape marked by moments of weakness due to the COVID-19 pandemic and the remote working trends it has accelerated.

American Bancorps The ratio of non-performing assets to loans and other real estate stood at 0.49% in the third quarter, compared to 0.35% a year earlier. The increase was mainly due to higher non-performing loans to commercial and commercial real estate.

“Credit quality results were in line with expectations,” Chairman and CEO Andrew Cecere said in a press release on Wednesday.

That of the nation the seventh largest bank in terms of assets reported net income of $1.7 billion, or $1.03 per share, compared with $1.5 billion, or 91 cents, a year earlier. The results included a net after-tax impact loss of $89 million, largely offset by lower income taxes

Net sales were $6.9 billion, compared to $7 billion a year ago.

Non-interest income fell 2% to $2.7 billion.

Adjusted for notable items from previous quarters, the bank reported a 1% decline in non-interest expenses from a year earlier to $4.2 billion.

American Bancorps The struggle to gather momentum is taking place in a still murky credit environment for big banks in general. One day earlier, PNC financial services The aforementioned credit growth proved elusive in the third quarter Bank of America said loans were going up.

“Signals on the return of loan demand are mixed,” said Chris Stanley, a Moody’s analyst.

Loans for all U.S. banks rose just 1% in the four quarters ended June 30, according to S&P Global Market Intelligence.

A American Bankers Association Panel of senior banking economists predicted commercial and industrial loan growth would contract 0.2% this year, before rising 3.3% in 2025.

Bank economists blamed high interest rates for modest credit activity this year. Over the course of 2022 and last year, the Federal Reserve raised interest rates to their highest levels this century to combat inflation. The central bank’s campaign has brought inflation down from a peak of above 9% in 2022 to below 3% this year.

Following this improvement, the Fed cut rates by 50 basis points in September and indicated that further cuts could follow. The banking economists said they expect demand for loans to increase next year as borrowing costs fall. They see interest rates falling by another 150 basis points at the end of 2025.

“It’s the longer-term path that is more important, and our expectation is that the Fed’s policy rate – which remains restrictive – will reach a more neutral level by the end of next year,” said Luke Tilley, president of the ABA committee and head of the Fed. economist at M&T Bank’s Wilmington Trust, told reporters in September.