Auto loans to buyers, dealers help boost portfolio

First Hawaiian Bank’s ties to the state auto industry run deeper than its sponsorship of the annual three-day auto show at the Hawai’i Convention Center.

The state’s largest bank also is the top local lender for auto loans, and that relationship with both buyers and dealers helped First Hawaiian’s earnings rise 7.7 percent in the second quarter.

First Hawaiian said Thursday that net income rose to $55.9 million from $51.9 million in the year-ago quarter partly on the strength of a 4.8 percent increase in its loan and lease portfolio. The bank, which was due to officially release its earnings Friday, said it holds a 60 to 65 percent share of the Hawaii market for local auto lenders.

"The auto business for us — both lending to the consumer and lending to the dealer — has been a core business for us for four decades now," said Bob Harrison, chairman, president and chief executive of First Hawaiian. "It’s a very important business for us, and we’ve been with the dealers through thick and thin."

Overall, First Hawaiian’s loans and leases increased to a record $9.6 billion from $9.2 billion.

"We continue to see steady growth in the loan portfolio," Harrison said. "Commercial and industrial loan growth (such as business loans) has been good. Commercial real estate (such as developments and office buildings) has been growing steadily as we’re seeing projects around town get further along in construction. On the consumer side, we’re seeing good strength in auto lending as car sales have increased significantly over the last year."

First Hawaiian also enjoyed a strong quarter for deposits as they rose 9.3 percent to a record $14.1 billion from $12.9 billion.

Total assets rose 5.6 percent to a record $17.5 billion from $16.6 billion.

The bank’s net interest margin — the spread between loans and deposits — declined in the second quarter to 2.93 percent from 3.01 percent in the year-earlier period. Net interest income rose 2.3 percent to $111.9 million from $109.4 million after getting a $3 million boost when an aircraft lessor bought out its lease.

Noninterest income, which includes service charges and fees, slipped 3 percent to $52.3 million from $53.9 million.

Nonperforming assets — loans overdue by 90 days or more — as a percentage of total assets improved to 0.17 percent from 0.22 percent.

The bank also said its earnings have not been affected by the $9 billion fine assessed against its parent company, French bank BNP Paribas, for violating U.S. money laundering laws.