Bank of Hawaii Corp., the state’s second-largest bank, said Monday it hit on all cylinders in the first quarter amid an improving state economy.

Earnings rose 3.4 percent as loans and deposits grew and it sharply reduced the amount of money it set aside for potential loan losses, the bank said.

"It’s not often that all the things you want to go up, go up, and all things that you want to go down, go down," said Peter Ho, chairman, president and CEO of Bank of Hawaii. "It was one of those quarters where all those things seemed to happen."

Bankoh had net income of $43.8 million, or 95 cents a share, to easily beat the consensus by 15 analysts of 81 cents a share, according to FactSet, a Norwalk, Conn.-based financial research firm. A year earlier Bankoh had earnings of $42.4 million, or 88 cents a share.

Loans and leases rose 5.1 percent to $5.6 billion, and deposits jumped 7.2 percent to $10.6 billion. Bankoh ended the quarter with $13.8 billion in assets, up 6.1 percent from the year-ago period.

The bank’s provision for loan losses plunged 92.5 percent to $351,000 from $4.7 million in the first quarter of 2011.

Net charge-offs, or debt considered uncollectible, narrowed 28.6 percent to $3.4 million from $4.7 million.

"I thought they had a really fantastic quarter," said Nashville, Tenn.-based analyst Brett Rabatin of brokerage firm Sterne Agee. "Everyone in the industry is facing the same difficult environment from a perspective of low interest rates, and there’s nowhere to hide from that. But they continue to post extremely high profitability, the loan portfolio grew and there were some pretty encouraging signs from this quarter overall."

Bankoh’s stock rose 48 cents, or 1 percent, to $48.11 on a down day for the overall stock market. The earnings were released before the market opened.

Ho said he’s optimistic for the remainder of the year after the bank’s loan and lease growth averaged just under 5 percent in the first quarter from the same period a year ago.

"Commercial lending activity continues to be strong," Ho said. "For several quarters now, we’re beginning to see the formation of a potential new construction phase. For us it’s the beginning of a new cycle. It seems like there’s been no fewer than a half-dozen new proj­ects, mostly in the Kakaako area, mostly condo proj­ects."

Ho said residential mortgage lending also has been strong, and consumer lending, such as auto, home equity and personal loans, has stabilized.

"We’re bankers. We’re always going to be cautious. But I feel good about the forecast for the rest of the year," Ho said. "I’ve felt good for a while now. Our primary economic driver, the visitor industry, has had a nice string of success for a while. Clearly, we have to get the unemployment rate (6.4 percent) down. Hopefully, some of the early-stage activity we see on the real estate side will bring more construction jobs."

First Hawaiian Bank, the state’s largest, reported last week that its net income jumped 7.7 percent in the first quarter to $56.8 million.

Bankoh’s net interest income, the difference between what it pays depositors and what it brings in from loans, slipped 1.8 percent in the quarter to $97.9 million from $99.7 million.

Noninterest income, which includes money earned from fees and charges, fell 10.8 percent to $48.1 million from $53.9 million. Bankoh’s fee income continued to be affected by the Durbin Amendment, a new law implemented Oct. 1 that reduces by nearly 50 percent the average amount of fees that all banks collect from debit card transactions.

Ho said Bankoh’s fees from debit cards were down $4 million from the year-earlier quarter, but that was somewhat mitigated by the bank adding 27,000 consumer checking accounts — a nearly 9 percent gain — from the year-earlier quarter that brought increased fee volume.

"The pricing change that took effect in the beginning of the fourth quarter last year would have had the impact of reducing our revenue by $4 million, but the actual number was only down $3 million because we simply added more checking accounts," he said.

Bankoh also benefited from a $3.5 million gain on the early termination of leveraged leases for two cargo lumber ships. That was partly offset by a $1 million loss from the sale and termination of an aircraft lease.

Noninterest income in the first quarter of 2011 included gains of $6.1 million on sales of investment securities.

The bank also declared a dividend of 45 cents a share that will be payable June 14 to shareholders of rec­ord at the close of business on May 31. That would equate to an annualized yield of 3.7 percent.