Hawaii’s largest banks, navigating through a sluggish economy, posted mixed fourth-quarter earnings but finished the year with similar trends: modest loan growth, increased deposits and a smaller difference between lending rates and deposit rates.

Bank of Hawaii Corp., the state’s second-largest bank with $13.7 billion in assets, said Wednesday earnings rose 2.7 percent to $40.3 million. The bank rewarded CEO Peter Ho with a 20 percent, or $150,000, raise in base salary to $900,000, effective April 1. Bankoh’s stock slipped 10 cents to $47.78.

American Savings Bank, the No. 3 bank with $5 billion in assets, said earnings declined 6.4 percent to $14.4 million. Parent company HEI Industries Inc., which began reporting American Savings’ earnings separately in the first quarter of last year, is due to report its overall financial results on Feb. 15. HEI’s stock edged down 1 cent to $26.74.

Central Pacific Financial Corp., the No. 4 bank with $4.4 billion in assets, said earnings rose 2.6 percent to $12.4 million, marking the eighth straight profitable quarter since its $325 million recapitalization in February 2011. Central Pacific’s stock declined 1 cent to $16.

The banks’ results come on the heels of First Hawaiian Bank’s $53.1 million in fourth quarter earnings — a 3.1 percent gain — reported last week. First Hawaiian is the state’s largest bank with $16.6 billion in assets.

BANK OF HAWAII

Bank of Hawaii originated more than $1 billion in mortgage loans in 2012 to help boost its earnings in the face of a low interest-rate environment.

"It was a very, very strong year for us in our mortgage banking area, which is great in that we’re putting more people in new homes or providing more attractive rates for people already in homes," Ho said.

Loans and leases at year-end were up 5.7 percent to $5.9 billion from $5.5 billion a year earlier. Noninterest income, which includes service charges and fees, jumped 22.1 percent to $53 million from $43.4 million.

Bankoh’s asset quality improved as nonperforming assets — loans delinquent 90 days or more — decreased in the fourth quarter to $37.1 million from $40.8 million a year ago. The bank did not need to set aside any money for potential loan losses for the second quarter in a row.

"It was another quarter where margin pressure was definitely the headwind, but I think they continue to execute pretty well," said Nashville, Tenn.-based analyst Brett Rabatin of brokerage firm Sterne Agee. "Loan growth was pretty solid and expenses on a core basis continue to improve, so I think it was overall pretty good results for the environment."

Deposits gained 8.8 percent to $11.5 billion from $10.6 billion but Bankoh’s net interest margin, the spread between lending rates and deposit rates, decreased in the fourth quarter to 2.87 percent from 3.04 percent in the year-earlier period.

AMERICAN SAVINGS BANK

American Savings was targeting low- to mid-single-digit loan growth in 2012 and said the 2.6 percent increase it achieved last year was in line with expectations.

"We had a very good year making credit available to our customers," American Savings President and CEO Richard Wacker said. "We extended more than $1.7 billion of new loans and refinancings to help our customers buy homes, install PV, expand their business, or simply lower their interest rates. We doubled the amount of residential mortgages we originated."

The bank’s total loans and leases rose to $3.8 billion from $3.7 billion while noninterest income, driven mainly by higher gains on sales of newly originated residential loans, increased 35.9 percent to $22.9 million from $16.8 million.

The bank’s deposits increased 3.9 percent to $4.2 billion from $4.1 billion.

American Savings’ net interest margin, however, declined to 3.81 percent from 4.16 percent.

"It’s very tough with the low interest rates and increasing regulatory constraints," Wacker said. "It means we have to continue to grow while being careful to avoid credit losses."

CENTRAL PACIFIC BANK

Central Pacific Bank’s cleansing of its once-troubled mortgage portfolio continued as the bank reduced its nonperforming assets at year-end to $90 million — a far cry from the $497 million it had on Dec. 31, 2009. Central Pacific reduced its nonperforming assets in the fourth quarter by $50.3 million from $140.3 million at the end of the third quarter.

"We’re obviously very pleased with the reduction in nonperforming assets but we still have more to go," Central Pacific Chief Credit Officer Bill Wilson said.

Central Pacific, which has stopped pursuing loans in California after getting burned by that state’s real estate meltdown, still has $237 million in outstanding loans on the mainland, predominantly in California, with about $45 million nonperforming. In Hawaii, the bank has $1.97 billion in outstanding loans, also with about $45 million nonperforming.

Despite the headwinds created by weeding out troubled mortgages, the bank still was able to increase its loans and leases last quarter by 6.8 percent to $2.2 billion from $2.1 billion.

The bank, which raised $325 million primarily from private-equity firms in February 2011 in its recapitalization, posted more than $703 million in losses from 2008-2010 before beginning its turnaround.

As a result of those losses, the bank was able to offset the income tax liability on its earnings in the past two years, said CEO John Dean. "We also benefited from reducing our reserves (for potential loan losses) due to the continued improvements in our asset quality. Not paying taxes and releasing reserves have had a positive impact on those earnings."

Central Pacific’s deposits rose 6.9 percent to $3.7 billion from $3.4 billion. The bank’s net interest margin, however, fell to 3 percent from 3.25 percent.