State’s biggest bank logs steady growth

First Hawaiian Bank hit new levels for assets, loans and deposits during the second quarter and expects the rest of the year to be more of the same.

The state’s largest bank continued its methodical growth during the April-June period as net income rose 1.6 percent to $56.8 million from $55.9 million in the year-earlier quarter.

Assets rose 6.7 percent to $18.7 billion, loans grew 6.6 percent to $10.3 billion and deposits increased 7.7 percent to $15.2 billion.

“The second half looks good,” First Hawaiian Chairman and CEO Bob Harrison said. “We’re still seeing steady growth across the bank. We’re seeing tourism do well, and there’s quite a few big projects on Oahu on the construction side although you don’t see as much on the neighbor islands. It’s a very strong market in that respect.”

Harrison said the bank has showed “good, steady improvement,” and characterized the second quarter as “a very solid performance.”

“The interest rate environment makes it challenging for banks when the rates get this low, but maybe rates will change later this year,” he said. “It’s up to the Federal Reserve. But 6.6 percent growth in loans and 7.7 percent for deposits is really good growth.”

First Hawaiian’s net interest income improved as the spread between loan and deposit rates rose 6.3 percent to $119 million last quarter from $111.9 million in the year-earlier period due to the bank’s strong loan growth. However, the bank’s net interest margin decreased to 2.87 percent from 2.93 percent as loans continue to reprice and the rates stay low.

Noninterest income, which includes service charges and fees, slipped 0.4 percent to $52.1 million from $52.3 million.

The bank’s credit quality kept improving as nonperforming assets — loans overdue by 90 days or more — declined 29.9 percent to $21.3 million from $30.4 million and as a percentage of total assets improved to 0.11 percent from 0.17 percent.

As a wholly owned subsidiary of French banking giant BNP Paribas, First Hawaiian is not required to separately report its earnings, but does so voluntarily each quarter. The bank has 57 branches in Hawaii, three on Guam and two on Saipan.