First Hawaiian’s earnings soar 19.7%

First Hawaiian Bank’s net income jumped 19.7 percent in the first quarter as it benefited from a new lower tax rate and saw strong loan growth.

The parent of the state’s largest bank, First Hawaiian Inc., reported Thursday that earnings rose to $68 million, or 49 cents a share, from $56.7 million, or 41 cents a share, compared with the period last year.

First Hawaiian’s effective tax rate for the quarter dropped to 26 percent from 36.9 percent in 2017. The Tax Cuts and Jobs Act, which went into effect Jan. 1, reduced the federal corporate tax rate to 21 percent from 35 percent.

“Our performance was driven by good loan growth, an improving deposit mix, expanded net interest margin, excellent asset quality and a reduction in the effective tax rate,” First Hawaiian Chairman and CEO Bob Harrison said on an earnings conference call. “These results were supported by the strong Hawaiian economy.”

Harrison said the bank remains well capitalized and seeks to return excess capital to shareholders in the form of share repurchases or special dividends “at the appropriate time.”

Loans rose 5.8 percent to $12.5 billion, deposits increased 2.5 percent to $17.4 billion and assets grew 2.3 percent to $20.2 billion.

The bank’s net interest margin — the spread between interest received on loans and paid out on deposits — improved to 3.13 percent in the first quarter from 3 percent in 2017 in the period as loan interest rates continued to rise. Net interest income rose 8 percent to $139.7 million.

Noninterest income, which includes service charges and fees, fell 10.4 percent to $48.7 million in the quarter.

First Hawaiian’s stock closed down 1 cent Thursday at $28.28. The financial results were announced after the market closed.