Central Pacific Financial Corp.’s net income fell 10.1% in the fourth quarter despite solid loan growth and improved margins.

The holding company for the state’s fourth-largest bank said today that earnings fell to $14.2 million, or 50 cents a share, from $15.8 million, or 54 cents a share, in the year-earlier quarter. Central Pacific said its earnings were impacted by a $2.1 million expense it incurred from setting aside that amount for potential loan losses compared with a credit of $1.4 million it received in the fourth quarter of 2018 when it returned that loan loss provision to its income statement.

Loans rose 9.1% to $4.45 billion last quarter from the year-earlier period while Central Pacific Bank’s net interest margin, the difference between what it collects on loans and what it pays for deposits, jumped 15 basis points to 3.43%. The bank’s net interest income rose 7.3% to $47.9 million.

Noninterest income, which includes service charges and fees, gained 3.9% to $9.8M. The bank’s deposits increased 3.5% to $4.12 billion.

For the year, the bank’s net income fell 2% to $58.3 million. The decrease was attributable to a $7.4 million adjustment it made in its loan portfolio by setting aside $6.3 million for potential loan losses compared with a $1.1 million credit it took in 2018.

“2019 was a pivotal year for the company as we embarked on our RISE2020 transformation,” Central Pacific Financial Chairman and CEO Paul Yonamine said. “We continue to make significant progress and are on schedule to meet our 2020 milestones in our digital banking and branch transformation initiatives.”