First Hawaiian Bank’s deposits hit an all-time high of $12.6 billion in the second quarter as customers continued to stockpile money rather than make large purchases in a slow-growth economy.

While the strong deposit growth helped push up the bank’s earnings 3.6 percent to $56.4 million, First Hawaiian President and CEO Bob Harrison said Thursday he is looking forward to a pickup in the construction industry that will signal the state’s economic recovery is fully underway.

"People are still cautious, there’s no question about it," Harrison said. "But there is improvement, and you’re starting to see confidence come back in the sense of developments starting."

One sign of growing consumer confidence can be found in the bank’s quarterly business activity report that it released earlier this month. The report, which tracks 16 industries, showed that credit and debit card sales transactions at Hawaii businesses open at least a year rose 8.1 percent in the second quarter from the same period a year ago. First Hawaiian is the state’s largest local card processor of merchant services.

"The BAR (business activity report) report is a measure of confidence," Harrison said. "It reflects the economy we’re in. As the economy improves, it’s going to help our loan growth. At some point, people are going to take their deposits and do something else with them, like making investments. But that’s a good thing. We have plenty of liquidity to support loan growth."

First Hawaiian, the state’s largest bank with $16.1 billion in assets, said deposits grew by 7.8 percent last quarter from $11.7 billion in the year-earlier period, according to the bank’s financial results to be released today. Lending growth remained more modest with a 4.2 percent gain to $8.6 billion from $8.2 billion a year ago. Assets rose 8.6 percent to $16.1 billion from $14.8 billion.

"We’re seeing things continue to improve in terms of loan activity," Harrison said. "At this point, deposits are growing faster than loans and, at some point, that will turn around and you’ll see loans grow faster as the economy continues to recover."

The bank’s net interest margin, the spread between its lending rates and deposit rates, decreased to 3.39 percent from 3.83 percent a year ago due to the compression from the low rates. Net interest income fell to $120 million from $126 million while non-interest income, which includes service charges and fees, rose to $48 million from $43 million.

First Hawaiian’s net income for the first six months of the year was $113.2 million, up 5.6 percent from $107.1 million a year ago.

"Gains in the tourism and retail sectors are leading our state’s economic recovery," Harrison said. "While the recovery has been slow, our construction industry is showing signs of improvement which will play an important role in reducing Hawaii’s unemployment rate."

First Hawaiian’s percentage of nonperforming assets — loans overdue by 90 days or more — to total assets remained one of the lowest in the United States at 0.23 percent compared with 0.24 percent a year ago. The bank’s loan-loss provision, which is the amount it sets aside for potential loan losses, declined to $6.7 million from $10.3 million.

The bank’s efficiency ratio, which measures how much it costs the bank to make a dollar of revenue, stayed strong at 42.9 cents compared with 42.4 cents a year earlier.

Bank of Hawaii, which will report its earnings Monday, is the state’s second-largest bank with assets of $13.76 billion as of the end of the first quarter.

First Hawaiian, a wholly owned subsidiary of French banking giant BNP Pari-bas, is not required to separately report its earnings, but does so voluntarily each quarter.

The Honolulu-based bank, founded in 1858, has 58 branches in Hawaii, three on Guam and two on Saipan.