Bank of Hawaii Corp. took a short-term financial hit last quarter to exit the aircraft leasing business.

But double-digit loan growth and continued increases in deposits helped soften the blow.

The state’s second-largest bank said Monday that earnings declined 17.9 percent in the July-to-September period primarily due to a previously announced $6.5 million charge that the company took to discontinue its aircraft leasing operations.

Excluding the charge, it was a solid quarter for the bank, which saw loans jump 16.4 percent to $7.69 billion and deposits increase 4.7 percent to $12.94 billion.

“We made the decision to exit out of our remaining aircraft leveraged lease portfolio, which really was put in place in the 1990s and has since been a form of lending that we really don’t do anymore,” Bankoh Chairman, President and CEO Peter Ho said in a telephone interview. “So that cost us some money— $6.5 million on an after-tax basis. In my view it was short-term pain for long-term gain. These were legacy assets, somewhat challenged assets. Now we’re done with them and written them out of the balance sheet, and we feel good about that. It gives us a better risk profile moving forward.”

The charge dragged down Bankoh’s net income to $34.3 million, or 79 cents a share, compared with $41.8 million, or 95 cents a share, in the year-earlier period. The bank said earnings also were  affected by one-time items totaling $4.6 million that benefited its net income in the year-ago period but not in the most recent quarter. In the third quarter of 2014, Bankoh returned to its income statement $2.7 million it had set aside for potential loan losses, and had a net gain of $1.9 million from the sale of Visa stock that the bank obtained for its membership stake in the credit card company when it went public in 2008. The bank had no loan provision credit or stock sale in the most recent quarter.

“There were really two parts of the quarter,” Ho said, referring to the aircraft leasing exit as one of the components. “The other part of the quarter was actually pretty good. We had loan growth in excess of 16 percent, had nice average deposits of 6 percent (with a Sept. 30 balance up 4.5 percent), so the loan growth and deposit growth was a reflection of a continued strong economy that is benefiting from what is happening in the visitor industry, construction and housing.”

Ho said the bank’s loan growth came from all areas.

“It was a really strong commercial quarter and strong residential quarter, and a strong consumer quarter in each category — auto, installments and credit cards.”

The bank’s net interest income, the difference between interest earned on loans/securities and what is paid out on deposits, rose 2.6 percent to $97.9 million from $95.4 million. Its net interest margin — the spread between loans/securities and deposits — fell to 2.77 percent from 2.85 percent.

Noninterest income, which includes money earned from service charges and fees, slipped 3.8 percent to $43.2 million from $45 million.

Analyst Aaron Deer of San Francisco-based Sandler O’Neill & Partners called the bank’s net income “solid” and said Bankoh’s core earnings, which exclude the discontinued aircraft leasing, were in line with his expectations of 94 cents a share. Consensus earnings per share were 95 cents, he said.

“Their net interest margin was down a touch due to the low interest rate environment, but generally I was encouraged to see their loan growth is continuing to come on strong, and I think that reflects the continued strength of the Hawaii economy,” said Deer.

Assets rose 4.5 percent to $15.16 billion.

Bankoh’s stock fell 53 cents, or 0.8 percent, to close at $66.07. The earnings were announced before the market opened.

Bankoh said the improving Hawaii economy also resulted in the company’s nonperforming assets — delinquent loans not accruing interest and foreclosed real estate — declining 11.3 percent to $29.5 million from $33.3 million in the year-earlier period.

The bank’s net loans and leases charged off during the quarter were 0.1 percent annualized of total average loans and leases outstanding.

Bankoh, which has more branches in the state than any other financial institution, said it will have 65 remaining in Hawaii and 71 systemwide after its 55-year-old Kapahulu branch closes Friday due to declining customer traffic. Customers’ accounts at the 727 Kapahulu Ave. branch will be moved to the Kaimuki branch at 3600 Waialae Ave.

Ho said that the 13,586-square-foot Kapahulu branch parcel, which includes the building, remains up for sale.