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Bank of Hawaii Corp. in Honolulu said Monday that fourth-quarter earnings fell 3.4% from a year earlier, to $39.2 million, as a decline in credit costs and higher net interest income could not offset a steep drop in fee income.

The $13.8 billion-asset company said in a news release that noninterest income fell 15.7% year over year, to $43.4 million, due largely to lower debit card revenue since the Oct. 1 implementation of a new law that caps fees on debit transactions. Meanwhile, mortgage revenues fell 25% to $3.4 million, a decline Bank of Hawaii attributed to a decision to hold some saleable mortgages in its portfolio.

Despite the overall decline in income, Bank of Hawaii's earnings per share of 85 cents topped consensus estimates by four cents.

Net interest income was $97.2 million, up $600,000 from a year earlier. The net interest margin was 3.04%, down 5 basis points from the prior quarter and down 11 basis points from a year earlier. Loan balances increased 3.5% from the third quarter to $5.5 billion.

The provision for loan losses was $2.2 million, down 58% from a year earlier. Nonperforming assets, however, ticked up 8% to $40.8 million, or 0.73% of total assets. The company said the increase was primarily caused by the addition of a $2.1 million construction loan.