Bank of Hawaii in Honolulu reported a slight increase in its second-quarter earnings as a decline in noninterest income was offset by increased lending.

Net income at the $16.6 billion-asset company climbed 1% from a year earlier to $44.7 million. Bank of Hawaii’s earnings per share of $1.05 came in 2 cents above consensus analysts' estimates compiled by FactSet Research Systems.

Net interest income rose 8.4% to $115.3 million, as total loans and leases increased 12.7% to $9.4 billion. Loan volume increased in most categories, including commercial mortgages, residential mortgages and auto lending. The net interest margin climbed 7 basis points year over year, to 2.92%.

The company attributed the increased loan demand in part to the state’s strong economy. Hawaii’s unemployment rate of 2.7% in June was well below the national average of 4.4%, and that has resulted in higher sales of single-family homes and condominiums, the company said.

Peter S. Ho, CEO of Bank of Hawaii
Bank of Hawaii will increase its dividend for the third time in 18 months, CEO Peter Ho said Monday.

Asset quality also improved as the total nonperforming assets decreased by more than 17%, to $16.4 million.

“Our loans and deposits continued to grow, our margin improved, expenses were well controlled, and our asset quality remains strong,” Peter Ho, Bank of Hawaii’s chairman, president and CEO, said in a news release Monday. Ho added that the company plans to increase its dividend for the third time in the past 18 months.

Noninterest income dropped 2.8% to $45.2 million, as fees from trust activities, deposit service charges and mortgage banking all declined slightly. Noninterest income in the second quarter of 2016 included a service fee of $1.2 million resulting from the sale of trust real estate.

The return on assets for the second quarter of 2017 shrank by 5 basis points to 1.09%. The efficiency ratio was 55.99%, down from 57.35% a year earlier.

Noninterest expenses rose 2.5% to $88.2 million on higher salaries and occupancy costs.

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