First Hawaiian Bank posted a 2.6 percent increase in fourth-quarter earnings and capped off 2011 with record highs for both assets and deposits.

The state’s largest bank by assets said in a financial report released today that net income rose to $51.5 million last quarter from $50.2 million in the year-earlier period. Assets rose 4.2 percent to $15.8 billion while deposits increased 15.7 percent to $12.2 billion.

"The bank’s in great shape," said CEO Bob Harrison, 51, who took over the reins of the bank on Jan. 1 following the retirement of 61-year-old Don Horner. "The challenge has been that loan growth, despite a tremendous amount of activity ($2.9 billion in loan origination during the year), was modest."

First Hawaiian had $8.4 billion in loans and leases on its books at the end of the year, up just 1.5 percent from $8.3 billion a year earlier.

The main drag on loan growth is a reluctance to invest in commercial real estate, Harrison said.

"You haven’t really seen a lot of commercial construction, and while we’ve got good loan activity (in other areas), we still haven’t seen the commercial side really engaged," he said. "You look around town and see one or two cranes as opposed to a few years ago you’d see 10-plus. That’s just a reflection of the cycle and people being cautious."

While investment in commercial real estate is weak, consumer spending is speeding up, the bank said.

First Hawaiian, the state’s largest local credit card processor, said credit and debit card sales recorded at businesses in the state open at least a year jumped 8.9 percent during the final quarter of the year from the year-ago period.

"I think the economy is starting to turn around," Harrison said. "You’re seeing it on the consumer side in tourism, but you haven’t seen the next phase, which is commercial investment, such as businesses hiring more people and upgrading their facilities."

Harrison said deposits are growing because customers are keeping their money in short-term liquid investments.

"You don’t see as much money flowing to other investments," he said. "People want to put their money where it’s safe and wait a little while before they start making investments."

The bank’s percentage of nonperforming assets — loans overdue by 90 days or more — remained one of the lowest in the United States at 0.21 percent compared with 0.25 percent a year earlier.

First Hawaiian’s efficiency ratio, which measures how much it costs the bank to make a dollar of revenue, also remained strong at 43.7 cents compared with 43.3 cents a year earlier.

For all of 2011, First Hawaiian’s net income slipped 1.7 percent to $209 million from $212.6 million in 2010. Excluding a one-time tax benefit from investment tax credits in 2010, the bank’s earnings rose 3.4 percent last year to $209 million from $202.1 million.

Bank of Hawaii, which reports its earnings on Monday, is the state’s second-largest bank with assets of $13.3 billion as of the end of the third quarter.

First Hawaiian, a wholly owned subsidiary of French banking giant BNP Paribas, 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.