Central Pacific Bank, bolstered by the sale of a former branch site, increased its earnings after two down quarters and topped analysts’ expectations.

The parent of the state’s fourth-largest bank was due to report today that fourth-quarter net income rose 11.7 percent to $12.2 million, or 39 cents a share — 2 cents better than forecasts. A year earlier Central Pacific Financial Corp. earned $10.9 million, or 34 cents a share.

During the quarter the bank sold its former University branch property for a net gain of $3.5 million after the branch was consolidated earlier in the year with the McCully branch.

“It was a strong fourth quarter for us and a strong year of performance on all fronts,” Central Pacific President and CEO Catherine Ngo said in a phone interview Tuesday. “We’re reporting continued improvement in asset quality as well as strong loan and deposit growth (up 9.8 percent and 3.9 percent, respectively).”

For the year, Central Pacific’s net income rose 2.5 percent to $47 million from $45.9 million in 2015.

Central Pacific continued to make major strides in reducing its nonperforming assets, which had mushroomed to $496 million in March 2010 in the wake of the California real estate meltdown. The bank’s nonperforming assets — delinquent loans not accruing interest and foreclosed real estate — were just $9.2 million last quarter, down 43.4 percent from $16.2 million in the year-earlier period.

“We think $9.2 million is sort of the bottom,” Central Pacific Chief Credit Officer Anna Hu said. “We could possibly go a little lower, but that would probably be about the normalized area that we see ourselves going forward.”

AS ITS loan portfolio improves, the bank continues to add money to income that it had set aside for potential loan losses. Central Pacific shifted over $2.6 million last quarter compared with $2 million in the year-earlier period.

The bank’s operating expenses jumped 18 percent during the quarter to $37.5 million from $31.7 million primarily due to two strategic moves it undertook. In one of the moves, Central Pacific purchased annuity contracts to settle pension obligations on about 30 percent of its plan participants.

“The company has a defined benefit plan that was frozen in 2002, but we still have this forward obligation,” Central Pacific Chief Financial Officer David Morimoto said. “Most companies that have frozen defined benefit plans slowly look for ways to eventually terminate the plan, and that’s the path that Central Pacific is on. So what we did in the fourth quarter was buy annuities, which means we basically turned over the payment obligation to an insurance company. They (former employees) still will get paid all of their benefits, but rather than come from Central Pacific, it will come from a third-party insurance company.”

The bank also took a $700,000 charge that it paid to the Hawaii Employees’ Retirement System to terminate a lease early in City Financial Tower, which included the old City Bank main branch. The bank consolidated its residential mortgage loan operation to bank-owned space in Harbor Square.

Central Pacific’s stock closed Tuesday up 67 cents, or 2.3 percent, at $30.42.