First Hawaiian Bank’s net income jumped 7.7 percent in the first quarter as strong gains from its securities portfolio helped lift assets to a record $16.1 billion.

The state’s largest bank said $3.3 million in after-tax gains from bond sales helped boost its earnings to $56.8 million compared with $52.7 million a year ago. In the year-earlier quarter, First Hawaiian had only $200,000 in after-tax securities gains.

Excluding the securities gains, First Hawaiian’s core earnings rose 1.9 percent to $53.5 million from $52.5 million in the year-earlier quarter.

“We’re seeing very
good deposit growth
and reasonable
loan growth.”

Bob Harrison
President and CEO,
First Hawaiian Bank

First Hawaiian President and CEO Bob Harrison said Thursday that the bank’s financial results, due out officially today, were “solid” but that the construction sector needs to improve before the economy begins firing on all cylinders.

“We’re seeing very good deposit growth and reasonable loan growth,” he said. “Tourism has been good, but we haven’t seen the construction sector come off its cyclical low. It’s still down but seems to be doing a little bit better.”

Given the lagging construction sector, he was encouraged that the bank increased its loans and leases 2.8 percent to $8.4 billion in the first quarter from $8.2 billion in the year-earlier period.

“We’re happy with that given where the economy is,” Harrison said. “There are several construction projects now in pre-sale, and the pre-sales have been fairly strong. Once the developers have the pre-sales they feel comfortable with, they’ll come to various financial sources, and hopefully First Hawaiian Bank, and we’re here to help them with a construction loan to start construction. A year ago they weren’t in pre-sale and not doing that, so it is a process.”

Harrison said the bank is seeing consumers regain confidence in the economy through an increase in credit and debit card transactions. First Hawaiian is the state’s largest local card processor of merchant services.

The bank, which tracks 16 industries, said in its quarterly business activity report released Sunday that card sales at businesses open at least a year jumped 10.4 percent in the first quarter from the same period a year ago. That was the largest increase in two years.

“We remain optimistic that increases in tourism and consumer confidence will help boost Hawaii’s economy in the future,” Harrison said.

Despite improved consumer confidence, individuals and businesses are still being cautious with their money, as evidenced by the bank’s 15 percent jump in deposits to $12.4 billion from $10.8 billion a year ago.

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

“It’s a bit of a symptom of people not feeling completely comfortable with the economy,” Harrison said. “They’re keeping it short-term and liquid rather than investing, whether it’s a new piece of equipment or a project, and it’s true for individuals as well.”

Harrison said the bank’s asset quality continued to remain strong.

First Hawaiian’s percentage of nonperforming assets — loans overdue by 90 days or more — to total assets remained one of the lowest in the United States at 0.22 percent compared with 0.25 percent a year ago. The bank’s $16.1 billion in total assets was up 6.5 percent from $15.2 billion a year ago.

The bank’s efficiency ratio, which measures how much it costs the bank to make a dollar of revenue, stayed strong at 42.8 cents compared with 43.3 cents a year earlier.

First Hawaiian’s capital, or net worth, at the end of the quarter was in excess of $2.6 billion and remained in the top quartile nationally as a percentage of total assets.

Bank of Hawaii, which will report its earnings on Monday, is the state’s second-largest bank, with assets of $13.85 billion as of the end of the fourth 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.