Bank of Hawaii Corp. Chief Executive Peter Ho said Monday that loan growth has broadened out to the consumer sector and that it’s providing an additional financial boost to the state’s second-largest bank.

With the state’s economic recovery seemingly on track, Bankoh posted a robust second quarter Monday as earnings rose 9.9 percent, loans increased 9.7 percent and deposits gained 10.7 percent.

"Loan growth is really coming from all sectors," Ho said in a telephone interview. "Commercial loan growth really has been quite strong for several years, and we’ve been saying for a while now we expect to see growth in consumer loans, which has been lagging commercial activity. So I was very heartened last quarter to see not just the overall level of loan growth, but that it really came from consumers as well as commercial. It’s really a healthy indication of the broader economy."

Bankoh had net income of $41.5 million, or 94 cents a share, compared with $37.8 million, or 85 cents a share, in the year-earlier quarter. The bank added $2 million to its non­interest income by selling 23,500 Visa Class B shares that it received for its membership stake in the card company when it went public in 2008. The bank also lowered its tax rate by contributing 5,700 Visa Class B shares to the Bank of Hawaii Foundation that benefits nonprofit organizations.

On a core basis the bank had earnings per share of 91 cents to beat the consensus estimate of 89 cents. The company, which released its earnings after the market closed, saw its stock decline 84 cents to $56.11 during the regular trading session.

"It was one of the better quarters I’ve seen from them in the past year given the loan growth and that expenses continue to be very well managed," said Nashville, Tenn.-based analyst Brett Raba­tin of brokerage firm Sterne Agee. "Their credit obviously was really good. There are definitely challenges for any bank in this environment with low rates and competitive lending out there, but they executed really well in the quarter and beat consensus."

Loans increased to $6.43 billion from $5.86 billion, deposits grew to $12.67 billion from $11.45 billion and assets rose 8.1 percent to $14.84 billion from $13.73 billion. Due to the repurchase of $12.49 million worth of shares in the second quarter, the bank’s earnings per share rose 10.6 percent in the April-to-June period from the same time a year ago.

The bank also lowered its nonperforming assets — loans overdue by 90 days or more — to $34.4 million from $36.4 million in the year-earlier quarter, and returned to its income statement $2.2 million it previously had set aside for potential loan losses. The bank also had a net recovery of $1.9 million in loans and leases that it previously had charged off.

"It’s one of those quarters where all the things you want to go up, went up and all the things you want to go down went down," Ho said. "If you boil it all down to earnings per share, it was up 10.6 percent. We’d take that quarter just about any time."

The bank also saw its net interest margin — the spread between lending and deposit rates — improve to 2.86 percent from 2.77 percent in the year-earlier quarter as net interest income rose 8.1 percent to $94.4 million from $87.3 million.

Noninterest income, which includes service charges and fees, fell 7.4 percent to $44.5 million from $48 million. The decline was largely due to a drop to $1.8 million, from $5.8 million, in mortgage fee revenue, which is what the bank receives from refinancings as well as loan sales it makes to the secondary market.

"There was more refinance activity and volume a year ago and less volume this quarter. That’s one of the reasons why the mortgage income is down," Ho said. "The other reason is we’re holding mortgages on our balance sheet. When you do that, you generate the interest income from holding the loan, but you don’t get the income off the sale of the loan."

Ho said that with the state unemployment rate hovering at 4.4 percent, and even lower on Oahu, he was pleased to see consumer loan growth rise 2.6 percent from the first quarter and 7.9 percent from the second quarter of 2013.

"Given the real estate values have rebounded nicely from the downturn, it’s obviously a very strong economy and local marketplace to be lending into," he said.