Central Pacific Bank’s renewed focus on loans in its core Hawaii market helped increase earnings 17 percent in the first quarter and set the stage for the company’s second dividend increase in less than a year.

The parent of the state’s fourth-largest bank said its net income rose to $13.1 million, or 42 cents a share, to beat analysts’ consensus estimate by 4 cents. A year earlier Central Pacific Financial Corp. earned $11.2 million, or 35 cents a share.

Loans rose 7.2 percent to $3.55 billion on the strength of a 12 percent increase in Hawaii loans from the year-earlier quarter. The bank reduced its mainland loans by 21.6 percent during the same period.

“The Hawaii market will be our focus going forward,” Central Pacific President and CEO Catherine Ngo said in a phone interview Tuesday ahead of today’s official earnings release. “However, for our good mainland borrowers, we will continue to support them. We will consider new loans to those borrowers as well as to Hawaii businesses looking to expand to the mainland.”

Central Pacific has been reducing its exposure to mainland real estate and focusing more on Hawaii after getting hurt during the 2008-2009 recession. At its pre-recession peak at the end of 2007, Central Pacific’s mainland exposure comprised 29.1 percent, or $1.2 billion, of the bank’s total loans. After the recession at the end of 2009, it represented 18.6 percent, or $569 million, of total loans.

Most of Central Pacific’s mainland loans today are in California, but it has “a few scattered up the coast and a few in the inland states,” Central Pacific Chief Credit Officer Anna Hu said.

The bank also has been aggressive in reducing its nonperforming assets, which had swelled 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 $8.8 million last quarter, down 44.6 percent from $15.9 million in the year-earlier period.

Central Pacific had $3.17 billion, or 89.4 percent, of its loans in Hawaii at the end of the first quarter compared with just $374.9 million, or 10.6 percent, on the mainland. All the nonperforming assets were in Hawaii.

“The majority of the NPAs (nonperforming assets) are in the residential loan segment,” Hu said.

Central Pacific’s dividend increase was its second since the third quarter. The bank raised its dividend by 2 cents, or 12.5 percent, to 18 cents a share. It will be payable June 15 to shareholders of record at the close of business May 31. On an annualized basis it represents a 2.3 percent yield based on Tuesday’s closing price of $31.35.

“The dividend increase was a result of the increase in core profitability and management’s confidence in our future performance,” Central Pacific Chief Financial Officer David Morimoto said. “(The dividend yield) also brings us more in line with our industry peers.”

As of the market close on Tuesday, First Hawaiian Bank’s dividend yield was 2.9 percent, Territorial Savings Bank’s was at 2.47 percent and Bank of Hawaii’s was at 2.42 percent. For American Savings Bank’s parent, Hawaiian Electric Industries Inc., it was at 3.68 percent. Utilities typically offer high dividend rates.

Central Pacific continued to grow its deposits and assets. Deposits rose 6.2 percent to $4.78 billion last quarter while assets increased 3.8 percent to $5.44 billion.

The bank’s net interest income, the difference between the interest Central Pacific pays on deposits and the interest it receives on loans, rose 5.2 percent to $41.3 million from $39.2 million. The net interest margin slipped to 3.30 percent from 3.33 percent.

Central Pacific’s noninterest income, which includes service charges and fees, rose 15.7 percent to $10 million from $8.7 million.

Ngo, the CEO, said she is optimistic about an agreement signed earlier this month between the bank and the TSUBASA Alliance, which is made up of six regional banks throughout Japan.

“This is a wonderful opportunity for us to help the customers in these banks as they expand their businesses in Hawaii as they acquire residential and commercial real estate,” Ngo said. “It’s not only wonderful for CPB, but it’s also wonderful for the state of Hawaii.”