Preheat the oven to 350°F and prepare a 9×5-inch loaf pan by spraying it with nonstick cooking spray and lining the bottom with parchment paper. This prevents sticking and ensures easy removal after baking.

In a large bowl, cream together the room-temperature unsalted butter and sugar using a whisk, handheld mixer, or stand mixer until light and fluffy, which takes about 2-3 minutes. Add the two eggs and ½ teaspoon vanilla extract, mixing until fully incorporated and smooth.

Stir in the mashed ripe bananas—choose ones that are overripe with dark brown spots for maximum sweetness and softness—until well combined. Fold in most of the sweetened shredded coconut (reserve a small amount for topping if desired), distributing it evenly for that signature island texture throughout the batter.

In a separate bowl, whisk together the all-purpose flour, baking powder, baking soda, and salt to ensure even distribution of leavening agents. Gently fold the dry ingredients into the wet mixture using a spatula to avoid overmixing, which can lead to a dense loaf. Add the 2 tablespoons of milk to achieve the perfect batter consistency—moist but not runny.

Pour the batter into the prepared loaf pan, smoothing the top with the spatula for even baking. Bake for 50 minutes, then check doneness with a toothpick inserted in the center—it should come out with a few moist crumbs.

While baking, prepare the topping: melt 1 tablespoon of butter. After 50 minutes, brush the top of the loaf with the melted butter to act as “glue,” then sprinkle the roughly chopped macadamia nuts evenly over the surface, pressing lightly to adhere. Return to the oven for another 10 minutes until the nuts are golden and crispy and a toothpick tests clean.

Remove from the oven and let the bread cool in the pan for 20-25 minutes on a wire rack. Invert onto a plate to release, then cool completely before slicing to allow flavors to meld and structure to set.