Central Pacific Financial Reports Second Quarter 2024 Earnings of $15.8 Million

Rhea-AI Summary

Central Pacific Financial Corp. (NYSE: CPF) reported net income of $15.8 million, or $0.58 per diluted share, for Q2 2024, a 22.2% increase from the previous quarter. Key highlights include:

- Net interest margin increased to 2.97%, up 14 bps from Q1
- Total loans decreased by $17.8 million to $5.38 billion
- Core deposits increased by $16.7 million to $5.91 billion
- Net charge-offs decreased by $0.8 million to $3.8 million
- Total risk-based capital ratio of 15.1% and common equity tier 1 ratio of 11.9%
- Quarterly cash dividend of $0.26 per share approved

The company maintained solid liquidity and grew capital levels, with $298.9 million in cash and $2.56 billion in total other liquidity sources.

Positive

• Net income increased by 22.2% to $15.8 million compared to the previous quarter
• Net interest margin expanded by 14 basis points to 2.97%
• Core deposits grew by $16.7 million to $5.91 billion
• Net charge-offs decreased by $0.8 million to $3.8 million
• Total risk-based capital ratio improved to 15.1%
• Maintained strong liquidity with $298.9 million in cash and $2.56 billion in other liquidity sources

Negative

• Total loans decreased by $17.8 million to $5.38 billion
• Total deposits decreased by $36.4 million to $6.58 billion
• Other operating expenses increased to $41.2 million
• Efficiency ratio increased to 64.26% compared to 63.17% in the year-ago quarter

Insights

Financial Analyst

Central Pacific Financial's Q2 2024 results show promising signs of resilience and growth in a challenging economic environment. The 22.2% increase in net income to $15.8 million is particularly noteworthy, indicating improved operational efficiency and revenue generation. The 14 bps expansion in net interest margin to 2.97% is a positive indicator of the bank's ability to manage its interest-earning assets effectively.

However, it's important to note the slight decrease in total loans and deposits compared to the previous quarter and year-ago period. This could be a reflection of broader economic conditions or a strategic decision to focus on higher-quality assets. The reduction in government time deposits by $41.6 million suggests a deliberate move to optimize the deposit mix and reduce funding costs.

The improvement in asset quality metrics is encouraging, with net charge-offs decreasing to $3.8 million from $4.5 million in the previous quarter. The bank's capital ratios remain strong, with the total risk-based capital ratio at 15.1%, well above regulatory requirements. This provides a solid foundation for future growth and potential dividend increases.

Overall, Central Pacific Financial's Q2 performance demonstrates its ability to navigate current market challenges while maintaining a strong financial position. The continued focus on core deposit growth and NIM expansion bodes well for future profitability.

Market Research Analyst

Central Pacific Financial's Q2 2024 results offer valuable insights into the regional banking landscape, particularly in Hawaii. The bank's recognition by Forbes as one of America's Best Banks and the Best-In-State Bank for Hawaii in 2024 underscores its strong market position and customer satisfaction levels.

The increase in core deposits by $16.7 million is a positive sign, indicating customer trust and the bank's ability to attract and retain deposits in a competitive environment. However, the overall decrease in total deposits by $36.4 million warrants attention and may reflect broader economic trends or increased competition in the region.

The bank's liquidity position remains robust, with 121% of uninsured and uncollateralized deposits covered by available liquidity sources. This strong liquidity buffer should provide reassurance to depositors and investors alike, especially in light of recent concerns in the banking sector.

The continuation of quarterly dividends at $0.26 per share demonstrates confidence in the bank's financial stability and commitment to shareholder returns. However, the pause in share repurchases could indicate a more cautious approach to capital management in the current economic climate.

As the banking industry faces challenges from rising interest rates and economic uncertainties, Central Pacific Financial's solid performance and strong market position in Hawaii could provide a competitive advantage and opportunities for growth in the coming quarters.

Highlights include:

• Net income of $15.8 million, or $0.58 per diluted share, an increase of 22.2% compared to the $12.9 million earned in the previous quarter
• Net interest margin of 2.97% increased by 14 bps from 2.83% in the previous quarter
• Total loans of $5.38 billion decreased by $17.8 million from the previous quarter
• Core deposits of $5.91 billion increased by $16.7 million from the previous quarter. Total deposits of $6.58 billion decreased by $36.4 million from the previous quarter, which included a decrease in government time deposits of $41.6 million.
• Net charge-offs of $3.8 million decreased by $0.8 million from the previous quarter
• Total risk-based capital and common equity tier 1 ratios of 15.1% and 11.9%, respectively
• The CPF Board of Directors approved a quarterly cash dividend of $0.26 per share

HONOLULU--(BUSINESS WIRE)-- Central Pacific Financial Corp. (NYSE: CPF) (the "Company"), parent company of Central Pacific Bank (the "Bank" or "CPB"), today reported net income of $15.8 million, or fully diluted earnings per share ("EPS") of $0.58 for the second quarter of 2024, compared to net income of $12.9 million, or EPS of $0.48 in the previous quarter and net income of $14.5 million, or EPS of $0.53 in the year-ago quarter.

"We continue to navigate the current environment and positive trends are developing. We are pleased with our strong second quarter financial results, which included the highest net income in our last five quarters," said Arnold Martines, Chairman, President and Chief Executive Officer. "Key contributors included NIM expansion of 14 bps, core deposit growth and improvement in net charge-offs. At the same time, we maintained solid liquidity and grew our capital levels further."

"We were recently recognized by Forbes Magazine as one of America’s Best Banks as well as the Best-In-State Bank for Hawaii in 2024. We are humbled by this recognition, proud of our employees, and thankful to our customers for the trust they place in Central Pacific Bank," Martines said.

The Board of Directors has also appointed Mr. Martines as Chairman of the Board of the Company and the Bank. Mr. Martines replaces Ms. A. Catherine Ngo who continues to serve as a member of the Board of Directors of the Company and the Bank.

Earnings Highlights

Net interest income was $51.9 million for the second quarter of 2024, which increased by $1.7 million, or 3.5% from the previous quarter, and decreased by $0.8 million, or 1.5% from the year-ago quarter. Net interest margin ("NIM") was 2.97% for the second quarter of 2024, an increase of 14 basis points ("bp" or "bps") from the previous quarter and 1 bp from the year-ago quarter. The sequential quarter increase in net interest income and NIM was primarily due to higher average yields earned on investment securities and loans, while interest-bearing liability costs remained relatively stable. The higher average yield earned on investment securities includes $0.9 million in income from an interest rate swap that became effective on March 31, 2024.

The Company recorded a provision for credit losses of $2.2 million in the second quarter of 2024, compared to a provision of $3.9 million in the previous quarter and a provision of $4.3 million in the year-ago quarter. The provision in the second quarter consisted of a provision for credit losses on loans of $2.4 million and a credit to the provision for off-balance sheet exposures of $0.2 million.

Other operating income totaled $12.1 million for the second quarter of 2024, compared to $11.2 million in the previous quarter and $10.4 million in the year-ago quarter. The higher other operating income was primarily due to higher mortgage banking income of $0.4 million and higher investment services fees of $0.6 million (included in other service charges and fees).

Other operating expense totaled $41.2 million for the second quarter of 2024, compared to $40.6 million in the previous quarter and $39.9 million in the year-ago quarter. The higher other operating expense was primarily due to higher salaries and employee benefits.

The efficiency ratio was 64.26% for the second quarter of 2024, compared to 66.05% in the previous quarter and 63.17% in the year-ago quarter.

The effective tax rate was 23.4% for the second quarter of 2024, compared to 23.5% in the previous quarter and 23.6% in the year-ago quarter.

Balance Sheet Highlights

Total assets of $7.39 billion at June 30, 2024 decreased by $23.0 million, or 0.3% from $7.41 billion at March 31, 2024, and decreased by $180.6 million, or 2.4% from $7.57 billion at June 30, 2023. The Company had $298.9 million in cash on its balance sheet and $2.56 billion in total other liquidity sources, including available borrowing capacity and unpledged investment securities at June 30, 2024. Total available sources of liquidity as a percentage of uninsured and uncollateralized deposits was 121% at June 30, 2024, compared to 118% at March 31, 2024 and 128% at June 30, 2023. During the second quarter of 2024, excess balance sheet liquidity was used to pay off $41.6 million in higher cost government time deposits.

Total loans, net of deferred fees and costs, of $5.38 billion at June 30, 2024 decreased by $17.8 million, or 0.3% from $5.40 billion at March 31, 2024, and decreased by $137.0 million, or 2.5% from $5.52 billion at June 30, 2023. Average yields earned on loans during the second quarter of 2024 was 4.80%, compared to 4.67% in the previous quarter and 4.37% in the year-ago quarter.

Total deposits of $6.58 billion at June 30, 2024 decreased by $36.4 million or 0.5% from $6.62 billion at March 31, 2024, and decreased by $223.3 million, or 3.3% from $6.81 billion at June 30, 2023. Core deposits, which include demand deposits, savings and money market deposits and time deposits up to $250,000, totaled $5.91 billion at June 30, 2024, and increased by $16.7 million, or 0.3% from $5.90 billion at March 31, 2024. Average rates paid on total deposits during the second quarter of 2024 was 1.33%, compared to 1.32% in the previous quarter and 0.84% in the year-ago quarter. Approximately 64%, 65% and 65% of the Company's total deposits were FDIC-insured or fully collateralized at June 30, 2024, March 31, 2024 and June 30, 2023, respectively.

Asset Quality

Nonperforming assets totaled $10.3 million, or 0.14% of total assets at June 30, 2024, compared to $10.1 million, or 0.14% of total assets at March 31, 2024 and $11.1 million, or 0.15% of total assets at June 30, 2023.

Net charge-offs totaled $3.8 million in the second quarter of 2024, compared to net charge-offs of $4.5 million in the previous quarter, and net charge-offs of $3.4 million in the year-ago quarter. Annualized net charge-offs as a percentage of average loans was 0.28%, 0.34% and 0.24% during the three months ended June 30, 2024, March 31, 2024 and June 30, 2023, respectively.

The allowance for credit losses, as a percentage of total loans was 1.16% at June 30, 2024, compared to 1.18% at March 31, 2024, and 1.16% at June 30, 2023.

Capital

Total shareholders' equity was $518.6 million at June 30, 2024, compared to $507.2 million and $476.3 million at March 31, 2024 and June 30, 2023, respectively.

During the second quarter of 2024, the Company did not repurchase any shares of common stock. As of June 30, 2024, $19.1 million in share repurchase authorization remained available under the Company's share repurchase program.

The Company's leverage, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 capital ratios were 9.3%, 12.8%, 15.1%, and 11.9%, respectively, at June 30, 2024, compared to 9.0%, 12.6%, 14.8%, and 11.6%, respectively, at March 31, 2024.

On July 30, 2024, the Company's Board of Directors declared a quarterly cash dividend of $0.26 per share on its outstanding common shares. The dividend will be payable on September 16, 2024 to shareholders of record at the close of business on August 30, 2024.

Conference Call

The Company's management will host a conference call today at 1:00 p.m. Eastern Time (7:00 a.m. Hawaii Time) to discuss the quarterly results. Individuals are encouraged to listen to the live webcast of the presentation by visiting the investor relations page of the Company's website at http://ir.cpb.bank. Alternatively, investors may participate in the live call by dialing 1-800-715-9871 (conference ID: 9836028). A playback of the call will be available through August 30, 2024 by dialing 1-800-770-2030 (playback ID: 9836028) and on the Company's website. Information which may be discussed in the conference call is provided in an earnings supplement presentation on the Company's website at http://ir.cpb.bank.

About Central Pacific Financial Corp.

Central Pacific Financial Corp. is a Hawaii-based bank holding company with approximately $7.39 billion in assets as of June 30, 2024. Central Pacific Bank, its primary subsidiary, operates 27 branches and 55 ATMs in the State of Hawaii. For additional information, please visit the Company's website at http://www.cpb.bank.

Equal Housing Lender
Member FDIC
NYSE Listed: CPF

Forward-Looking Statements

This document may contain forward-looking statements ("FLS") concerning: projections of revenues, expenses, income or loss, earnings or loss per share, capital expenditures, payment or nonpayment of dividends, capital position, credit losses, net interest margin or other financial items; statements of plans, objectives and expectations of Central Pacific Financial Corp. (the "Company") or its management or Board of Directors, including those relating to business plans, use of capital resources, products or services and regulatory developments and regulatory actions; statements of future economic performance including anticipated performance results from our business initiatives; or any statements of the assumptions underlying or relating to any of the foregoing. Words such as "believe," "plan," "anticipate," "seek," "expect," "intend," "forecast," "hope," "target," "continue," "remain," "estimate," "will," "should," "may" and other similar expressions are intended to identify FLS but are not the exclusive means of identifying such statements.

While we believe that our FLS and the assumptions underlying them are reasonably based, such statements and assumptions are by their nature subject to risks and uncertainties, and thus could later prove to be inaccurate or incorrect. Accordingly, actual results could differ materially from those statements or projections for a variety of reasons, including, but not limited to: the effects of inflation and interest rate fluctuations; the adverse effects of recent bank failures and the potential impact of such developments on customer confidence, deposit behavior, liquidity and regulatory responses thereto; the adverse effects of the COVID-19 pandemic virus (and its variants) and other pandemic viruses on local, national and international economies, including, but not limited to, the adverse impact on tourism and construction in the State of Hawaii, our borrowers, customers, third-party contractors, vendors and employees, as well as the effects of government programs and initiatives in response thereto; supply chain disruptions; the increase in inventory or adverse conditions in the real estate market and deterioration in the construction industry; adverse changes in the financial performance and/or condition of our borrowers and, as a result, increased loan delinquency rates, deterioration in asset quality, and losses in our loan portfolio; the impact of local, national, and international economies and events (including natural disasters such as wildfires, volcanic eruptions, hurricanes, tsunamis, storms, and earthquakes) on the Company's business and operations and on tourism, the military, and other major industries operating within the Hawaii market and any other markets in which the Company does business; deterioration or malaise in domestic economic conditions, including any destabilization in the financial industry and deterioration of the real estate market, as well as the impact of declining levels of consumer and business confidence in the state of the economy in general and in financial institutions in particular; changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, changes in capital standards, other regulatory reform and federal and state legislation, including but not limited to regulations promulgated by the Consumer Financial Protection Bureau, government-sponsored enterprise reform, and any related rules and regulations which affect our business operations and competitiveness; the costs and effects of legal and regulatory developments, including legal proceedings and lawsuits we are or may become subject to, or regulatory or other governmental inquiries and proceedings and the resolution thereof; the results of regulatory examinations or reviews and the effect of, and our ability to comply with, any regulations or regulatory orders or actions we are or may become subject to, and the effect of any recurring or special FDIC assessments; the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters and the cost and resources required to implement such changes; the effects of and changes in trade, monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System; securities market and monetary fluctuations, including the impact resulting from the elimination of the London Interbank Offered Rate Index; negative trends in our market capitalization and adverse changes in the price of the Company's common stock; the effects of any acquisitions or dispositions we may make; political instability; acts of war or terrorism; changes in consumer spending, borrowings and savings habits; technological changes and developments; cybersecurity and data privacy breaches and the consequence therefrom; failure to maintain effective internal control over financial reporting or disclosure controls and procedures; our ability to address deficiencies in our internal controls over financial reporting or disclosure controls and procedures; changes in the competitive environment among financial holding companies and other financial service providers; our ability to successfully implement our initiatives to lower our efficiency ratio; our ability to attract and retain key personnel; changes in our personnel, organization, compensation and benefit plans; our ability to successfully implement and achieve the objectives of our Banking-as-a-Service initiatives, including adoption of the initiatives by customers and risks faced by any of our bank collaborations including reputational and regulatory risk; and our success at managing the risks involved in the foregoing items.

For further information with respect to factors that could cause actual results to materially differ from the expectations or projections stated in the FLS, please see the Company's publicly available Securities and Exchange Commission filings, including the Company's Form 10-K for the last fiscal year and, in particular, the discussion of "Risk Factors" set forth therein. We urge investors to consider all of these factors carefully in evaluating the FLS contained in this document. FLS speak only as of the date on which such statements are made. We undertake no obligation to update any FLS to reflect events or circumstances after the date on which such statements are made, or to reflect the occurrence of unanticipated events except as required by law.

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Financial Highlights
(Unaudited)																						TABLE 1
		Three Months Ended																				Six Months Ended
(Dollars in thousands,		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,				Jun 30,
except for per share amounts)		2024				2024				2023				2023				2023				2024				2023
CONDENSED INCOME STATEMENT
Net interest income		$	51,921			$	50,187			$	51,142			$	51,928			$	52,734			$	102,108			$	106,930
Provision for credit losses			2,239				3,936				4,653				4,874				4,319				6,175				6,171
Total other operating income			12,121				11,244				15,172				10,047				10,435				23,365				21,444
Total other operating expense			41,151				40,576				42,522				39,611				39,903				81,727				82,010
Income tax expense			4,835				3,974				4,273				4,349				4,472				8,809				9,531
Net income			15,817				12,945				14,866				13,141				14,475				28,762				30,662
Basic earnings per share		$	0.58			$	0.48			$	0.55			$	0.49			$	0.54			$	1.06			$	1.14
Diluted earnings per share			0.58				0.48				0.55				0.49				0.53				1.06				1.13
Dividends declared per share			0.26				0.26				0.26				0.26				0.26				0.52				0.52
PERFORMANCE RATIOS
Return on average assets (ROA) [1]			0.86	%			0.70	%			0.79	%			0.70	%			0.78	%			0.78	%			0.82	%
Return on average shareholders’ equity (ROE) [1]			12.42				10.33				12.55				10.95				12.12				11.38				13.03
Average shareholders’ equity to average assets			6.94				6.73				6.32				6.39				6.40				6.83				6.31
Efficiency ratio [2]			64.26				66.05				64.12				63.91				63.17				65.14				63.88
Net interest margin (NIM) [1]			2.97				2.83				2.84				2.88				2.96				2.90				3.02
Dividend payout ratio [3]			44.83				54.17				47.27				53.06				49.06				49.06				46.02
SELECTED AVERAGE BALANCES
Average loans, including loans held for sale		$	5,385,829			$	5,400,558			$	5,458,245			$	5,507,248			$	5,543,398			$	5,393,193			$	5,534,741
Average interest-earning assets			7,032,515				7,140,264				7,208,613				7,199,866				7,155,606				7,086,389				7,134,111
Average assets			7,338,714				7,449,661				7,498,097				7,510,537				7,463,629				7,394,188				7,453,753
Average deposits			6,542,767				6,659,812				6,730,883				6,738,071				6,674,650				6,601,290				6,665,208
Average interest-bearing liabilities			4,910,998				5,009,542				5,023,321				4,999,820				4,908,120				4,960,270				4,864,633
Average shareholders’ equity			509,507				501,120				473,708				480,118				477,711				505,314				470,673

[1]		ROA and ROE are annualized based on a 30/360 day convention. Annualized net interest income and expense in the NIM calculation are based on the day count interest payment conventions at the interest-earning asset or interest-bearing liability level (i.e. 30/360, actual/actual).
[2]		Efficiency ratio is defined as total other operating expense divided by total revenue (net interest income and total other operating income).
[3]		Dividend payout ratio is defined as dividends declared per share divided by diluted earnings per share.

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Financial Highlights
(Unaudited)										TABLE 1 (CONTINUED)
		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,
		2024				2024				2023				2023				2023
REGULATORY CAPITAL RATIOS
Central Pacific Financial Corp.
Leverage ratio			9.3	%			9.0	%			8.8	%			8.7	%			8.7	%
Tier 1 risk-based capital ratio			12.8				12.6				12.4				11.9				11.8
Total risk-based capital ratio			15.1				14.8				14.6				14.1				13.9
Common equity tier 1 capital ratio			11.9				11.6				11.4				11.0				10.9
Central Pacific Bank
Leverage ratio			9.6				9.4				9.2				9.1				9.1
Tier 1 risk-based capital ratio			13.3				13.1				12.9				12.4				12.3
Total risk-based capital ratio			14.5				14.3				14.1				13.7				13.5
Common equity tier 1 capital ratio			13.3				13.1				12.9				12.4				12.3
		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,
(dollars in thousands, except for per share amounts)		2024				2024				2023				2023				2023
BALANCE SHEET
Total loans, net of deferred fees and costs		$	5,383,644			$	5,401,417			$	5,438,982			$	5,508,710			$	5,520,683
Total assets			7,386,952				7,409,999				7,642,796				7,637,924				7,567,592
Total deposits			6,582,455				6,618,854				6,847,592				6,874,745				6,805,737
Long-term debt			156,223				156,163				156,102				156,041				155,981
Total shareholders’ equity			518,647				507,203				503,815				468,598				476,279
Total shareholders’ equity to total assets			7.02	%			6.84	%			6.59	%			6.14	%			6.29	%
ASSET QUALITY
Allowance for credit losses (ACL)		$	62,225			$	63,532			$	63,934			$	64,517			$	63,849
Nonaccrual loans			10,257				10,132				7,008				6,652				11,061
Non-performing assets (NPA)			10,257				10,132				7,008				6,652				11,061
Ratio of ACL to total loans			1.16	%			1.18	%			1.18	%			1.17	%			1.16	%
Ratio of NPA to total assets			0.14	%			0.14	%			0.09	%			0.09	%			0.15	%
PER SHARE OF COMMON STOCK OUTSTANDING
Book value per common share		$	19.16			$	18.76			$	18.63			$	17.33			$	17.61
Closing market price per common share			21.20				19.75				19.68				16.68				15.71

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)										TABLE 2
		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,
(Dollars in thousands, except share data)		2024				2024				2023				2023				2023
ASSETS
Cash and due from financial institutions		$	103,829			$	98,410			$	116,181			$	108,818			$	129,071
Interest-bearing deposits in other financial institutions			195,062				214,472				406,256				329,913				181,913
Investment securities:
Available-for-sale debt securities, at fair value			676,719				660,833				647,210				625,253				664,071
Held-to-maturity debt securities, at amortized cost; fair value of: $528,088 at June 30, 2024, $541,685 at March 31, 2024, $565,178 at December 31, 2023, $531,887 at September 30, 2023, and $581,222 at June 30, 2023			615,867				624,948				632,338				640,053				649,946
Total investment securities			1,292,586				1,285,781				1,279,548				1,265,306				1,314,017
Loans held for sale			3,950				755				1,778				—				2,593
Loans, net of deferred fees and costs			5,383,644				5,401,417				5,438,982				5,508,710				5,520,683
Less: allowance for credit losses			(62,225	)			(63,532	)			(63,934	)			(64,517	)			(63,849	)
Loans, net of allowance for credit losses			5,321,419				5,337,885				5,375,048				5,444,193				5,456,834
Premises and equipment, net			100,646				97,688				96,184				97,378				96,479
Accrued interest receivable			23,184				21,957				21,511				21,529				20,463
Investment in unconsolidated entities			40,155				40,780				41,546				42,523				45,218
Mortgage servicing rights			8,636				8,599				8,696				8,797				8,843
Bank-owned life insurance			173,716				172,228				170,706				168,543				168,136
Federal Home Loan Bank of Des Moines ("FHLB") stock			6,925				6,921				6,793				10,995				10,960
Right-of-use lease assets			32,081				32,079				29,720				32,294				33,247
Other assets			84,763				92,444				88,829				107,635				99,818
Total assets		$	7,386,952			$	7,409,999			$	7,642,796			$	7,637,924			$	7,567,592
LIABILITIES
Deposits:
Noninterest-bearing demand		$	1,847,173			$	1,848,554			$	1,913,379			$	1,969,523			$	2,009,387
Interest-bearing demand			1,283,669				1,290,321				1,329,189				1,345,843				1,359,978
Savings and money market			2,234,111				2,211,966				2,209,733				2,209,550				2,184,652
Time			1,217,502				1,268,013				1,395,291				1,349,829				1,251,720
Total deposits			6,582,455				6,618,854				6,847,592				6,874,745				6,805,737
Long-term debt, net of unamortized debt issuance costs of: $324 at June 30, 2024, $384 at March 31, 2024, $445 at December 31, 2023, $506 at September 30, 2023 and $566 at June 30, 2023			156,223				156,163				156,102				156,041				155,981
Lease liabilities			33,422				33,169				30,634				33,186				34,111
Accrued interest payable			14,998				16,654				18,948				16,752				11,402
Other liabilities			81,207				77,956				85,705				88,602				84,082
Total liabilities			6,868,305				6,902,796				7,138,981				7,169,326				7,091,313
EQUITY
Shareholders' equity:
Preferred stock, no par value, authorized 1,000,000 shares; issued and outstanding: none at June 30, 2024, March 31, 2024, December 31, 2023, September 30, 2023, and June 30, 2023			—				—				—				—				—
Common stock, no par value, authorized 185,000,000 shares; issued and outstanding: 27,063,644 at June 30, 2024, 27,042,326 at March 31, 2024, 27,045,033 at December 31, 2023, 27,043,169 at September 30, 2023, and 27,045,792 at June 30, 2023			404,494				404,494				405,439				405,439				405,511
Additional paid-in capital			104,161				103,130				102,982				102,550				101,997
Retained earnings			132,683				123,902				117,990				110,156				104,046
Accumulated other comprehensive loss			(122,691	)			(124,323	)			(122,596	)			(149,547	)			(135,275	)
Total shareholders' equity			518,647				507,203				503,815				468,598				476,279
Total liabilities and equity		$	7,386,952			$	7,409,999			$	7,642,796			$	7,637,924			$	7,567,592

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)																						TABLE 3
		Three Months Ended																				Six Months Ended
		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,				Jun 30,
(Dollars in thousands, except per share data)		2024				2024				2023				2023				2023				2024				2023
Interest income:
Interest and fees on loans		$	64,422			$	62,819			$	62,429			$	62,162			$	60,455			$	127,241			$	118,724
Interest and dividends on investment securities:
Taxable investment securities			8,466				7,211				7,292				7,016				7,145				15,677				14,481
Tax-exempt investment securities			598				655				686				709				727				1,253				1,517
Interest on deposits in other financial institutions			2,203				3,611				3,597				2,412				877				5,814				1,154
Dividend income on FHLB stock			151				106				109				113				120				257				256
Total interest income			75,840				74,402				74,113				72,412				69,324				150,242				136,132
Interest expense:
Interest on deposits:
Interest-bearing demand			490				499				467				460				411				989				774
Savings and money market			8,977				8,443				7,459				6,464				4,670				17,420				8,056
Time			12,173				12,990				12,741				11,268				8,932				25,163				15,196
Interest on short-term borrowings			1				—				—				—				378				1				1,139
Interest on long-term debt			2,278				2,283				2,304				2,292				2,199				4,561				4,037
Total interest expense			23,919				24,215				22,971				20,484				16,590				48,134				29,202
Net interest income			51,921				50,187				51,142				51,928				52,734				102,108				106,930
Provision for credit losses			2,239				3,936				4,653				4,874				4,319				6,175				6,171
Net interest income after provision for credit losses			49,682				46,251				46,489				47,054				48,415				95,933				100,759
Other operating income:
Mortgage banking income			1,040				613				611				765				690				1,653				1,216
Service charges on deposit accounts			2,135				2,103				2,312				2,193				2,137				4,238				4,248
Other service charges and fees			5,869				5,261				5,349				5,203				4,994				11,130				9,979
Income from fiduciary activities			1,449				1,435				1,272				1,234				1,068				2,884				2,389
Income from bank-owned life insurance			1,234				1,522				2,015				379				1,185				2,756				2,476
Net loss on sales of investment securities			—				—				(1,939	)			(135	)			—				—				—
Other			394				310				5,552				408				361				704				1,136
Total other operating income			12,121				11,244				15,172				10,047				10,435				23,365				21,444
Other operating expense:
Salaries and employee benefits			21,246				20,735				20,164				19,015				20,848				41,981				42,871
Net occupancy			4,597				4,600				4,676				4,725				4,310				9,197				8,784
Computer software			4,381				4,287				4,026				4,473				4,621				8,668				9,227
Legal and professional services			2,506				2,320				2,245				2,359				2,469				4,826				5,355
Equipment			995				1,010				968				1,112				932				2,005				1,878
Advertising			901				914				1,045				968				942				1,815				1,875
Communication			657				837				632				809				791				1,494				1,569
Other			5,868				5,873				8,766				6,150				4,990				11,741				10,451
Total other operating expense			41,151				40,576				42,522				39,611				39,903				81,727				82,010
Income before income taxes			20,652				16,919				19,139				17,490				18,947				37,571				40,193
Income tax expense			4,835				3,974				4,273				4,349				4,472				8,809				9,531
Net income		$	15,817			$	12,945			$	14,866			$	13,141			$	14,475			$	28,762			$	30,662
Per common share data:
Basic earnings per share		$	0.58			$	0.48			$	0.55			$	0.49			$	0.54			$	1.06			$	1.14
Diluted earnings per share			0.58				0.48				0.55				0.49				0.53				1.06				1.13
Cash dividends declared			0.26				0.26				0.26				0.26				0.26				0.52				0.52
Basic weighted average shares outstanding			27,053,549				27,046,525				27,044,121				27,042,762				27,024,043				27,050,037				27,011,659
Diluted weighted average shares outstanding			27,116,349				27,099,101				27,097,285				27,079,484				27,071,478				27,106,267				27,090,258

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Average Balances, Interest Income & Expense, Yields and Rates (Taxable Equivalent)
(Unaudited)											TABLE 4
		Three Months Ended									Three Months Ended									Three Months Ended
		June 30, 2024									March 31, 2024									June 30, 2023
		Average			Average						Average			Average						Average			Average
(Dollars in thousands)		Balance			Yield/Rate			Interest			Balance			Yield/Rate			Interest			Balance			Yield/Rate			Interest
ASSETS
Interest-earning assets:
Interest-bearing deposits in other financial institutions		$	162,393		5.46	%		$	2,203		$	265,418		5.47	%		$	3,611		$	69,189		5.08	%		$	877
Investment securities:
Taxable			1,335,100		2.54				8,466			1,324,657		2.18				7,211			1,379,319		2.07				7,145
Tax-exempt [1]			142,268		2.13				757			142,830		2.32				829			151,979		2.42				920
Total investment securities			1,477,368		2.50				9,223			1,467,487		2.19				8,040			1,531,298		2.11				8,065
Loans, including loans held for sale			5,385,829		4.80				64,422			5,400,558		4.67				62,819			5,543,398		4.37				60,455
FHLB stock			6,925		8.71				151			6,801		6.24				106			11,721		4.10				120
Total interest-earning assets			7,032,515		4.34				75,999			7,140,264		4.19				74,576			7,155,606		3.89				69,517
Noninterest-earning assets			306,199									309,397									308,023
Total assets		$	7,338,714								$	7,449,661								$	7,463,629
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits		$	1,273,901		0.15	%		$	490		$	1,296,865		0.15	%		$	499		$	1,367,878		0.12	%		$	411
Savings and money market deposits			2,221,754		1.63				8,977			2,218,250		1.53				8,443			2,172,680		0.86				4,670
Time deposits up to $250,000			555,809		3.29				4,548			544,279		3.21				4,339			390,961		1.82				1,770
Time deposits over $250,000			703,280		4.36				7,625			794,019		4.38				8,651			790,864		3.63				7,162
Total interest-bearing deposits			4,754,744		1.83				21,640			4,853,413		1.82				21,932			4,722,383		1.19				14,013
FHLB advances and other short-term borrowings			66		5.60				1			—		—				—			29,791		5.09				378
Long-term debt			156,188		5.86				2,278			156,129		5.88				2,283			155,946		5.65				2,199
Total interest-bearing liabilities			4,910,998		1.96				23,919			5,009,542		1.94				24,215			4,908,120		1.36				16,590
Noninterest-bearing deposits			1,788,023									1,806,399									1,952,267
Other liabilities			130,186									132,600									125,531
Total liabilities			6,829,207									6,948,541									6,985,918
Total equity			509,507									501,120									477,711
Total liabilities and equity		$	7,338,714								$	7,449,661								$	7,463,629
Net interest income								$	52,080								$	50,361								$	52,927
Interest rate spread					2.38	%								2.25	%								2.53	%
Net interest margin					2.97	%								2.83	%								2.96	%

[1]		Interest income and resultant yield information for tax-exempt investment securities is expressed on a taxable-equivalent basis using a federal statutory tax rate of 21%.

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Average Balances, Interest Income & Expense, Yields and Rates (Taxable Equivalent)
(Unaudited)											TABLE 5
		Six Months Ended									Six Months Ended
		June 30, 2024									June 30, 2023
		Average			Average						Average			Average
(Dollars in thousands)		Balance			Yield/Rate			Interest			Balance			Yield/Rate			Interest
ASSETS
Interest-earning assets:
Interest-bearing deposits in other financial institutions		$	213,905		5.47	%		$	5,814		$	47,195		4.93	%		$	1,154
Investment securities:
Taxable			1,329,879		2.36				15,677			1,387,606		2.09				14,481
Tax-exempt [1]			142,549		2.23				1,586			152,520		2.52				1,920
Total investment securities			1,472,428		2.34				17,263			1,540,126		2.13				16,401
Loans, including loans held for sale			5,393,193		4.74				127,241			5,534,741		4.32				118,724
FHLB stock			6,863		7.49				257			12,049		4.26				256
Total interest-earning assets			7,086,389		4.26				150,575			7,134,111		3.85				136,535
Noninterest-earning assets			307,799									319,642
Total assets		$	7,394,188								$	7,453,753
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits		$	1,285,383		0.15	%		$	989		$	1,391,386		0.11	%		$	774
Savings and money market deposits			2,220,002		1.58				17,420			2,177,783		0.75				8,056
Time deposits up to $250,000			550,044		3.25				8,887			366,316		1.60				2,907
Time deposits over $250,000			748,649		4.37				16,276			740,428		3.35				12,289
Total interest-bearing deposits			4,804,078		1.82				43,572			4,675,913		1.04				24,026
FHLB advances and other short-term borrowings			33		5.60				1			47,031		4.88				1,139
Long-term debt			156,159		5.87				4,561			141,689		5.75				4,037
Total interest-bearing liabilities			4,960,270		1.95				48,134			4,864,633		1.21				29,202
Noninterest-bearing deposits			1,797,212									1,989,295
Other liabilities			131,392									129,152
Total liabilities			6,888,874									6,983,080
Total equity			505,314									470,673
Total liabilities and equity		$	7,394,188								$	7,453,753
Net interest income								$	102,441								$	107,333
Interest rate spread					2.31	%								2.64	%
Net interest margin					2.90	%								3.02	%

[1]		Interest income and resultant yield information for tax-exempt investment securities is expressed on a taxable-equivalent basis using a federal statutory tax rate of 21%.

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Loans by Geographic Distribution
(Unaudited)										TABLE 6
		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,
(Dollars in thousands)		2024				2024				2023				2023				2023
HAWAII:
Commercial and industrial		$	415,538			$	420,009			$	421,736			$	406,433			$	374,601
Real estate:
Construction			147,657				145,213				163,337				174,057				168,012
Residential mortgage			1,913,177				1,924,889				1,927,789				1,930,740				1,942,906
Home equity			706,811				729,210				736,524				753,980				750,760
Commercial mortgage			1,150,703				1,103,174				1,063,969				1,045,625				1,037,826
Consumer			287,295				306,563				322,346				338,248				327,790
Total loans, net of deferred fees and costs			4,621,181				4,629,058				4,635,701				4,649,083				4,601,895
Less: Allowance for credit losses			(47,902	)			(48,739	)			(48,189	)			(48,105	)			(44,828	)
Loans, net of allowance for credit losses		$	4,573,279			$	4,580,319			$	4,587,512			$	4,600,978			$	4,557,067
U.S. MAINLAND: [1]
Commercial and industrial		$	169,318			$	156,087			$	153,971			$	157,373			$	170,557
Real estate:
Construction			23,865				23,356				22,182				37,455				32,807
Commercial mortgage			314,667				319,088				318,933				319,802				329,736
Consumer			254,613				273,828				308,195				344,997				385,688
Total loans, net of deferred fees and costs			762,463				772,359				803,281				859,627				918,788
Less: Allowance for credit losses			(14,323	)			(14,793	)			(15,745	)			(16,412	)			(19,021	)
Loans, net of allowance for credit losses		$	748,140			$	757,566			$	787,536			$	843,215			$	899,767
TOTAL:
Commercial and industrial		$	584,856			$	576,096			$	575,707			$	563,806			$	545,158
Real estate:
Construction			171,522				168,569				185,519				211,512				200,819
Residential mortgage			1,913,177				1,924,889				1,927,789				1,930,740				1,942,906
Home equity			706,811				729,210				736,524				753,980				750,760
Commercial mortgage			1,465,370				1,422,262				1,382,902				1,365,427				1,367,562
Consumer			541,908				580,391				630,541				683,245				713,478
Total loans, net of deferred fees and costs			5,383,644				5,401,417				5,438,982				5,508,710				5,520,683
Less: Allowance for credit losses			(62,225	)			(63,532	)			(63,934	)			(64,517	)			(63,849	)
Loans, net of allowance for credit losses		$	5,321,419			$	5,337,885			$	5,375,048			$	5,444,193			$	5,456,834

[1]		U.S. Mainland includes territories of the United States.

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Deposits
(Unaudited)										TABLE 7
		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,
(Dollars in thousands)		2024				2024				2023				2023				2023
Noninterest-bearing demand		$	1,847,173			$	1,848,554			$	1,913,379			$	1,969,523			$	2,009,387
Interest-bearing demand			1,283,669				1,290,321				1,329,189				1,345,843				1,359,978
Savings and money market			2,234,111				2,211,966				2,209,733				2,209,550				2,184,652
Time deposits up to $250,000			547,212				544,600				533,898				465,543				427,864
Core deposits			5,912,165				5,895,441				5,986,199				5,990,459				5,981,881
Government time deposits			193,833				235,463				374,581				400,130				383,426
Other time deposits greater than $250,000			476,457				487,950				486,812				484,156				440,430
Total time deposits greater than $250,000			670,290				723,413				861,393				884,286				823,856
Total deposits		$	6,582,455			$	6,618,854			$	6,847,592			$	6,874,745			$	6,805,737

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Nonperforming Assets and Accruing Loans 90+ Days Past Due
(Unaudited)										TABLE 8
		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,
(Dollars in thousands)		2024				2024				2023				2023				2023
Nonaccrual loans:
Commercial and industrial		$	355			$	357			$	432			$	352			$	319
Real estate:
Construction			—				—				—				—				4,851
Residential mortgage			7,991				7,979				4,962				4,949				4,385
Home equity			1,247				929				834				677				797
Commercial mortgage			77				77				77				77				77
Consumer			587				790				703				597				632
Total nonaccrual loans			10,257				10,132				7,008				6,652				11,061
Other real estate owned ("OREO")			—				—				—				—				—
Total nonperforming assets ("NPAs")			10,257				10,132				7,008				6,652				11,061
Accruing loans 90+ days past due:
Real estate:
Construction			—				588				—				—				—
Residential mortgage			1,273				386				—				794				959
Home equity			135				560				229				—				133
Consumer			896				924				1,083				2,120				2,207
Total accruing loans 90+ days past due			2,304				2,458				1,312				2,914				3,299
Total NPAs and accruing loans 90+ days past due		$	12,561			$	12,590			$	8,320			$	9,566			$	14,360
Ratio of total nonaccrual loans to total loans			0.19	%			0.19	%			0.13	%			0.12	%			0.20	%
Ratio of total NPAs to total assets			0.14				0.14				0.09				0.09				0.15
Ratio of total NPAs to total loans and OREO			0.19				0.19				0.13				0.12				0.20
Ratio of total NPAs and accruing loans 90+ days past due to total loans and OREO			0.23				0.23				0.15				0.17				0.26
Quarter-to-quarter changes in NPAs:
Balance at beginning of quarter		$	10,132			$	7,008			$	6,652			$	11,061			$	5,313
Additions			1,920				4,792				1,836				2,311				7,105
Reductions:
Payments			(363	)			(263	)			(268	)			(5,718	)			(290	)
Return to accrual status			(27	)			(198	)			(137	)			(207	)			(212	)
Charge-offs, valuation and other adjustments			(1,405	)			(1,207	)			(1,075	)			(795	)			(855	)
Total reductions			(1,795	)			(1,668	)			(1,480	)			(6,720	)			(1,357	)
Balance at end of quarter		$	10,257			$	10,132			$	7,008			$	6,652			$	11,061

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Allowance for Credit Losses on Loans
(Unaudited)																						TABLE 9
		Three Months Ended																				Six Months Ended
		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,				Jun 30,
(Dollars in thousands)		2024				2024				2023				2023				2023				2024				2023
Allowance for credit losses:
Balance at beginning of period		$	63,532			$	63,934			$	64,517			$	63,849			$	63,099			$	63,934			$	63,738
Provision for credit losses on loans			2,448				4,121				4,959				4,526				4,135				6,569				5,750
Charge-offs:
Commercial and industrial			(519	)			(682	)			(419	)			(402	)			(362	)			(1,201	)			(1,141	)
Real estate:
Residential mortgage			(284	)			—				—				—				—				(284	)			—
Consumer			(4,345	)			(4,838	)			(5,976	)			(4,710	)			(3,873	)			(9,183	)			(6,559	)
Total charge-offs			(5,148	)			(5,520	)			(6,395	)			(5,112	)			(4,235	)			(10,668	)			(7,700	)
Recoveries:
Commercial and industrial			130				90				84				261				125				220				375
Real estate:
Construction			—				—				—				1				—				—				—
Residential mortgage			9				8				7				10				7				17				60
Home equity			—				6				42				—				15				6				15
Consumer			1,254				893				720				982				703				2,147				1,611
Total recoveries			1,393				997				853				1,254				850				2,390				2,061
Net charge-offs			(3,755	)			(4,523	)			(5,542	)			(3,858	)			(3,385	)			(8,278	)			(5,639	)
Balance at end of period		$	62,225			$	63,532			$	63,934			$	64,517			$	63,849			$	62,225			$	63,849
Average loans, net of deferred fees and costs		$	5,385,829			$	5,400,558			$	5,458,245			$	5,507,248			$	5,543,398			$	5,393,193			$	5,534,741
Ratio of annualized net charge-offs to average loans			0.28	%			0.34	%			0.41	%			0.28	%			0.24	%			0.31	%			0.20	%
Ratio of ACL to total loans			1.16				1.18				1.18				1.17				1.16				1.16	%			1.16	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240731076743/en/

Investor Contact:

Ian Tanaka

SVP, Treasury Manager

(808) 544-3646

ian.tanaka@cpb.bank



Media Contact:

Tim Sakahara

AVP, Corporate Communications Manager

(808) 544-5125

tim.sakahara@cpb.bank

Source: Central Pacific Financial Corp.

FAQ

What was Central Pacific Financial's (CPF) net income for Q2 2024?

Central Pacific Financial (CPF) reported a net income of $15.8 million, or $0.58 per diluted share, for the second quarter of 2024.

How did CPF's net interest margin (NIM) change in Q2 2024?

CPF's net interest margin (NIM) increased to 2.97% in Q2 2024, up 14 basis points from 2.83% in the previous quarter.

What was the total loan balance for Central Pacific Financial (CPF) at the end of Q2 2024?

Central Pacific Financial's (CPF) total loans, net of deferred fees and costs, were $5.38 billion at June 30, 2024, decreasing by $17.8 million from the previous quarter.

Did Central Pacific Financial (CPF) declare a dividend for Q2 2024?

Yes, Central Pacific Financial's (CPF) Board of Directors declared a quarterly cash dividend of $0.26 per share on July 30, 2024, payable on September 16, 2024.