Highlights include:
- Net income of $13.3 million, or $0.49 per diluted share.
Excluding $3.1 million in pre-tax expenses related to a strategic
opportunity, adjusted net income (non-GAAP) was $15.7 million, or
$0.58 per diluted share.
- Net interest margin of 3.07% increased by 10 bps from 2.97%
in the previous quarter
- Total loans of $5.34 billion decreased by $41.0 million from
the previous quarter
- Core deposits of $5.97 billion increased by $53.9 million
from the previous quarter. Total deposits of $6.58 billion
increased by $0.6 million from the previous quarter, which included
a decrease in government time deposits of $69.1 million.
- Total risk-based capital and common equity tier 1 ratios of
15.3% and 12.1%, respectively
- The CPF Board of Directors approved a quarterly cash
dividend of $0.26 per share
Central Pacific Financial Corp. (NYSE: CPF) (the "Company"),
parent company of Central Pacific Bank (the "Bank" or "CPB"), today
reported net income of $13.3 million, or fully diluted earnings per
share ("EPS") of $0.49 for the third quarter of 2024, compared to
net income of $15.8 million, or EPS of $0.58 in the previous
quarter and net income of $13.1 million, or EPS of $0.49 in the
year-ago quarter. Results for the third quarter of 2024 were
impacted by $3.1 million in pre-tax expenses related to our
evaluation and assessment of a strategic opportunity. While the
parties are no longer currently engaged in discussions, we remain
interested in the opportunity under the right terms and conditions.
Excluding these expenses, adjusted net income and EPS (non-GAAP)
for the quarter was approximately $15.7 million and $0.58,
respectively.
"Our third quarter core results were strong and we continue to
pursue our strategies for future growth and additional internal
operating efficiencies," said Arnold Martines, Chairman, President
and Chief Executive Officer. "Our net interest income and net
interest margin expanded as we successfully managed the balance
sheet and repricing in this evolving interest rate
environment."
"Central Pacific remains committed to supporting our customers
and communities. We were pleased to open a new state-of-the-art
branch in Kahului to support the business and personal financial
needs of the Maui community as we move to expand our presence on
the neighbor islands," Martines said.
Earnings Highlights
Net interest income was $53.9 million for the third quarter of
2024, which increased by $1.9 million, or 3.7% from the previous
quarter, and increased by $1.9 million, or 3.7% from the year-ago
quarter. Net interest margin ("NIM") was 3.07% for the third
quarter of 2024, an increase of 10 basis points ("bp" or "bps")
from the previous quarter and an increase of 19 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 of 11 and 9 bps, respectively,
combined with a 1 bp decline in average rates paid on
interest-bearing deposits. The higher average yield earned on
investment securities in the third quarter of 2024 includes $1.1
million in income from an interest rate swap that became effective
on March 31, 2024, compared to $0.9 million in the second quarter
of 2024.
The Company recorded a provision for credit losses of $2.8
million in the third quarter of 2024, compared to a provision of
$2.2 million in the previous quarter and a provision of $4.9
million in the year-ago quarter. The provision in the current
quarter consisted of a provision for credit losses on loans of $3.0
million, offset by a credit to the provision for off-balance sheet
exposures of $0.2 million.
Other operating income totaled $12.7 million for the third
quarter of 2024, compared to $12.1 million in the previous quarter
and $10.0 million in the year-ago quarter. The higher other
operating income was primarily due to higher income from bank-owned
life insurance of $0.7 million, partially offset by lower mortgage
banking income of $0.2 million.
Other operating expense totaled $46.7 million for the third
quarter of 2024, compared to $41.2 million in the previous quarter
and $39.6 million in the year-ago quarter. The higher other
operating expense was primarily due to the aforementioned $3.1
million in expenses related to a strategic opportunity (included in
other), higher salaries and employee benefits of $1.1 million, and
higher directors' deferred compensation plan expenses of $1.0
million (included in other).
The efficiency ratio was 70.12% for the third quarter of 2024,
compared to 64.26% in the previous quarter and 63.91% in the
year-ago quarter. Excluding the aforementioned expenses related to
a strategic opportunity, the adjusted efficiency ratio (non-GAAP)
for the third quarter of 2024 was 65.51%.
The effective tax rate was 22.0% for the third quarter of 2024,
compared to 23.4% in the previous quarter and 24.9% in the year-ago
quarter. The decrease in the effective tax rate was primarily due
to higher tax-exempt income from bank-owned life insurance and
additional tax credits recognized.
Balance Sheet Highlights
Total assets of $7.42 billion at September 30, 2024 increased by
$28.5 million, or 0.4% from $7.39 billion at June 30, 2024, and
decreased by $222.5 million, or 2.9% from $7.64 billion at
September 30, 2023. The Company had $326.6 million in cash on its
balance sheet and $2.55 billion in total other liquidity sources,
including available borrowing capacity and unpledged investment
securities at September 30, 2024. Total available sources of
liquidity as a percentage of uninsured and uncollateralized
deposits was 118% at September 30, 2024, compared to 121% at June
30, 2024 and 122% at September 30, 2023. During the third quarter
of 2024, excess balance sheet liquidity was used to pay off $69.1
million in higher cost government time deposits.
Total loans, net of deferred fees and costs, of $5.34 billion at
September 30, 2024 decreased by $41.0 million, or 0.8% from $5.38
billion at June 30, 2024, and decreased by $166.1 million, or 3.0%
from $5.51 billion at September 30, 2023. Average yields earned on
loans during the third quarter of 2024 was 4.89%, compared to 4.80%
in the previous quarter and 4.49% in the year-ago quarter.
Total deposits of $6.58 billion at September 30, 2024 increased
by $0.6 million or 0.01% from $6.58 billion at June 30, 2024, and
decreased by $291.7 million, or 4.2% from $6.87 billion at
September 30, 2023. Core deposits, which include demand deposits,
savings and money market deposits and time deposits up to $250,000,
totaled $5.97 billion at September 30, 2024, and increased by $53.9
million, or 0.9% from $5.91 billion at June 30, 2024. Average rates
paid on total deposits during the third quarter of 2024 was 1.32%,
compared to 1.33% in the previous quarter and 1.07% in the year-ago
quarter. FDIC-insured or fully collateralized deposits represented
approximately 63% of total deposits at September 30, 2024, compared
to 64% at June 30, 2024 and 65% at September 30, 2023.
Asset Quality
Nonperforming assets totaled $11.6 million, or 0.16% of total
assets at September 30, 2024, compared to $10.3 million, or 0.14%
of total assets at June 30, 2024 and $6.7 million, or 0.09% of
total assets at September 30, 2023. The increase in nonperforming
assets was primarily due to the addition of residential mortgage
loans totaling $2.2 million which were well-collateralized with
strong loan-to-value ratios.
Net charge-offs totaled $3.6 million in the third quarter of
2024, compared to net charge-offs of $3.8 million in the previous
quarter, and net charge-offs of $3.9 million in the year-ago
quarter. Annualized net charge-offs as a percentage of average
loans was 0.27%, 0.28% and 0.28% during the three months ended
September 30, 2024, June 30, 2024 and September 30, 2023,
respectively.
The allowance for credit losses, as a percentage of total loans
was 1.15% at September 30, 2024, compared to 1.16% at June 30,
2024, and 1.17% at September 30, 2023.
Capital
Total shareholders' equity was $543.7 million at September 30,
2024, compared to $518.6 million and $468.6 million at June 30,
2024 and September 30, 2023, respectively.
During the third quarter of 2024, the Company did not repurchase
any shares of common stock. As of September 30, 2024, $19.1 million
in share repurchase authorization remained available under the
Company's share repurchase program.
The Company's leverage, common equity tier 1, tier 1 risk-based
capital, and total risk-based capital ratios were 9.5%, 12.1%,
13.1%, and 15.3%, respectively, at September 30, 2024, compared to
9.3%, 11.9%, 12.8%, and 15.1%, respectively, at June 30, 2024.
On October 29, 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 December 16, 2024 to
shareholders of record at the close of business on November 29,
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: 6299769). A playback of the call
will be available through November 29, 2024 by dialing
1-800-770-2030 (playback ID: 6299769) 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 $7.42 billion in assets as of September
30, 2024. Central Pacific Bank, its primary subsidiary, operates 27
branches and 56 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; labor contract disputes and potential strikes;
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 PCAOB, the FASB 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 LIBOR Index; negative trends
in our market capitalization and adverse changes in the price of
the Company's common stock; the effects of any potential or actual
acquisitions or dispositions we may make or evaluate, and the
related costs, including re-engagement in any potential acquisition
process; 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 BaaS 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 SEC 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
Nine Months Ended
(Dollars in thousands,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Sep 30,
except for per share amounts)
2024
2024
2024
2023
2023
2024
2023
CONDENSED INCOME STATEMENT
Net interest income
$
53,851
$
51,921
$
50,187
$
51,142
$
51,928
$
155,959
$
158,858
Provision for credit losses
2,833
2,239
3,936
4,653
4,874
9,008
11,045
Total other operating income
12,734
12,121
11,244
15,172
10,047
36,099
31,491
Total other operating expense
46,687
41,151
40,576
42,522
39,611
128,414
121,621
Income tax expense
3,760
4,835
3,974
4,273
4,349
12,569
13,880
Net income
13,305
15,817
12,945
14,866
13,141
42,067
43,803
Basic earnings per share
$
0.49
$
0.58
$
0.48
$
0.55
$
0.49
$
1.55
$
1.62
Diluted earnings per share
0.49
0.58
0.48
0.55
0.49
1.55
1.62
Dividends declared per share
0.26
0.26
0.26
0.26
0.26
0.78
0.78
PERFORMANCE RATIOS
Return on average assets (ROA) [1]
0.72
%
0.86
%
0.70
%
0.79
%
0.70
%
0.76
%
0.78
%
Return on average shareholders’ equity
(ROE) [1]
10.02
12.42
10.33
12.55
10.95
10.91
12.33
Average shareholders’ equity to average
assets
7.23
6.94
6.73
6.32
6.39
6.97
6.34
Efficiency ratio [2]
70.12
64.26
66.05
64.12
63.91
66.86
63.89
Net interest margin (NIM) [1]
3.07
2.97
2.83
2.84
2.88
2.95
2.98
Dividend payout ratio [3]
53.06
44.83
54.17
47.27
53.06
50.32
48.15
SELECTED AVERAGE BALANCES
Average loans, including loans held for
sale
$
5,330,810
$
5,385,829
$
5,400,558
$
5,458,245
$
5,507,248
$
5,372,247
$
5,525,476
Average interest-earning assets
7,022,910
7,032,515
7,140,264
7,208,613
7,199,866
7,065,075
7,156,270
Average assets
7,347,403
7,338,714
7,449,661
7,498,097
7,510,537
7,378,479
7,472,890
Average deposits
6,535,422
6,542,767
6,659,812
6,730,883
6,738,071
6,579,174
6,689,762
Average interest-bearing liabilities
4,904,460
4,910,998
5,009,542
5,023,321
4,999,820
4,941,530
4,910,190
Average shareholders’ equity
530,928
509,507
501,120
473,708
480,118
513,914
473,856
[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)
Sep 30,
Jun 30,
Mar 31,
Dec 31,
Sep 30,
2024
2024
2024
2023
2023
REGULATORY CAPITAL RATIOS
Central Pacific Financial Corp.
Leverage ratio
9.5
%
9.3
%
9.0
%
8.8
%
8.7
%
Common equity tier 1 capital ratio
12.1
11.9
11.6
11.4
11.0
Tier 1 risk-based capital ratio
13.1
12.8
12.6
12.4
11.9
Total risk-based capital ratio
15.3
15.1
14.8
14.6
14.1
Central Pacific Bank
Leverage ratio
9.8
9.6
9.4
9.2
9.1
Common equity tier 1 capital ratio
13.6
13.3
13.1
12.9
12.4
Tier 1 risk-based capital ratio
13.6
13.3
13.1
12.9
12.4
Total risk-based capital ratio
14.8
14.5
14.3
14.1
13.7
Sep 30,
Jun 30,
Mar 31,
Dec 31,
Sep 30,
(dollars in thousands, except for per
share amounts)
2024
2024
2024
2023
2023
BALANCE SHEET
Total loans, net of deferred fees and
costs
$
5,342,609
$
5,383,644
$
5,401,417
$
5,438,982
$
5,508,710
Total assets
7,415,430
7,386,952
7,409,999
7,642,796
7,637,924
Total deposits
6,583,013
6,582,455
6,618,854
6,847,592
6,874,745
Long-term debt
156,284
156,223
156,163
156,102
156,041
Total shareholders’ equity
543,725
518,647
507,203
503,815
468,598
Total shareholders’ equity to total
assets
7.33
%
7.02
%
6.84
%
6.59
%
6.14
%
ASSET QUALITY
Allowance for credit losses (ACL)
$
61,647
$
62,225
$
63,532
$
63,934
$
64,517
Nonaccrual loans
11,597
10,257
10,132
7,008
6,652
Non-performing assets (NPA)
11,597
10,257
10,132
7,008
6,652
Ratio of ACL to total loans
1.15
%
1.16
%
1.18
%
1.18
%
1.17
%
Ratio of NPA to total assets
0.16
%
0.14
%
0.14
%
0.09
%
0.09
%
PER SHARE OF COMMON STOCK OUTSTANDING
Book value per common share
$
20.09
$
19.16
$
18.76
$
18.63
$
17.33
Closing market price per common share
29.51
21.20
19.75
19.68
16.68
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
TABLE 2
Sep 30,
Jun 30,
Mar 31,
Dec 31,
Sep 30,
(Dollars in thousands, except share
data)
2024
2024
2024
2023
2023
ASSETS
Cash and due from financial
institutions
$
100,064
$
103,829
$
98,410
$
116,181
$
108,818
Interest-bearing deposits in other
financial institutions
226,505
195,062
214,472
406,256
329,913
Investment securities:
Available-for-sale debt securities, at
fair value
723,453
676,719
660,833
647,210
625,253
Held-to-maturity debt securities, at
amortized cost; fair value of: $546,990 at September 30, 2024,
$528,088 at June 30, 2024, $541,685 at March 31, 2024, $565,178 at
December 31, 2023, and $531,887 at September 30, 2023
606,117
615,867
624,948
632,338
640,053
Total investment securities
1,329,570
1,292,586
1,285,781
1,279,548
1,265,306
Loans held for sale
1,609
3,950
755
1,778
—
Loans, net of deferred fees and costs
5,342,609
5,383,644
5,401,417
5,438,982
5,508,710
Less: allowance for credit losses
(61,647
)
(62,225
)
(63,532
)
(63,934
)
(64,517
)
Loans, net of allowance for credit
losses
5,280,962
5,321,419
5,337,885
5,375,048
5,444,193
Premises and equipment, net
104,575
100,646
97,688
96,184
97,378
Accrued interest receivable
23,942
23,184
21,957
21,511
21,529
Investment in unconsolidated entities
54,836
40,155
40,780
41,546
42,523
Mortgage servicing rights
8,513
8,636
8,599
8,696
8,797
Bank-owned life insurance
175,914
173,716
172,228
170,706
168,543
Federal Home Loan Bank of Des Moines
("FHLB") stock
6,929
6,925
6,921
6,793
10,995
Right-of-use lease assets
32,192
32,081
32,079
29,720
32,294
Other assets
69,819
84,763
92,444
88,829
107,635
Total assets
$
7,415,430
$
7,386,952
$
7,409,999
$
7,642,796
$
7,637,924
LIABILITIES
Deposits:
Noninterest-bearing demand
$
1,838,009
$
1,847,173
$
1,848,554
$
1,913,379
$
1,969,523
Interest-bearing demand
1,255,382
1,283,669
1,290,321
1,329,189
1,345,843
Savings and money market
2,336,323
2,234,111
2,211,966
2,209,733
2,209,550
Time
1,153,299
1,217,502
1,268,013
1,395,291
1,349,829
Total deposits
6,583,013
6,582,455
6,618,854
6,847,592
6,874,745
Long-term debt, net of unamortized debt
issuance costs of: $263 at September 30, 2024, $324 at June 30,
2024, $384 at March 31, 2024, $445 at December 31, 2023, and $506
at September 30, 2023
156,284
156,223
156,163
156,102
156,041
Lease liabilities
33,807
33,422
33,169
30,634
33,186
Accrued interest payable
12,980
14,998
16,654
18,948
16,752
Other liabilities
85,621
81,207
77,956
85,705
88,602
Total liabilities
6,871,705
6,868,305
6,902,796
7,138,981
7,169,326
EQUITY
Shareholders' equity:
Preferred stock, no par value, authorized
1,000,000 shares; issued and outstanding: none at September 30,
2024, June 30, 2024, March 31, 2024, December 31, 2023, and
September 30, 2023
—
—
—
—
—
Common stock, no par value, authorized
185,000,000 shares; issued and outstanding: 27,064,501 at September
30, 2024, 27,063,644 at June 30, 2024, 27,042,326 at March 31,
2024, 27,045,033 at December 31, 2023, and 27,043,169 at September
30, 2023
404,494
404,494
404,494
405,439
405,439
Additional paid-in capital
104,794
104,161
103,130
102,982
102,550
Retained earnings
138,951
132,683
123,902
117,990
110,156
Accumulated other comprehensive loss
(104,514
)
(122,691
)
(124,323
)
(122,596
)
(149,547
)
Total shareholders' equity
543,725
518,647
507,203
503,815
468,598
Total liabilities and equity
$
7,415,430
$
7,386,952
$
7,409,999
$
7,642,796
$
7,637,924
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Statements of
Income
(Unaudited)
TABLE 3
Three Months Ended
Nine Months Ended
Sep 30,
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Sep 30,
(Dollars in thousands, except per share
data)
2024
2024
2024
2023
2023
2024
2023
Interest income:
Interest and fees on loans
$
65,469
$
64,422
$
62,819
$
62,429
$
62,162
$
192,710
$
180,886
Interest and dividends on investment
securities:
Taxable investment securities
8,975
8,466
7,211
7,292
7,016
24,652
21,497
Tax-exempt investment securities
551
598
655
686
709
1,804
2,226
Interest on deposits in other financial
institutions
2,775
2,203
3,611
3,597
2,412
8,589
3,566
Dividend income on FHLB stock
127
151
106
109
113
384
369
Total interest income
77,897
75,840
74,402
74,113
72,412
228,139
208,544
Interest expense:
Interest on deposits:
Interest-bearing demand
484
490
499
467
460
1,473
1,234
Savings and money market
10,235
8,977
8,443
7,459
6,464
27,655
14,520
Time
11,040
12,173
12,990
12,741
11,268
36,203
26,464
Interest on short-term borrowings
—
1
—
—
—
1
1,139
Interest on long-term debt
2,287
2,278
2,283
2,304
2,292
6,848
6,329
Total interest expense
24,046
23,919
24,215
22,971
20,484
72,180
49,686
Net interest income
53,851
51,921
50,187
51,142
51,928
155,959
158,858
Provision for credit losses
2,833
2,239
3,936
4,653
4,874
9,008
11,045
Net interest income after provision for
credit losses
51,018
49,682
46,251
46,489
47,054
146,951
147,813
Other operating income:
Mortgage banking income
822
1,040
613
611
765
2,475
1,981
Service charges on deposit accounts
2,167
2,135
2,103
2,312
2,193
6,405
6,441
Other service charges and fees
5,947
5,869
5,261
5,349
5,203
17,077
15,182
Income from fiduciary activities
1,447
1,449
1,435
1,272
1,234
4,331
3,623
Income from bank-owned life insurance
1,897
1,234
1,522
2,015
379
4,653
2,855
Net loss on sales of investment
securities
—
—
—
(1,939
)
(135
)
—
(135
)
Other
454
394
310
5,552
408
1,158
1,544
Total other operating income
12,734
12,121
11,244
15,172
10,047
36,099
31,491
Other operating expense:
Salaries and employee benefits
22,299
21,246
20,735
20,164
19,015
64,280
61,886
Net occupancy
4,612
4,597
4,600
4,676
4,725
13,809
13,509
Computer software
4,590
4,381
4,287
4,026
4,473
13,258
13,700
Legal and professional services
2,460
2,506
2,320
2,245
2,359
7,286
7,714
Equipment
972
995
1,010
968
1,112
2,977
2,990
Advertising
889
901
914
1,045
968
2,704
2,843
Communication
740
657
837
632
809
2,234
2,378
Other
10,125
5,868
5,873
8,766
6,150
21,866
16,601
Total other operating expense
46,687
41,151
40,576
42,522
39,611
128,414
121,621
Income before income taxes
17,065
20,652
16,919
19,139
17,490
54,636
57,683
Income tax expense
3,760
4,835
3,974
4,273
4,349
12,569
13,880
Net income
$
13,305
$
15,817
$
12,945
$
14,866
$
13,141
$
42,067
$
43,803
Per common share data:
Basic earnings per share
$
0.49
$
0.58
$
0.48
$
0.55
$
0.49
$
1.55
$
1.62
Diluted earnings per share
0.49
0.58
0.48
0.55
0.49
1.55
1.62
Cash dividends declared
0.26
0.26
0.26
0.26
0.26
0.78
0.78
Basic weighted average shares
outstanding
27,064,035
27,053,549
27,046,525
27,044,121
27,042,762
27,054,737
27,022,141
Diluted weighted average shares
outstanding
27,194,625
27,116,349
27,099,101
27,097,285
27,079,484
27,137,985
27,081,541
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
September 30, 2024
June 30, 2024
September 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
$
203,657
5.42
%
$
2,775
$
162,393
5.46
%
$
2,203
$
177,780
5.38
%
$
2,412
Investment securities:
Taxable
1,340,347
2.68
8,975
1,335,100
2.54
8,466
1,354,039
2.07
7,016
Tax-exempt [1]
141,168
1.98
697
142,268
2.13
757
149,824
2.40
897
Total investment securities
1,481,515
2.61
9,672
1,477,368
2.50
9,223
1,503,863
2.10
7,913
Loans, including loans held for sale
5,330,810
4.89
65,469
5,385,829
4.80
64,422
5,507,248
4.49
62,162
FHLB stock
6,928
7.31
127
6,925
8.71
151
10,975
4.09
113
Total interest-earning assets
7,022,910
4.43
78,043
7,032,515
4.34
75,999
7,199,866
4.01
72,600
Noninterest-earning assets
324,493
306,199
310,671
Total assets
$
7,347,403
$
7,338,714
$
7,510,537
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits
$
1,267,135
0.15
%
$
484
$
1,273,901
0.15
%
$
490
$
1,339,294
0.14
%
$
460
Savings and money market deposits
2,298,853
1.77
10,235
2,221,754
1.63
8,977
2,209,835
1.16
6,464
Time deposits up to $250,000
534,497
3.15
4,238
555,809
3.29
4,548
449,844
2.33
2,637
Time deposits over $250,000
647,728
4.18
6,802
703,280
4.36
7,625
844,842
4.05
8,631
Total interest-bearing deposits
4,748,213
1.82
21,759
4,754,744
1.83
21,640
4,843,815
1.49
18,192
FHLB advances and other short-term
borrowings
—
—
—
66
5.60
1
—
—
—
Long-term debt
156,247
5.82
2,287
156,188
5.86
2,278
156,005
5.83
2,292
Total interest-bearing liabilities
4,904,460
1.95
24,046
4,910,998
1.96
23,919
4,999,820
1.63
20,484
Noninterest-bearing deposits
1,787,209
1,788,023
1,894,256
Other liabilities
124,806
130,186
136,343
Total liabilities
6,816,475
6,829,207
7,030,419
Total equity
530,928
509,507
480,118
Total liabilities and equity
$
7,347,403
$
7,338,714
$
7,510,537
Net interest income
$
53,997
$
52,080
$
52,116
Interest rate spread
2.48
%
2.38
%
2.38
%
Net interest margin
3.07
%
2.97
%
2.88
%
[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
Nine Months Ended
Nine Months Ended
September 30, 2024
September 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
$
210,464
5.45
%
$
8,589
$
91,202
5.23
%
$
3,566
Investment securities:
Taxable
1,333,394
2.47
24,652
1,376,294
2.08
21,497
Tax-exempt [1]
142,085
2.14
2,284
151,611
2.48
2,818
Total investment securities
1,475,479
2.43
26,936
1,527,905
2.12
24,315
Loans, including loans held for sale
5,372,247
4.79
192,710
5,525,476
4.37
180,886
FHLB stock
6,885
7.43
384
11,687
4.21
369
Total interest-earning assets
7,065,075
4.32
228,619
7,156,270
3.90
209,136
Noninterest-earning assets
313,404
316,620
Total assets
$
7,378,479
$
7,472,890
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits
$
1,279,256
0.15
%
$
1,473
$
1,373,831
0.12
%
$
1,234
Savings and money market deposits
2,246,478
1.64
27,655
2,188,585
0.89
14,520
Time deposits up to $250,000
544,823
3.22
13,125
394,464
1.88
5,544
Time deposits over $250,000
714,763
4.31
23,078
775,615
3.61
20,920
Total interest-bearing deposits
4,785,320
1.82
65,331
4,732,495
1.19
42,218
FHLB advances and other short-term
borrowings
22
5.60
1
31,182
4.88
1,139
Long-term debt
156,188
5.86
6,848
146,513
5.78
6,329
Total interest-bearing liabilities
4,941,530
1.95
72,180
4,910,190
1.35
49,686
Noninterest-bearing deposits
1,793,854
1,957,267
Other liabilities
129,181
131,577
Total liabilities
6,864,565
6,999,034
Total equity
513,914
473,856
Total liabilities and equity
$
7,378,479
$
7,472,890
Net interest income
$
156,439
$
159,450
Interest rate spread
2.37
%
2.55
%
Net interest margin
2.95
%
2.98
%
[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
Sep 30,
Jun 30,
Mar 31,
Dec 31,
Sep 30,
(Dollars in thousands)
2024
2024
2024
2023
2023
HAWAII:
Commercial and industrial
$
411,209
$
415,538
$
420,009
$
421,736
$
406,433
Real estate:
Construction
134,043
147,657
145,213
163,337
174,057
Residential mortgage
1,897,919
1,913,177
1,924,889
1,927,789
1,930,740
Home equity
697,123
706,811
729,210
736,524
753,980
Commercial mortgage
1,157,625
1,150,703
1,103,174
1,063,969
1,045,625
Consumer
277,849
287,295
306,563
322,346
338,248
Total loans, net of deferred fees and
costs
4,575,768
4,621,181
4,629,058
4,635,701
4,649,083
Less: Allowance for credit losses
(47,789
)
(47,902
)
(48,739
)
(48,189
)
(48,105
)
Loans, net of allowance for credit
losses
$
4,527,979
$
4,573,279
$
4,580,319
$
4,587,512
$
4,600,978
U.S. MAINLAND: [1]
Commercial and industrial
$
188,238
$
169,318
$
156,087
$
153,971
$
157,373
Real estate:
Construction
24,083
23,865
23,356
22,182
37,455
Commercial mortgage
312,685
314,667
319,088
318,933
319,802
Consumer
241,835
254,613
273,828
308,195
344,997
Total loans, net of deferred fees and
costs
766,841
762,463
772,359
803,281
859,627
Less: Allowance for credit losses
(13,858
)
(14,323
)
(14,793
)
(15,745
)
(16,412
)
Loans, net of allowance for credit
losses
$
752,983
$
748,140
$
757,566
$
787,536
$
843,215
TOTAL:
Commercial and industrial
$
599,447
$
584,856
$
576,096
$
575,707
$
563,806
Real estate:
Construction
158,126
171,522
168,569
185,519
211,512
Residential mortgage
1,897,919
1,913,177
1,924,889
1,927,789
1,930,740
Home equity
697,123
706,811
729,210
736,524
753,980
Commercial mortgage
1,470,310
1,465,370
1,422,262
1,382,902
1,365,427
Consumer
519,684
541,908
580,391
630,541
683,245
Total loans, net of deferred fees and
costs
5,342,609
5,383,644
5,401,417
5,438,982
5,508,710
Less: Allowance for credit losses
(61,647
)
(62,225
)
(63,532
)
(63,934
)
(64,517
)
Loans, net of allowance for credit
losses
$
5,280,962
$
5,321,419
$
5,337,885
$
5,375,048
$
5,444,193
[1]
U.S. Mainland includes
territories of the United States.
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Deposits
(Unaudited)
TABLE 7
Sep 30,
Jun 30,
Mar 31,
Dec 31,
Sep 30,
(Dollars in thousands)
2024
2024
2024
2023
2023
Noninterest-bearing demand
$
1,838,009
$
1,847,173
$
1,848,554
$
1,913,379
$
1,969,523
Interest-bearing demand
1,255,382
1,283,669
1,290,321
1,329,189
1,345,843
Savings and money market
2,336,323
2,234,111
2,211,966
2,209,733
2,209,550
Time deposits up to $250,000
536,316
547,212
544,600
533,898
465,543
Core deposits
5,966,030
5,912,165
5,895,441
5,986,199
5,990,459
Other time deposits greater than
$250,000
492,221
476,457
487,950
486,812
484,156
Government time deposits
124,762
193,833
235,463
374,581
400,130
Total time deposits greater than
$250,000
616,983
670,290
723,413
861,393
884,286
Total deposits
$
6,583,013
$
6,582,455
$
6,618,854
$
6,847,592
$
6,874,745
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Nonperforming Assets and Accruing Loans
90+ Days Past Due
(Unaudited)
TABLE 8
Sep 30,
Jun 30,
Mar 31,
Dec 31,
Sep 30,
(Dollars in thousands)
2024
2024
2024
2023
2023
Nonaccrual loans:
Commercial and industrial
$
376
$
355
$
357
$
432
$
352
Real estate:
Residential mortgage
9,680
7,991
7,979
4,962
4,949
Home equity
915
1,247
929
834
677
Commercial mortgage
—
77
77
77
77
Consumer
626
587
790
703
597
Total nonaccrual loans
11,597
10,257
10,132
7,008
6,652
Other real estate owned ("OREO")
—
—
—
—
—
Total nonperforming assets ("NPAs")
11,597
10,257
10,132
7,008
6,652
Accruing loans 90+ days past due:
Real estate:
Construction
—
—
588
—
—
Residential mortgage
13
1,273
386
—
794
Home equity
135
135
560
229
—
Consumer
481
896
924
1,083
2,120
Total accruing loans 90+ days past due
629
2,304
2,458
1,312
2,914
Total NPAs and accruing loans 90+ days
past due
$
12,226
$
12,561
$
12,590
$
8,320
$
9,566
Ratio of total nonaccrual loans to total
loans
0.22
%
0.19
%
0.19
%
0.13
%
0.12
%
Ratio of total NPAs to total assets
0.16
0.14
0.14
0.09
0.09
Ratio of total NPAs to total loans and
OREO
0.22
0.19
0.19
0.13
0.12
Ratio of total NPAs and accruing loans 90+
days past due to total loans and OREO
0.23
0.23
0.23
0.15
0.17
Quarter-to-quarter changes in NPAs:
Balance at beginning of quarter
$
10,257
$
10,132
$
7,008
$
6,652
$
11,061
Additions
3,484
1,920
4,792
1,836
2,311
Reductions:
Payments
(602
)
(363
)
(263
)
(268
)
(5,718
)
Return to accrual status
(354
)
(27
)
(198
)
(137
)
(207
)
Charge-offs, valuation and other
adjustments
(1,188
)
(1,405
)
(1,207
)
(1,075
)
(795
)
Total reductions
(2,144
)
(1,795
)
(1,668
)
(1,480
)
(6,720
)
Balance at end of quarter
$
11,597
$
10,257
$
10,132
$
7,008
$
6,652
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Allowance for Credit Losses on
Loans
(Unaudited)
TABLE 9
Three Months Ended
Nine Months Ended
Sep 30,
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Sep 30,
(Dollars in thousands)
2024
2024
2024
2023
2023
2024
2023
Allowance for credit losses:
Balance at beginning of period
$
62,225
$
63,532
$
63,934
$
64,517
$
63,849
$
63,934
$
63,738
Provision for credit losses on loans
3,040
2,448
4,121
4,959
4,526
9,609
10,276
Charge-offs:
Commercial and industrial
(663
)
(519
)
(682
)
(419
)
(402
)
(1,864
)
(1,543
)
Real estate:
Residential mortgage
(99
)
(284
)
—
—
—
(383
)
—
Consumer
(3,956
)
(4,345
)
(4,838
)
(5,976
)
(4,710
)
(13,139
)
(11,269
)
Total charge-offs
(4,718
)
(5,148
)
(5,520
)
(6,395
)
(5,112
)
(15,386
)
(12,812
)
Recoveries:
Commercial and industrial
158
130
90
84
261
378
636
Real estate:
Construction
—
—
—
—
1
—
1
Residential mortgage
8
9
8
7
10
25
70
Home equity
—
—
6
42
—
6
15
Consumer
934
1,254
893
720
982
3,081
2,593
Total recoveries
1,100
1,393
997
853
1,254
3,490
3,315
Net charge-offs
(3,618
)
(3,755
)
(4,523
)
(5,542
)
(3,858
)
(11,896
)
(9,497
)
Balance at end of period
$
61,647
$
62,225
$
63,532
$
63,934
$
64,517
$
61,647
$
64,517
Average loans, net of deferred fees and
costs
$
5,330,810
$
5,385,829
$
5,400,558
$
5,458,245
$
5,507,248
$
5,372,247
$
5,525,476
Ratio of annualized net charge-offs to
average loans
0.27
%
0.28
%
0.34
%
0.41
%
0.28
%
0.30
%
0.23
%
Ratio of ACL to total loans
1.15
1.16
1.18
1.18
1.17
1.15
%
1.17
%
CENTRAL PACIFIC FINANCIAL CORP. AND
SUBSIDIARIES
Reconciliation of Non-GAAP Financial
Measures
(Unaudited)
TABLE 10
The Company uses certain non-GAAP financial measures in addition
to our GAAP results to provide useful information which we believe
are better indicators of the Company's core activities. This
information should be considered as supplemental in nature and
should not be considered in isolation or as a substitute for the
related financial information prepared in accordance with GAAP. In
addition, these non-GAAP financial measures may not be comparable
to similarly entitled measures reported by other companies.
The following reconciling adjustments from GAAP or reported
financial measures to non-GAAP adjusted financial measures are
limited to the $3.1 million in pre-tax expenses related to our
evaluation and assessment of a strategic opportunity. Management
does not consider these expenses to be representative of the
Company's core earnings.
Three Months Ended September 30,
2024
Nine Months Ended September 30,
2024
(dollars in thousands,
Non-GAAP
Non-GAAP
except per share data)
Reported
Adjustment
Adjusted
Reported
Adjustment
Adjusted
Financial measures:
Net income
$
13,305
$
2,362
$
15,667
$
42,067
$
2,362
$
44,429
Diluted earnings per share ("EPS")
$
0.49
$
0.09
$
0.58
$
1.55
$
0.09
$
1.64
Pre-provision net revenue (non-GAAP)
$
19,898
$
3,068
$
22,966
$
63,644
$
3,068
$
66,712
Efficiency ratio (non-GAAP)
70.12
%
(4.61
)%
65.51
%
66.86
%
(1.60
)%
65.26
%
Return on average assets ("ROA")
0.72
%
0.13
%
0.85
%
0.76
%
0.04
%
0.80
%
Return on average shareholders' equity
("ROE")
10.02
%
1.73
%
11.75
%
10.91
%
0.60
%
11.51
%
As of September 30, 2024:
Tangible common equity ratio
(non-GAAP)
7.31
%
0.03
%
7.34
%
The following tables present a recalculation of the non-GAAP
financial measures presented above.
Three Months Ended
Nine Months Ended
(dollars in thousands, except per share
data)
September 30, 2024
September 30, 2024
GAAP net income
$
13,305
$
42,067
Add: Pre-tax expenses related to a
strategic opportunity
3,068
3,068
Less: Income tax effect (assumes 23%
ETR)
(706
)
(706
)
Expenses related to a strategic
opportunity, net of tax
2,362
2,362
Adjusted net income (non-GAAP)
$
15,667
$
44,429
Diluted weighted average shares
outstanding
27,194,625
27,137,985
GAAP EPS
$
0.49
$
1.55
Add: Expenses related to a strategic
opportunity, net of tax
0.09
0.09
Adjusted EPS (non-GAAP)
$
0.58
$
1.64
CENTRAL PACIFIC FINANCIAL CORP. AND
SUBSIDIARIES
Reconciliation of Non-GAAP Financial
Measures
(Unaudited)
TABLE 10 (CONTINUED)
Three Months Ended
Nine Months Ended
(dollars in thousands)
September 30, 2024
September 30, 2024
GAAP net income
$
13,305
$
42,067
Add: Income tax expense
3,760
12,569
GAAP pre-tax income
17,065
54,636
Add: Provision for credit losses
2,833
9,008
Pre-provision net revenue ("PPNR")
(non-GAAP)
19,898
63,644
Add: Pre-tax expenses related to a
strategic opportunity
3,068
3,068
Adjusted PPNR (non-GAAP)
$
22,966
$
66,712
Three Months Ended
Nine Months Ended
(dollars in thousands)
September 30, 2024
September 30, 2024
Total other operating expense
$
46,687
$
128,414
Less: Expenses related to a strategic
opportunity
(3,068
)
(3,068
)
Adjusted total other operating expense
(non-GAAP)
$
43,619
$
125,346
Net interest income
$
53,851
$
155,959
Total other operating income
12,734
36,099
Total revenue
$
66,585
$
192,058
Efficiency ratio (non-GAAP)
70.12
%
66.86
%
Less: Expenses related to a strategic
opportunity
(4.61
)%
(1.60
)%
Adjusted efficiency ratio (non-GAAP)
65.51
%
65.26
%
Three Months Ended
Nine Months Ended
(dollars in thousands)
September 30, 2024
September 30, 2024
Average assets
$
7,347,403
$
7,378,479
Add: Expenses related to a strategic
opportunity, net of tax
2,362
787
Adjusted average assets (non-GAAP)
$
7,349,765
$
7,379,266
ROA (GAAP net income divided by average
assets)
0.72
%
0.76
%
Add: Expenses related to a strategic
opportunity, net of tax
0.13
0.04
Adjusted ROA (non-GAAP)
0.85
%
0.80
%
Average shareholders' equity
$
530,928
$
513,914
Add: Expenses related to a strategic
opportunity, net of tax
2,362
787
Adjusted average shareholders' equity
(non-GAAP)
$
533,290
$
514,701
ROE (GAAP net income divided by average
shareholders' equity)
10.02
%
10.91
%
Add: Expenses related to a strategic
opportunity, net of tax
1.73
0.60
Adjusted ROE (non-GAAP)
11.75
%
11.51
%
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial
Measures
(Unaudited)
TABLE 10 (CONTINUED)
(dollars in thousands)
September 30, 2024
Total shareholders' equity
$
543,725
Less: Intangible assets
(1,390
)
Tangible common equity ("TCE")
542,335
Add: Expenses related to a strategic
opportunity, net of tax
2,362
Adjusted TCE (non-GAAP)
$
544,697
Total assets
$
7,415,430
Less: Intangible assets
(1,390
)
Tangible assets
7,414,040
Add: Expenses related to a strategic
opportunity, net of tax
2,362
Adjusted tangible assets (non-GAAP)
$
7,416,402
TCE ratio (non-GAAP) (TCE divided by
tangible assets)
7.31
%
Add: Expenses related to a strategic
opportunity, net of tax
0.03
Adjusted TCE ratio (non-GAAP)
7.34
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241030600615/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
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