Core Insights - Bank stocks are a significant indicator of the health of the American economy, often referred to as the economy's circulatory system, facilitating capital flow across various sectors [1][4] - The article discusses the characteristics of bank stocks, their importance to investors, and how to identify the best bank stocks to buy [5][17] Group 1: Definition and Importance of Bank Stocks - Bank stocks represent companies in the banking sector and are classified under the broader category of financial stocks, which includes various financial services [7][8] - They are divided into two sub-categories: diversified banks, which have a national footprint and offer a wide range of services, and regional banks, which operate in limited geographic areas [13] Group 2: Investment Rationale - Investors are drawn to bank stocks due to their critical role in the economy, although their performance can be cyclical, reflecting economic conditions [9][10] - Banks primarily earn through the interest-rate spread, charging higher interest on loans than they pay on deposits, making economic activity a key factor in their profitability [10][11] Group 3: Characteristics of Bank Stocks - Diversified banks may offer more stability due to their varied operations, while regional banks can be more volatile but may provide better short-term opportunities for active investors [14][15] - The consolidation trend in the banking industry presents potential for growth, with over 4,600 banks in the U.S. indicating room for mergers and acquisitions [16][17] Group 4: Criteria for Selecting Bank Stocks - Ideal bank stocks should be part of the S&P Composite 1500, have a long-term EPS growth rate of at least 5%, and a trailing-12-month return on equity of at least 10% [18][19][20] - Stocks should also have at least five covering analysts and a consensus Buy rating, indicating strong market interest and positive outlook [21][22]

Company Overview - Central Pacific Financial (CPF) is based in Honolulu and operates in the Finance sector, specifically through Central Pacific Bank [3] - The company's shares have experienced a price change of 8.43% this year [3] Dividend Information - CPF currently pays a dividend of $0.27 per share, resulting in a dividend yield of 3.43%, which is higher than the Banks - West industry's yield of 2.75% and the S&P 500's yield of 1.47% [3] - The annualized dividend of $1.08 represents a 3.8% increase from the previous year [4] - Over the past five years, CPF has increased its dividend three times, averaging an annual increase of 3.02% [4] - The current payout ratio for CPF is 42%, indicating that the company pays out 42% of its trailing 12-month earnings per share as dividends [4] Earnings Growth - The Zacks Consensus Estimate for CPF's earnings in 2025 is $2.85 per share, reflecting a year-over-year earnings growth rate of 21.79% [5] Investment Considerations - CPF is considered a compelling investment opportunity due to its strong dividend performance and solid earnings growth prospects [6] - The stock currently holds a Zacks Rank of 3 (Hold), indicating a stable investment outlook [6]

Core Viewpoint - CPB Inc. (CPF) has reached a significant support level and is considered a good investment opportunity from a technical perspective due to the recent "golden cross" formation [1] Technical Analysis - CPF's 50-day simple moving average has broken above its 200-day moving average, indicating a bullish breakout [1] - A golden cross is characterized by a downtrend followed by a crossover of the shorter moving average over the longer one, leading to a potential trend reversal [2] Performance Metrics - CPF has experienced a rally of 13.2% over the past four weeks, suggesting positive momentum [3] - The company currently holds a 3 (Hold) rating on the Zacks Rank, indicating potential for further gains [3] Earnings Outlook - Positive earnings outlook for the current quarter, with no downward revisions in earnings estimates over the past two months and an increase in the Zacks Consensus Estimate [3][4] - The combination of earnings estimate revisions and technical indicators suggests that CPF may continue to see gains in the near future [4]

[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Central Pacific Financial Corp.'s unaudited consolidated financial statements for Q2 2025, including balance sheets, income, equity, and cash flows [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets decreased to $7.37 billion, liabilities to $6.80 billion, while equity increased to $568.9 million Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$7,369,567** | **$7,472,096** | | Cash and interest-bearing deposits | $316,970 | $380,941 | | Total investment securities | $1,345,689 | $1,334,588 | | Loans, net of allowance | $5,230,198 | $5,273,670 | | **Total Liabilities** | **$6,800,693** | **$6,933,711** | | Total deposits | $6,544,989 | $6,644,011 | | Long-term debt, net | $131,466 | $156,345 | | **Total Equity** | **$568,874** | **$538,385** | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Net income for Q2 2025 increased to $18.3 million, and for YTD 2025 to $36.0 million, primarily due to higher net interest income Key Income Statement Data (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $59,796 | $51,921 | $117,495 | $102,108 | | Provision for credit losses | $4,987 | $2,239 | $9,159 | $6,175 | | Total other operating income | $13,013 | $12,121 | $24,109 | $23,365 | | Total other operating expense | $43,946 | $41,151 | $86,018 | $81,727 | | **Net Income** | **$18,271** | **$15,817** | **$36,031** | **$28,762** | | **Diluted EPS** | **$0.67** | **$0.58** | **$1.33** | **$1.06** | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income for Q2 2025 increased to $20.2 million, and for YTD 2025 to $48.8 million, primarily due to fair value changes in investment securities Comprehensive Income (in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $18,271 | $15,817 | $36,031 | $28,762 | | Other comprehensive income (loss), net of tax | $1,907 | $1,632 | $12,764 | $(95) | | **Comprehensive Income** | **$20,178** | **$17,449** | **$48,795** | **$28,667** | [Consolidated Statements of Changes in Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity) Total equity increased to $568.9 million by June 30, 2025, driven by net income and comprehensive income, offset by dividends and share repurchases - For the six months ended June 30, 2025, the company paid cash dividends of **$0.54 per share**, totaling **$14.6 million**[19](index=19&type=chunk) - The company repurchased and retired **180,393 shares** for **$4.7 million** in the first six months of 2025[19](index=19&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities was $54.7 million, investing $24.6 million, with financing using $143.3 million, resulting in a $64.0 million net cash decrease Six Months Ended June 30 Cash Flow Summary (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $54,713 | $42,946 | | Net cash provided by investing activities | $24,623 | $13,659 | | Net cash used in financing activities | $(143,307) | $(280,151) | | **Net decrease in cash and cash equivalents** | **$(63,971)** | **$(223,546)** | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section details accounting policies and methodologies, covering ACL, investment securities, loan portfolio, derivatives, debt, and fair value measurements [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=47&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, with Q2 2025 net income at $18.3 million, driven by net interest income, covering portfolios, asset quality, and capital resources [Financial Summary](index=50&type=section&id=Financial%20Summary) Net income for Q2 2025 was $18.3 million and YTD 2025 was $36.0 million, driven by higher net interest income despite increased credit provisions Key Performance Ratios (Annualized) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Return on average assets | 1.00% | 0.86% | 0.98% | 0.78% | | Return on average shareholders' equity | 13.04% | 12.42% | 13.04% | 11.38% | - The provision for credit losses increased to **$5.0 million** in Q2 2025 from **$2.2 million** in Q2 2024, driven by the macroeconomic forecast and new unfunded construction loan commitments[183](index=183&type=chunk) [Results of Operations](index=53&type=section&id=Results%20of%20Operations) Operational results improved with net interest income increasing 15.2% to $60.0 million, driven by asset yields and deposit rates, alongside rising other income and expenses [Financial Condition](index=61&type=section&id=Financial%20Condition) Total assets decreased to $7.37 billion, loans to $5.29 billion, and deposits to $6.54 billion, while nonperforming assets increased and capital ratios improved [Market Risk](index=71&type=section&id=Market%20Risk) The company manages interest rate risk, with NII sensitivity showing a +100 bps rate change increases NII by 1.14%, and strong liquidity with $2.50 billion in available sources Net Interest Income Sensitivity (as of June 30, 2025) | Rate Change | Gradual Change | Instantaneous Change | | :--- | :--- | :--- | | +300 bps | 3.30% | 5.32% | | +200 bps | 2.22% | 3.58% | | +100 bps | 1.14% | 1.78% | | -100 bps | (1.24)% | (2.51)% | - As of June 30, 2025, the company had approximately **$2.50 billion** in total available liquidity sources, including borrowing capacity and unpledged securities[292](index=292&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=74&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section refers to the 'Market Risk' discussion within Item 2 for quantitative and qualitative disclosures about market risks - Disclosures regarding market risks are provided in the MD&A section of the report[294](index=294&type=chunk) [Controls and Procedures](index=74&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - The Principal Executive Officer and Principal Financial Officer concluded that the Company's disclosure controls and procedures were effective as of the end of the period[294](index=294&type=chunk) - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[295](index=295&type=chunk) [Part II. Other Information](index=75&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=75&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings, which management believes will not materially affect financial condition or operations - The company states that ongoing legal proceedings are not expected to have a material adverse effect on its financial condition or operations[166](index=166&type=chunk)[297](index=297&type=chunk) [Risk Factors](index=75&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors from the 2024 Form 10-K, except for added emphasis on risks from new or changing government policies and regulations - A risk factor was highlighted concerning the potential adverse effects of new or changing government policies, legislation, and regulation on the company's business, financial condition, or results of operations[298](index=298&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=75&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Board approved a $30.0 million share repurchase plan, with $2.6 million in repurchases during Q2 2025, leaving $25.3 million available Q2 2025 Share Repurchase Activity | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 1-30, 2025 | 87,661 | $24.73 | | May 1-31, 2025 | 9,987 | $26.81 | | June 1-30, 2025 | 6,416 | $25.93 | | **Total** | **104,064** | **$25.00** | - As of June 30, 2025, **$25.3 million** remained available under the company's **$30.0 million** share repurchase authorization[300](index=300&type=chunk) [Other Information](index=76&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q2 2025 - No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement during Q2 2025[302](index=302&type=chunk) [Exhibits](index=76&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including CEO and CFO certifications and Inline XBRL documents

Financial Data and Key Metrics Changes - The company reported net income of $18.3 million or $0.67 per diluted share, with a return on average assets of 1% and return on average equity of 13.04% [12] - Net interest income increased by 3.6% quarter over quarter to $59.8 million, with net interest margin expanding by 13 basis points to 3.44% [13] - Total other operating income was $13 million, reflecting a $1.9 million increase quarter over quarter [13] Business Line Data and Key Metrics Changes - The loan portfolio slightly declined to $5.29 billion, with growth in construction and consumer loans, while other categories saw declines [10] - Total deposits were $6.54 billion, also showing a slight decline from the prior quarter, but with a favorable shift towards noninterest-bearing deposits [11] Market Data and Key Metrics Changes - Hawaii's construction industry showed solid performance with completed construction reaching $14 billion in 2024, with steady growth expected in 2025 [6] - Visitor arrivals in Hawaii were up 2.8% year to date, with total visitor spending increasing by 6.5% compared to the prior year [7] - The unemployment rate in Hawaii remained low at 2.8%, outperforming the national rate of 4.1% [7] Company Strategy and Development Direction - The company aims to deepen customer relationships and grow market share in Hawaii, select Mainland markets, and Asia, targeting low single-digit growth for loans and deposits in 2025 [10] - The focus remains on managing the cost of funds while growing core deposits in a competitive environment [11] Management's Comments on Operating Environment and Future Outlook - Management maintains a cautiously optimistic outlook for Hawaii's economy, acknowledging potential headwinds but emphasizing sound fundamental economic drivers [9] - The company is confident in its core business environment and sees opportunities ahead despite a muted loan growth in the first half of 2025 [10] Other Important Information - The effective tax rate was 23.5% in the second quarter, expected to remain between 22% and 24% [14] - The company repurchased approximately 103,000 shares of common stock at a total cost of $2.6 million [14] - A quarterly cash dividend of $0.27 per share was declared, payable on September 15 [15] Q&A Session Summary Question: Growth trends and client demand - Management noted that loan growth was muted in the first half but expects a robust pipeline and strong net loan growth in July, contributing to revenue growth in the second half [25][27] Question: Competition in the market - Competition remains average in the Hawaii banking market, with no significant changes in strategy from competitors [30] Question: Non-interest bearing deposit growth - The company is focused on growing low-cost core deposits through relationship management and prospecting, which has shown early success [34] Question: Expense run rate and investments - The near-term guidance for total other operating expenses is projected to be between $43.5 million and $44.5 million per quarter, excluding one-time impacts [37] Question: Credit quality and concerns - Management indicated that the uptick in credit metrics is not systemic and that expected losses remain within risk appetite, with no anticipated losses from downgraded loans [40][41]

Financial Performance - Central Pacific Financial Corp (CPF) reported net income of $183 million, resulting in diluted earnings per share of $067 for 2Q25[13] - Pre-provision net revenue (PPNR) reached $289 million in 2Q25[13] - The return on assets (ROA) was 100% and the return on equity (ROE) was 1304% in 2Q25[13] - The net interest margin (NIM) expanded to 344%[13] Loan and Deposit Portfolio - Total assets reached $74 billion[8] - The loan portfolio is diversified, with 80% secured by real estate[16] - Total deposits amounted to $654 billion[18] - Noninterest-bearing demand deposits constitute 30% of the total deposit portfolio[20] Capital and Liquidity - The company maintains a strong liquidity position, with total sources of liquidity amounting to $2822 billion[43] - The investment portfolio is high quality, with 95% AAA rated and totals $13 billion, representing 18% of total assets[42] - The company repurchased 103077 shares of CPF common stock for $26 million, at $2500 per share[13, 46] Hawaii Economy - Construction completed in 2024 reached $14 billion[10] - Visitor spending totaled $9 billion as of May 2025, a 65% increase from the same period last year[11]

分组1 - Central Pacific Financial (CPF) reported quarterly earnings of $0.67 per share, missing the Zacks Consensus Estimate of $0.70 per share, but showing an increase from $0.58 per share a year ago, resulting in an earnings surprise of -4.29% [1] - The company posted revenues of $72.81 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.69%, and an increase from $64.04 million year-over-year [2] - Over the last four quarters, Central Pacific Financial has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [2] 分组2 - The stock has underperformed the market, losing about 4.1% since the beginning of the year compared to the S&P 500's gain of 8.2% [3] - The current consensus EPS estimate for the coming quarter is $0.72 on revenues of $73.2 million, and for the current fiscal year, it is $2.80 on revenues of $287.9 million [7] - The Zacks Industry Rank indicates that the Banks - West industry is currently in the bottom 40% of over 250 Zacks industries, which may impact the stock's performance [8]

[Q2 2025 Earnings Release](index=1&type=section&id=Q2%202025%20Earnings%20Release) This report details Central Pacific Financial Corp's Q2 2025 performance, including financial highlights, detailed analysis, and consolidated statements [Financial & Operational Highlights](index=1&type=section&id=Financial%20%26%20Operational%20Highlights) Central Pacific Financial Corp reported strong Q2 2025 results driven by higher net interest income and an improved efficiency ratio Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Income | $18.3 million | $17.8 million | $15.8 million | | Diluted EPS | $0.67 | $0.65 | $0.58 | | Return on Average Assets (ROA) | 1.00% | 0.96% | 0.86% | | Return on Average Equity (ROE) | 13.04% | 13.04% | 12.42% | | Quarterly Dividend per Share | $0.27 | $0.27 | $0.26 | - Management emphasized that the bank's **strong asset quality, capital, and liquidity** positions will enable future business growth[3](index=3&type=chunk) - For the fourth consecutive year, Central Pacific Bank was named **Best Bank In Hawaii** by Forbes Magazine in 2025[5](index=5&type=chunk) [Detailed Financial Analysis](index=1&type=section&id=Detailed%20Financial%20Analysis) The company's Q2 2025 performance featured higher net interest income, an expanded margin, and a slight contraction in the balance sheet [Earnings Analysis](index=1&type=section&id=Earnings%20Analysis) Net interest income and margin grew, though the provision for credit losses and operating expenses also increased Net Interest Income and Margin | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Interest Income | $59.8 million | $57.7 million | $51.9 million | | Net Interest Margin (NIM) | 3.44% | 3.31% | 2.97% | - The provision for credit losses was **$5.0 million**, up from $4.2 million, due to new unfunded loan commitments[6](index=6&type=chunk) - Other operating income increased to **$13.0 million** from $11.1 million, primarily due to a $1.8 million increase in income from bank-owned life insurance[7](index=7&type=chunk) - Other operating expense rose to **$43.9 million** from $42.1 million sequentially, driven by higher salaries and benefits[8](index=8&type=chunk) - The efficiency ratio improved to **60.36%** in Q2 2025, compared to 61.16% in Q1 2025 and 64.26% in Q2 2024[9](index=9&type=chunk) [Balance Sheet Analysis](index=2&type=section&id=Balance%20Sheet%20Analysis) Total assets, loans, and deposits experienced slight sequential decreases, while core deposits remained relatively stable Key Balance Sheet Items (vs. March 31, 2025) | Account | June 30, 2025 | Change (QoQ) | | :--- | :--- | :--- | | Total Assets | $7.37 billion | -0.5% | | Total Loans, Net | $5.29 billion | -0.8% | | Total Deposits | $6.54 billion | -0.8% | | Core Deposits | $5.96 billion | -0.3% | [Asset Quality](index=2&type=section&id=Asset%20Quality) Asset quality metrics showed a slight increase in risk, with rises in nonperforming assets and net charge-offs Nonperforming Assets (NPAs) | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | NPAs | $14.9 million | $11.1 million | $10.3 million | | NPAs to Total Assets | 0.20% | 0.15% | 0.14% | - Net charge-offs increased to **$4.7 million** in Q2 2025, primarily due to a $2.0 million full charge-off of a commercial and industrial loan[14](index=14&type=chunk) - The allowance for credit losses as a percentage of total loans was unchanged from the previous quarter at **1.13%**[15](index=15&type=chunk) [Capital Management](index=2&type=section&id=Capital%20Management) The company's capital position strengthened with improved regulatory ratios, continued share repurchases, and a declared dividend - During Q2 2025, the company repurchased **103,077 shares of common stock for $2.6 million**, with $25.3 million remaining available[16](index=16&type=chunk) - The Board of Directors declared a quarterly cash dividend of **$0.27 per share**, payable on September 15, 2025[17](index=17&type=chunk) Regulatory Capital Ratios | Ratio | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Common Equity Tier 1 | 12.6% | 12.4% | | Tier 1 Risk-Based Capital | 13.5% | 13.4% | | Total Risk-Based Capital | 15.8% | 15.6% | | Leverage Ratio | 9.6% | 9.4% | [Other Information](index=4&type=section&id=Other%20Information) This section provides conference call details and outlines forward-looking statements and associated risks [Conference Call Information](index=4&type=section&id=Conference%20Call%20Information) Management will host a conference call on July 25, 2025, to discuss the quarterly results - A conference call to discuss results is scheduled for today at 2:00 p.m. ET, with a live webcast available at http://ir.cpb.bank[18](index=18&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements subject to risks like inflation, economic policy, and market conditions - The report contains forward-looking statements subject to risks including **inflation, economic policies, bank failures, and regulatory changes**[20](index=20&type=chunk)[21](index=21&type=chunk) - Investors are urged to review the 'Risk Factors' section in the Company's SEC filings for a more detailed discussion of potential risks[22](index=22&type=chunk)[23](index=23&type=chunk) [Consolidated Financial Tables](index=8&type=section&id=Consolidated%20Financial%20Tables) This section presents detailed unaudited financial tables supporting the earnings release narrative [Financial Highlights (Table 1)](index=8&type=section&id=Financial%20Highlights%20(Table%201)) Table 1 provides a condensed overview of the income statement, key ratios, and capital over the last five quarters Condensed Income Statement (in thousands) | | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net interest income | $59,796 | $57,699 | $51,921 | | Provision for credit losses | $4,987 | $4,172 | $2,239 | | Total other operating income | $13,013 | $11,096 | $12,121 | | Total other operating expense | $43,946 | $42,072 | $41,151 | | Net income | $18,271 | $17,760 | $15,817 | [Consolidated Balance Sheets (Table 2)](index=10&type=section&id=Consolidated%20Balance%20Sheets%20(Table%202)) Table 2 presents detailed consolidated balance sheets for the last five quarters, breaking down assets and liabilities Balance Sheet Summary (in thousands) | Account | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | | :--- | :--- | :--- | :--- | | Total Assets | $7,369,567 | $7,405,239 | $7,386,952 | | Loans, net | $5,230,198 | $5,274,078 | $5,321,419 | | Total Deposits | $6,544,989 | $6,596,048 | $6,582,455 | | Total Equity | $568,874 | $557,376 | $518,647 | [Consolidated Statements of Income (Table 3)](index=11&type=section&id=Consolidated%20Statements%20of%20Income%20(Table%203)) Table 3 provides detailed income statements for the last five quarters and recent six-month periods Income Statement Summary (in thousands) | | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Total interest income | $78,120 | $77,206 | $75,840 | | Total interest expense | $18,324 | $19,507 | $23,919 | | Net interest income | $59,796 | $57,699 | $51,921 | | Income before income taxes | $23,876 | $22,551 | $20,652 | | Net income | $18,271 | $17,760 | $15,817 | [Average Balances and Yields (Tables 4 & 5)](index=12&type=section&id=Average%20Balances%20and%20Yields%20(Tables%204%20%26%205)) Tables 4 and 5 detail average asset and liability balances, yields, and rates used to calculate net interest margin Q2 2025 Average Yields and Rates | Category | Average Yield/Rate | | :--- | :--- | | Total interest-earning assets | 4.49% | | Loans, including loans held for sale | 4.96% | | Total interest-bearing liabilities | 1.53% | | Total interest-bearing deposits | 1.41% | | Net interest margin (taxable-equivalent) | 3.44% | [Loan and Deposit Analysis (Tables 6 & 7)](index=14&type=section&id=Loan%20and%20Deposit%20Analysis%20(Tables%206%20%26%207)) Table 6 breaks down the loan portfolio by type and geography, while Table 7 details the deposit composition Loan Portfolio by Type (June 30, 2025, in thousands) | Loan Type | Balance | | :--- | :--- | | Commercial and industrial | $608,130 | | Construction | $190,008 | | Residential mortgage | $1,851,690 | | Home equity | $627,834 | | Commercial mortgage | $1,540,523 | | Consumer | $471,624 | | **Total Loans** | **$5,289,809** | Deposit Composition (June 30, 2025, in thousands) | Deposit Type | Balance | | :--- | :--- | | Noninterest-bearing demand | $1,938,226 | | Core deposits | $5,956,655 | | Time deposits > $250,000 | $588,334 | | **Total Deposits** | **$6,544,989** | [Asset Quality Details (Tables 8 & 9)](index=16&type=section&id=Asset%20Quality%20Details%20(Tables%208%20%26%209)) Table 8 details nonperforming assets, while Table 9 provides a reconciliation of the allowance for credit losses Allowance for Credit Losses Roll-Forward (Q2 2025, in thousands) | Item | Amount | | :--- | :--- | | Balance at beginning of period | $60,469 | | Provision for credit losses on loans | $3,810 | | Total charge-offs | ($5,722) | | Total recoveries | $1,054 | | **Balance at end of period** | **$59,611** | [Reconciliation of Non-GAAP Financial Measures](index=18&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) This section reconciles non-GAAP measures like the efficiency ratio and tangible common equity ratio to GAAP figures Efficiency Ratio Calculation (Q2 2025, in thousands) | Item | Amount | | :--- | :--- | | Total other operating expense | $43,946 | | Net interest income | $59,796 | | Total other operating income | $13,013 | | **Total revenue** | **$72,809** | | **Efficiency ratio (non-GAAP)** | **60.36%** | Tangible Common Equity (TCE) Ratio (June 30, 2025) | Metric | Value | | :--- | :--- | | Tangible common equity | $568,874 thousand | | Tangible assets | $7,369,567 thousand | | **TCE ratio (non-GAAP)** | **7.72%** |

Company Overview - Central Pacific Financial (CPF) is headquartered in Honolulu and has experienced a price change of -5.51% this year [3] - The company currently pays a dividend of $0.27 per share, resulting in a dividend yield of 3.93%, which is higher than the Banks - West industry's yield of 3.2% and the S&P 500's yield of 1.6% [3] Dividend Analysis - CPF's current annualized dividend of $1.08 has increased by 3.8% from the previous year [4] - Over the last 5 years, CPF has increased its dividend 2 times year-over-year, with an average annual increase of 3.19% [4] - The company's payout ratio is currently 43%, indicating that it pays out 43% of its trailing 12-month earnings per share as dividends [4] Earnings Growth - The Zacks Consensus Estimate for CPF's earnings in 2025 is $2.80 per share, reflecting a year-over-year earnings growth rate of 19.66% [5] Investment Considerations - CPF is considered a compelling investment opportunity due to its strong dividend profile and current Zacks Rank of 3 (Hold) [7] - The company is positioned as a strong dividend play, appealing to income investors despite the general trend of high-yielding stocks struggling during periods of rising interest rates [7]

Part I. Financial Information [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited statements show a slight asset decrease to $7.41 billion, higher net income, and stable loan balances [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased slightly to $7.41 billion, while total equity increased to $557.4 million Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$7,405,239** | **$7,472,096** | | Loans, net | $5,274,078 | $5,273,670 | | Total investment securities | $1,370,067 | $1,334,588 | | **Total Liabilities** | **$6,847,863** | **$6,933,711** | | Total deposits | $6,596,048 | $6,644,011 | | **Total Equity** | **$557,376** | **$538,385** | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Q1 2025 net income rose to $17.8 million from $12.9 million year-over-year, driven by higher net interest income Q1 2025 vs. Q1 2024 Income Statement (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Interest Income | $57,699 | $50,187 | | Provision for credit losses | $4,172 | $3,936 | | Total other operating income | $11,096 | $11,244 | | Total other operating expense | $42,072 | $40,576 | | **Net Income** | **$17,760** | **$12,945** | | **Diluted EPS** | **$0.65** | **$0.48** | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income surged to $28.6 million in Q1 2025, boosted by net income and positive other comprehensive income Comprehensive Income Breakdown (in thousands) | Component | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income | $17,760 | $12,945 | | Other Comprehensive Income (Loss) | $10,857 | $(1,727) | | **Comprehensive Income** | **$28,617** | **$11,218** | [Consolidated Statements of Changes in Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity) Total equity grew to $557.4 million, driven by earnings that outweighed dividends and share repurchases - Key drivers for the **$19.0 million increase in total equity** during Q1 2025 were net income and positive other comprehensive income, partially offset by dividends and stock buybacks[17](index=17&type=chunk) Q1 2025 Equity Changes (in thousands) | Item | Amount | | :--- | :--- | | Beginning Equity (Dec 31, 2024) | $538,385 | | Net Income | $17,760 | | Other Comprehensive Income | $10,857 | | Cash Dividends Declared | $(7,327) | | Common Stock Repurchased | $(2,094) | | **Ending Equity (Mar 31, 2025)** | **$557,376** | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash and cash equivalents decreased by $104.0 million due to investing and financing activities Q1 2025 Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $20,440 | $16,996 | | Net Cash (Used in) from Investing Activities | $(42,101) | $10,165 | | Net Cash Used in Financing Activities | $(82,384) | $(236,716) | | **Net Decrease in Cash** | **$(104,045)** | **$(209,555)** | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail key accounting policies, including the DCF model for the Allowance for Credit Losses (ACL) - The company's Allowance for Credit Losses (ACL) model uses a **one-year reasonable and supportable forecast** from Moody's Analytics and a Discounted Cash Flow (DCF) methodology for most loan segments[28](index=28&type=chunk)[30](index=30&type=chunk)[42](index=42&type=chunk) - As of March 31, 2025, the company had **$1.37 billion in investment securities** with unrealized losses attributed to interest rate changes, not credit quality[52](index=52&type=chunk)[62](index=62&type=chunk) - Total loans were stable at **$5.33 billion**, with nonaccrual loans at **$11.1 million**, or 0.21% of total loans[64](index=64&type=chunk)[72](index=72&type=chunk) - The company operates as a **single reportable segment**, banking operations, with all operations located in the State of Hawaii[156](index=156&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses improved Q1 2025 net income of $17.8 million, driven by a 48 bps net interest margin expansion Q1 2025 Financial Highlights vs. Q1 2024 | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income | $17.8 million | $12.9 million | | Diluted EPS | $0.65 | $0.48 | | Net Interest Margin | 3.31% | 2.83% | | ROA | 0.96% | 0.70% | | ROE | 13.04% | 10.33% | - The Hawaii economy shows strength with a **low unemployment rate of 2.9%** in March 2025, though the recovery in tourism from Japan remains slow[186](index=186&type=chunk)[189](index=189&type=chunk)[191](index=191&type=chunk) - The efficiency ratio improved to **61.16%** in Q1 2025 from 66.05% in Q1 2024, primarily due to higher net interest income[182](index=182&type=chunk)[183](index=183&type=chunk) [Results of Operations](index=46&type=section&id=Results%20of%20Operations) Net interest income grew by $7.5 million due to a 48 bps margin increase, while operating expenses rose 3.7% - Net interest income increased by **$7.5 million** year-over-year, primarily due to a **$6.6 million positive impact from rate changes**[197](index=197&type=chunk)[203](index=203&type=chunk) - Other operating income decreased by $0.1 million, mainly due to a **$1.0 million decline in income from bank-owned life insurance (BOLI)**[205](index=205&type=chunk)[206](index=206&type=chunk) - Other operating expense increased by **$1.5 million**, driven by higher salaries and employee benefits (+$1.1M) and legal and professional services (+$0.5M)[207](index=207&type=chunk)[208](index=208&type=chunk) [Financial Condition](index=51&type=section&id=Financial%20Condition) Total assets were $7.41 billion, with a stable loan portfolio of $5.33 billion and low nonperforming assets Loan Portfolio Composition (in thousands) | Loan Type | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Commercial mortgage | $1,552,439 | $1,500,680 | | Residential mortgage | $1,870,239 | $1,892,520 | | Commercial and industrial | $634,620 | $606,936 | | Consumer | $461,920 | $510,523 | | **Total Loans** | **$5,334,547** | **$5,332,852** | Credit Quality Metrics | Metric | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Nonperforming Assets (NPAs) | $11,085 | $11,018 | | NPAs / Total Assets | 0.15% | 0.15% | | ACL / Total Loans | 1.13% | 1.11% | | ACL / Nonaccrual Loans | 545.50% | 545.50% | - Total deposits decreased by $48.0 million to $6.60 billion, with estimated uninsured deposits at **$2.45 billion**, or 37% of total deposits[227](index=227&type=chunk)[229](index=229&type=chunk) [Capital Resources and Liquidity](index=56&type=section&id=Capital%20Resources%20and%20Liquidity) The company maintains a strong, well-capitalized position with robust liquidity and all regulatory ratios exceeded minimums Regulatory Capital Ratios (Company) - March 31, 2025 | Ratio | Actual | Minimum Required | | :--- | :--- | :--- | | CET1 risk-based capital | 12.4% | 4.5% | | Tier 1 risk-based capital | 13.4% | 6.0% | | Total risk-based capital | 15.6% | 8.0% | | Leverage capital | 9.4% | 4.0% | - In January 2025, a new **$30.0 million share repurchase plan** was approved, with $2.1 million used in Q1 2025[238](index=238&type=chunk)[239](index=239&type=chunk) - Total liquidity sources as of March 31, 2025, including cash and borrowing capacity, totaled approximately **$2.54 billion**[260](index=260&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=61&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk, with a +100 bps rate change estimated to increase NII by 0.96% Net Interest Income Sensitivity (Gradual Change) | Rate Change | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | +200 bps | 1.87% | 1.91% | | +100 bps | 0.96% | 0.84% | | -100 bps | (1.05)% | (1.36)% | | -200 bps | (2.44)% | (2.93)% | [Controls and Procedures](index=61&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - The Principal Executive Officer and Principal Financial Officer concluded that the Company's **disclosure controls and procedures were effective** as of the end of the period[263](index=263&type=chunk) - No changes occurred during the quarter that have **materially affected, or are reasonably likely to materially affect**, the Company's internal control over financial reporting[264](index=264&type=chunk) Part II. Other Information [Legal Proceedings](index=62&type=section&id=Item%201.%20Legal%20Proceedings) Ongoing legal proceedings from the ordinary course of business are not expected to have a material adverse effect - The company states that it does not expect ongoing legal proceedings, which arise in the ordinary course of business, to have a **material adverse effect** on its financial condition or operations[266](index=266&type=chunk) [Risk Factors](index=62&type=section&id=Item%201A.%20Risk%20Factors) Risk factors are materially unchanged, except for an update on potential impacts from changing government policies - A risk factor was updated to emphasize that significant changes in government policies could **adversely affect asset quality, deposit levels, and loan demand**[267](index=267&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=62&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 77,316 shares for $2.1 million in Q1 2025 under a new $30 million authorization Q1 2025 Share Repurchase Activity | Metric | Value | | :--- | :--- | | New Authorization (Jan 2025) | $30.0 million | | Shares Repurchased in Q1 2025 | 77,316 | | Average Price Paid per Share | $27.09 | | Total Cost in Q1 2025 | $2.1 million | | Remaining Authorization (Mar 31, 2025) | $27.9 million | [Other Information](index=63&type=section&id=Item%205.%20Other%20Information) Two company directors adopted Rule 10b5-1 trading arrangements for the potential sale of company shares - Director A. Catherine Ngo adopted a Rule 10b5-1 trading plan on February 3, 2025, for the potential sale of up to **39,996 shares**[271](index=271&type=chunk) - Director Paul K. Yonamine adopted a Rule 10b5-1 trading plan on March 5, 2025, for the potential sale of up to **8,295 shares**[272](index=272&type=chunk) [Exhibits](index=63&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including CEO/CFO certifications and Interactive Data Files (Inline XBRL)