[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)

Group 1 - Central Pacific Financial (CPF) is experiencing significant activity in the options market, particularly with the Jun 20, 2025 $25.00 Call showing high implied volatility, indicating potential for a major price movement [1] - Implied volatility reflects market expectations for future stock movement, suggesting that investors anticipate a significant event that could lead to a substantial rally or sell-off [2] - Analysts have a positive outlook on Central Pacific Financial, with a Zacks Rank of 2 (Buy) in the Banks - West industry, which is in the bottom 32% of the Zacks Industry Rank [3] Group 2 - Over the past 60 days, two analysts have raised their earnings estimates for the current quarter, increasing the Zacks Consensus Estimate from 67 cents per share to 70 cents [3] - The high implied volatility may present trading opportunities, as seasoned options traders often seek to sell premium on such options, hoping the underlying stock does not move as much as expected by expiration [4]

Financial Data and Key Metrics Changes - Net income for Q1 2025 was $17.8 million, or 65¢ per diluted share, with a return on average assets of 0.96% and return on average equity of 13.04% [19][20] - The efficiency ratio improved to 61.2%, the best since Q4 2022 [20] - Net interest income increased by $1.9 million or 3.5% from the prior quarter to $57.7 million, with net interest margin (NIM) at 3.31%, up 14 basis points sequentially [20][21] - Total deposits declined by $48 million from the prior quarter, but average balances increased by $14 million [17] Business Line Data and Key Metrics Changes - The loan portfolio increased by $1.7 billion sequentially, marking the first quarterly increase in two years, driven by commercial mortgage and construction lending [16] - Total other operating income was $11.1 million, while total other operating expense was $42.1 million in Q1 [22] Market Data and Key Metrics Changes - The Hawaii construction industry saw a 20.3% increase in total construction value for the first ten months of 2024 compared to the same period in 2023, forecasted to exceed $14 billion [10] - Hawaii's unemployment rate remained low at 2.9% in March, outperforming the national rate of 4.2% [11] Company Strategy and Development Direction - The company aims to grow market share in Hawaii while exploring targeted lending opportunities in Mainland markets [15] - A focus on optimizing the balance sheet and executing strategies to navigate market uncertainties is emphasized [9] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding loan growth, particularly in commercial areas, despite market volatility [38] - The company is prepared to navigate potential economic challenges and is monitoring the impacts of current administration policies [13][11] Other Important Information - The company plans to consolidate office space, anticipating a one-time pretax write-off of $2 to $2.5 million, with expected annual savings of approximately $1 million [23] - A quarterly cash dividend of 27¢ per share was declared, payable on June 16 [25] Q&A Session Summary Question: Loan growth outlook amidst market volatility - Management remains cautiously optimistic about loan growth, reiterating guidance of low to mid-single-digit growth for the year, primarily in commercial areas [38][39] Question: Impact of trade wars on clients - Approximately 10% of the loan book may be impacted, particularly in accommodation, restaurant, wholesale, and retail sectors, but clients are expected to manage short-term turbulence [42][43] Question: Deposit performance and competitive landscape - The company is pleased with deposit performance, with a favorable mix shift towards core deposits, and expects funding costs to trend down gradually [48] Question: Margin expectations for March - The margin for March was reported at 3.37%, with expectations for continued expansion driven by lower funding costs and favorable mix shifts [54][56] Question: Capital priorities and stock repurchases - The capital position is strong, with plans for organic growth, share repurchases, and maintaining a quarterly cash dividend [68][69]

Financial Data and Key Metrics Changes - Net income for Q1 2025 was $17.8 million, or $0.65 per diluted share, with a return on average assets of 0.96% and return on average equity of 13.04% [15][16] - Net interest income increased by $1.9 million, or 3.5%, from the prior quarter to $57.7 million, with a net interest margin of 3.31%, up 14 basis points sequentially [16][18] - The efficiency ratio improved to 61.2, the best since Q4 2022 [15] Business Line Data and Key Metrics Changes - The loan portfolio increased by $1.7 million sequentially, marking the first quarterly increase in two years, driven by commercial mortgage and construction lending [13] - Total deposits declined by $48 million from the prior quarter, but average balances increased by $14 million, with a notable rise in average non-time deposits [14] Market Data and Key Metrics Changes - The Hawaii construction industry saw a 20.3% increase in total construction value for the first ten months of 2024 compared to the same period in 2023, forecasted to exceed $14 billion [9] - The statewide unemployment rate in Hawaii remained low at 2.9%, outperforming the national rate of 4.2% [10] Company Strategy and Development Direction - The company aims to grow market share in Hawaii while targeting lending opportunities in Mainland markets, focusing on small businesses [12][13] - Management is optimistic about net loan growth continuing to pick up, particularly in commercial areas [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating economic uncertainties and maintaining strong results despite external factors [7][11] - The company is prepared to address potential impacts from current administration policies and market volatility [11] Other Important Information - The company plans to consolidate office space, expecting to recognize a one-time pretax write-off of $2 million to $2.5 million, with anticipated annual savings of approximately $1 million [18] - A quarterly cash dividend of $0.27 per share was declared, payable on June 16 [18] Q&A Session Summary Question: Loan growth outlook amidst market volatility - Management remains cautiously optimistic about loan growth, reiterating guidance for low to mid-single digit growth for the full year, primarily in commercial areas [28][30] Question: Impact of trade wars and tariffs on clients - Approximately 10% of the loan book may be impacted, particularly in accommodation, restaurant, and retail sectors, but management believes clients can handle short-term turbulence [32][34] Question: Deposit performance and competitive landscape - The company is pleased with deposit performance, with a favorable mix shift towards core deposits, and expects funding costs to trend down gradually [38][40] Question: Margin expectations for March - The margin for March was reported at 3.37%, with expectations for continued expansion driven by lower funding costs and favorable asset repricing [44][46] Question: Capital priorities and share repurchases - The company maintains a strong capital position, focusing on organic growth, share repurchases, and a quarterly cash dividend with a 40% payout ratio [53][54]