Operations and Structure - Central Pacific Bank operates 27 branches and 55 ATMs across Hawaii, with 20 branches on Oahu[12]. - The company employed 763 individuals, with an average employee tenure of 9 years and 33% of staff having been with the company for over 10 years[20][25]. - Central Pacific Bank is ranked as the fourth-largest depository institution in Hawaii based on deposit market share as of December 31, 2025[27]. - The company focuses on strategic partnerships with financial institutions in Japan and Korea to diversify funding sources[14]. - The bank became a member of the Federal Reserve System on January 24, 2025, making the FRB its primary federal regulator[38]. Financial Performance and Capital Management - As of December 31, 2025, approximately 80% of the loan portfolio consisted of real estate-related loans[30]. - The company aims to deliver superior financial results and operational excellence across economic cycles[18]. - As of December 31, 2025, the Company and the Bank were well-capitalized, exceeding the minimum capital ratios required under Basel III[56]. - The minimum capital ratios required are: CET1 risk-based capital ratio of 7.0%, Tier 1 risk-based capital ratio of 8.5%, and total risk-based capital ratio of 10.5%[54]. - The Capital Conservation Buffer required under Basel III is 2.50% above the minimum CET1 ratio to avoid restrictions on capital distributions[52]. - The Company repurchased 788,261 shares of common stock at an aggregate cost of $23.3 million under the 2025 Repurchase Plan[77]. - The Company has authorized a new share repurchase plan allowing for the repurchase of up to $55.0 million of common stock[77]. - The Company must maintain a CET1 ratio of at least 6.5%, a Tier 1 capital ratio of at least 8%, and a total capital ratio of at least 10% to be considered well-capitalized[65]. Regulatory Environment - The Bank is subject to regulatory requirements that may limit its ability to accept brokered deposits if it is not well-capitalized[68]. - The Federal Reserve has not updated its well-capitalized standard for bank holding companies to fully reflect Basel III, affecting capital requirements[50]. - The impact of Basel IV on the Company will depend on how these standards are adopted by U.S. federal banking regulators[60]. - The Bank received an "Outstanding" rating in the FDIC's 2022 CRA Performance Evaluation, which measures lending, investment, and service activities supporting community needs[109]. - The FDIC has set the Designated Reserve Ratio (DRR) at 2.00%, with an increase in the initial base deposit insurance assessment rate schedules by 2 basis points effective January 1, 2023[87]. - In November 2023, the FDIC finalized a special assessment of approximately 13.4 basis points annually on institutions' uninsured deposits to recover losses from the closures of Silicon Valley Bank and Signature Bank[88]. - The 2023 CRA final rule was scheduled to take effect on April 1, 2024, but is currently subject to a preliminary injunction, delaying its implementation[112]. - The Dodd-Frank Act revised the FDIC's authority over Deposit Insurance Fund management, establishing requirements for the Designated Reserve Ratio and redefining the assessment base for quarterly assessments[85]. - The federal banking agencies continue to evaluate banks' CRA performance under the regulations originally adopted in 1995, as the 2023 final rule is not currently in effect[113]. Risk Factors - The company faces significant risks including credit, market/liquidity, operational, legal/regulatory, and strategic/reputation risks[136]. - The company recorded a provision for credit losses of $15.7 million for the year ended December 31, 2025, indicating potential future credit quality deterioration[160]. - The company faces risks related to the high concentration of real estate loans, which could lead to elevated credit costs if property values decline[148]. - The company is subject to regulatory capital standards that impose enhanced capital adequacy requirements, impacting its financial condition[149]. - The company is exposed to operational risks associated with third-party vendors and other financial institutions, which could adversely affect its performance[1]. - The company may incur increased funding costs if deposit customers seek higher yielding alternatives, impacting net interest income[1]. - The company is sensitive to economic conditions in Hawaii, where its operations are geographically concentrated, potentially affecting its borrowers' ability to repay loans[147]. - The company may face adverse effects from changes in governmental regulation and policies, which could impair operations and restrict growth[152]. - The company is dependent on key personnel, and the loss of such personnel may materially affect its prospects[1]. Market and Competitive Landscape - The banking industry in Hawaii is highly competitive, with Central Pacific Bank differentiating itself through strong personal relationships and superior customer service[28][29]. - The company operates in a highly competitive market, which may affect its ability to attract and retain customers[1]. - The company faces substantial competition from various financial institutions, including national, regional, and community banks, which may have more financial resources[196]. - The financial services industry is experiencing intense competitive pressures due to technological advances and consolidation, with larger competitors having greater access to capital markets[197]. - The rapid growth of digital wallets and fintech platforms may reduce transaction-based revenue and increase operational risks for the company[198]. - Legislative, regulatory, and technological changes could further intensify competition, allowing non-banks to offer traditional banking services[199]. - The company's competitiveness relies on maintaining long-term customer relationships, expanding market position, and introducing new products relative to competitors[202]. Financial Management and Investment - Interest earned on investment securities represented 13.3% of the company's interest income for the year ended December 31, 2025, up from 11.7% in 2024, highlighting the importance of effectively managing the investment securities portfolio[176]. - The high interest rate environment has significantly decreased the market value of the company's fixed-rate investment securities and loan portfolios, which could lead to realized losses if assets need to be sold to meet liquidity needs[177]. - The company relies on customer deposits as its primary source of funding, and any material decrease in deposits could necessitate raising additional funds at higher costs, impacting liquidity and profitability[182]. - The company relies on the mortgage secondary market for revenue and liquidity, and any limitations imposed by purchasers like Fannie Mae and Freddie Mac could adversely affect its ability to fund additional mortgage loans[185]. - Changes in accounting policies or standards could materially affect how the company reports its financial results, potentially impacting business and financial condition[194]. Environmental and Operational Risks - Environmental liability risks associated with bank branches and real estate collateral could lead to significant remediation costs and affect financial condition[203]. - Adverse actions from rating agencies could impact customer decisions and the company's ability to access capital markets on favorable terms[204]. - Operational risks from third-party vendors may disrupt operations and adversely affect financial condition if vendors fail to meet service agreements[205]. - Increases in homeowners insurance premiums due to natural disasters may negatively impact the residential mortgage loan market and real estate valuations[207]. - The company is subject to significant governmental regulation, which may affect lending practices and growth, potentially increasing operational expenses[208]. - Changes in regulations could adversely affect earnings and operational capabilities of the company[209].

Financial Performance - Net interest income increased by 1.3% from the prior quarter to $62.1 million, with net interest margin expanding by 7 basis points to 3.56% due to reduced deposit costs and stable loan yields [1] - For the full year 2025, net income was reported at $77.5 million, or $2.86 per diluted share, with adjusted non-GAAP net income at $78.6 million, reflecting a 24% increase over 2024 [3] - The company reported net income of $22.9 million for Q4, or $0.85 per diluted share, compared to $18.6 million, or $0.69 per diluted share, in the prior quarter [4][7] Capital Management - The bank repurchased 788,000 shares in 2025 and raised the quarterly dividend to $0.29, with an authorization for up to $55 million in buybacks for 2026 [6][19] - Total risk-based capital was reported at 14.8%, with capital priorities focused on supporting organic loan growth, dividends, and share repurchases [21] Loan and Deposit Trends - Total core deposits grew by $78 million during the quarter, while total loans declined by $78 million, attributed to large payoffs and delays in new fundings [10][11] - The company expects low single-digit percentage growth in net loans and deposits for 2026, with a consistent loan pipeline and a focus on the core Hawaii market [15] Credit Quality - Credit quality indicators remained stable, with net charge-offs at $2.5 million and non-performing assets at $14.4 million [20] - The provision expense for the quarter was $2.4 million, reflecting improvements in asset quality and a favorable macroeconomic forecast [20] Strategic Outlook - Management guided for a 4% to 6% increase in net interest income for 2026, with expectations for net interest margin expansion at a slower pace than in 2025 [8] - The company signed a strategic partnership with Korea Investment & Securities to expand its international strategy and create new deposit opportunities [24]

Financial Data and Key Metrics Changes - For Q4 2025, net income was $22.9 million, or $0.85 per diluted share, compared to $18.6 million, or $0.69 per diluted share in the prior quarter [9] - Return on average assets was 1.25%, and return on average equity was 15.41%, indicating continued profitability improvement [9] - Core earnings per share increased by 24% from the prior year [4] - Net interest income rose by 1.3% from the prior quarter to $62.1 million, with net interest margin expanding 7 basis points to 3.56% [10] Business Line Data and Key Metrics Changes - Total core deposits grew by $78 million during Q4, with gains in interest-bearing demand, savings, and money market balances [6] - Total loan portfolio declined by $78 million from the prior quarter, with a full-year decline of $44 million driven by a decrease in residential mortgage, home equity, and consumer portfolios [6][7] - Commercial mortgage and construction portfolios showed strong growth, with a 10% year-over-year increase [32] Market Data and Key Metrics Changes - Hawaii's economy remains resilient despite macroeconomic uncertainty, with strong construction activity in both public and private sectors [4] - Non-interest-bearing demand deposits represented 29% of total deposits, indicating a healthy deposit base [6] Company Strategy and Development Direction - The company is focused on organic growth, diversification, and operational excellence, aiming for consistent earnings growth and enhanced shareholder returns [4] - A strategic partnership with Korea Investment & Securities was signed to expand international reach and create new deposit opportunities [5] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2026, guiding for low single-digit growth in net loans and deposits [8] - The company plans to continue investing in technology to drive returns and efficiency while managing expenses [35] Other Important Information - The board declared a first-quarter cash dividend of $0.29 per share, an increase of 3.6% from the prior quarter [13] - A new share repurchase authorization for up to $55 million in 2026 was approved, reflecting strong earnings and capital position [14] Q&A Session Summary Question: Delay in new loan fundings - Management confirmed that delayed closings are expected to be weighted more towards the second quarter of 2026 [23] Question: Spot rate on deposit costs - The deposit spot rate at year-end was 89 basis points [24] Question: Loan growth outlook - Management indicated that loan growth is expected to be slower in the first quarter but may accelerate later in the year [43] Question: Drivers behind payoffs and paydowns - Payoffs were attributed to a smaller construction portfolio, impacting loan growth [47] Question: Competitive landscape for deposits - Core deposit growth was driven by both new clients and deepening relationships with existing clients [50]

Financial Data and Key Metrics Changes - For Q4 2025, the company reported net income of $22.9 million, or $0.85 per diluted share, compared to $18.6 million, or $0.69 per diluted share in the prior quarter, reflecting a strong performance [9] - The return on average assets was 1.25%, and return on average equity was 15.41%, indicating continued profitability improvement [9] - Core earnings per share increased by 24% from the prior year, underscoring strong operating momentum [4] - Net interest income rose by 1.3% from the prior quarter to $62.1 million, with net interest margin expanding 7 basis points to 3.56% [10] - Total other operating income was $14.2 million, up $0.7 million from the previous quarter [11] Business Line Data and Key Metrics Changes - Total core deposits grew by $78 million during the quarter, with significant gains in interest-bearing demand, savings, and money market balances [6] - The total loan portfolio declined by $78 million from the prior quarter, driven by large construction and commercial mortgage loan payoffs [6] - The decline in total loans for the full year 2025 was $44 million, primarily due to a $190 million decrease in residential mortgage, home equity, and consumer portfolios [7] Market Data and Key Metrics Changes - Hawaii's economy remains resilient despite macroeconomic uncertainty, with strong construction activity at both public and private levels, as well as in the military sector [4] - The company is focused on deepening relationships in Hawaii and strategic partnerships in Japan and Korea to drive deposit growth [7] Company Strategy and Development Direction - The company is focused on organic growth, thoughtful diversification, and operational excellence to achieve consistent earnings growth and enhance shareholder returns [4] - A strategic partnership with Korea Investment & Securities was signed to expand international reach and create new deposit opportunities [5] - The company is guiding for full-year net loan and deposit growth in the low single-digit percentage range for 2026 [8] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2026, expecting stronger growth in commercial portfolios and less drawdown on consumer portfolios [32] - The company plans to continue investing in technology to drive returns and efficiency while maintaining strong expense discipline [35] - The effective tax rate was 18.9% in Q4, benefiting from greater tax-exempt income and additional tax credits [12] Other Important Information - The board declared a first-quarter cash dividend of $0.29 per share, an increase of 3.6% from the prior quarter [13] - A new share repurchase authorization for up to $55 million in 2026 was approved, reflecting strong earnings and capital position [14] Q&A Session Summary Question: Delay in new loan fundings - Management confirmed that some loan closings were delayed and expected to be weighted more towards the second quarter [23] Question: Deposit costs and competition - The current deposit beta is about 30%, with expectations to remain in the 25%-30% range [25] Question: Share buyback plan - The company plans to be active in the buyback as they return capital that cannot be used for organic growth [26] Question: Loan growth outlook - Management expects a seasonally slower quarter for loan growth in Q1, with potential acceleration later in the year [43] Question: Drivers behind payoffs and paydowns - Payoffs were attributed to a smaller construction portfolio, and efforts are being made to build this portfolio [47] Question: Competitive landscape for deposits - Core deposit growth is a combination of new customer acquisition and deepening existing relationships [50]

Financial Data and Key Metrics Changes - For Q4 2025, the company reported net income of $22.9 million, or $0.85 per diluted share, compared to $18.6 million, or $0.69 per diluted share in the prior quarter, indicating a strong profitability improvement [10] - The return on average assets was 1.25%, and return on average equity was 15.41%, reflecting continued profitability improvement [10] - Core earnings per share increased by 24% from the prior year, underscoring strong operating momentum [4] - Total net interest income rose by 1.3% from the prior quarter to $62.1 million, with net interest margin expanding by 7 basis points to 3.56% [11] - For the full year 2025, net income was $77.5 million, or $2.86 per diluted share, representing a meaningful 24% increase over 2024 [10] Business Line Data and Key Metrics Changes - Total core deposits grew by $78 million during Q4, with significant gains in interest-bearing demand, savings, and money market balances [6] - The total loan portfolio declined by $78 million from the prior quarter, driven by large construction and commercial mortgage loan payoffs [7] - The decline in total loans for the full year 2025 was $44 million, primarily due to a $190 million decrease in residential mortgage, home equity, and consumer portfolios, partially offset by growth in commercial mortgage and construction [8] Market Data and Key Metrics Changes - Hawaii's economy remains resilient despite macroeconomic uncertainty, with strong construction activity in both public and private sectors, as well as the military sector [4] - The company is focusing on deepening relationships in Hawaii and strategic partnerships in Japan and Korea to drive deposit growth [8] Company Strategy and Development Direction - The company is focused on organic growth, thoughtful diversification, and operational excellence to achieve consistent earnings growth and enhance shareholder returns [4] - A strategic partnership with Korea Investment & Securities was signed to expand international reach and create new deposit opportunities [5] - The company plans to continue using capital for organic loan growth, dividends, and share repurchases to optimize its capital position [14] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2026, guiding for low single-digit net loan and deposit growth [9] - The company expects to see stronger growth in commercial portfolios and less drawdown on consumer portfolios in 2026 [31] - Management highlighted a strong capital position to support the bank through the credit cycle and against unexpected outcomes [17] Other Important Information - The effective tax rate was 18.9% in Q4, benefiting from greater tax-exempt income and additional tax credits [13] - The board declared a first-quarter cash dividend of $0.29 per share, an increase of 3.6% from the prior quarter [13] - A new share repurchase authorization for up to $55 million in 2026 was approved, reflecting strong earnings and capital position [14] Q&A Session Summary Question: Delay in new loan fundings - Management confirmed that some loan closings were delayed and expected to be funded in the first half of 2026, with a heavier weighting towards the second quarter [23] Question: Deposit costs and competition - The deposit spot rate at year-end was 89 basis points, with an interest-bearing deposit beta of about 30% [24][25] Question: Buyback plan for 2026 - Management confirmed plans to be active on the buyback as they return capital that cannot be used for organic growth [26] Question: Loan growth outlook in Hawaii - Management indicated a cautious optimism for stronger growth in commercial areas, with a focus on optimizing the loan portfolio towards more commercial lending [30][31] Question: Drivers behind payoffs and paydowns - Management noted that the construction portfolio's size impacts loan growth, and efforts are being made to build this portfolio [47]

For further information on factors that could cause actual results to differ materially from the expectations or projections expressed in our FLS, please refer to the Company's filings with the U.S. Securities and Exchange Commission, including the Company's most recent Forms 10-Q and 10-K, particularly, 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 ...

Core Insights - Central Pacific Financial (CPF) reported a revenue of $76.29 million for the quarter ended December 2025, marking a 30.6% increase year-over-year [1] - Earnings per share (EPS) for the quarter was $0.85, up from $0.70 in the same quarter last year, exceeding the consensus estimate of $0.73 by 16.44% [1] Financial Performance Metrics - Efficiency Ratio stood at 59.9%, better than the average estimate of 60.4% from two analysts [4] - Net Interest Margin was reported at 3.6%, matching the average estimate [4] - Average Balance of Total Interest Earning Assets was $6.96 billion, slightly below the estimated $7.03 billion [4] - Total Nonaccrual Loans were reported at $14.39 million, aligning with the average estimate [4] - Total Nonperforming Assets were $14.39 million, better than the average estimate of $15.39 million [4] - Net Charge-offs to Average Loans were 0.2%, lower than the estimated 0.3% [4] - Net Interest Income was $62.09 million, slightly below the average estimate of $62.8 million [4] - Total Noninterest Income was $14.2 million, exceeding the average estimate of $12.58 million [4] Stock Performance - Shares of Central Pacific Financial have returned -0.2% over the past month, while the Zacks S&P 500 composite increased by 0.8% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market [3]

Core Insights - Central Pacific Financial (CPF) reported quarterly earnings of $0.85 per share, exceeding the Zacks Consensus Estimate of $0.73 per share, and showing an increase from $0.70 per share a year ago, resulting in an earnings surprise of +16.44% [1] - The company achieved revenues of $76.29 million for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 1.18% and up from $58.4 million year-over-year [2] Earnings Performance - Over the last four quarters, Central Pacific Financial has surpassed consensus EPS estimates two times and topped consensus revenue estimates four times [2] - The current consensus EPS estimate for the upcoming quarter is $0.68 on revenues of $74.55 million, while for the current fiscal year, it is $3.13 on revenues of $308.2 million [7] Market Position - Central Pacific Financial shares have increased by approximately 1.7% since the beginning of the year, compared to the S&P 500's gain of 1.9% [3] - The Zacks Industry Rank for Banks - West, to which Central Pacific Financial belongs, is currently in the top 28% of over 250 Zacks industries, indicating a favorable industry outlook [8] Future Outlook - The sustainability of the stock's price movement will depend on management's commentary during the earnings call and the trends in earnings estimate revisions [3][4] - The estimate revisions trend for Central Pacific Financial was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, suggesting it is expected to perform in line with the market in the near future [6]

Financial Performance - Net income for Q4 2025 was $22.9 million, or $0.85 per diluted share, compared to $18.6 million, or $0.69 in the prior quarter, and $11.3 million, or $0.42 in the same quarter last year[2] - For the full year 2025, net income was $77.5 million, or $2.86 per diluted share, up from $53.4 million, or $1.97 in 2024[2] - Net income for Q4 2025 was $22,875,000, an increase from $18,574,000 in Q3 2025 and $11,345,000 in Q4 2024[46] - Basic earnings per share increased to $0.86 in Q4 2025 from $0.42 in Q4 2024, representing a 104.8% growth[30] - Adjusted net income (non-GAAP) for the year ended December 31, 2025 was $78,647,000, up from $63,423,000 in 2024[48] - Adjusted diluted EPS (non-GAAP) for the year ended December 31, 2025 was $2.91, compared to $2.34 in 2024[48] Revenue and Income Sources - Total revenue for Q4 2025 was $76,288,000, compared to $74,808,000 in Q3 2025 and $58,398,000 in Q4 2024[49] - Total interest income for Q4 2025 was $78,877,000, a slight decrease from $79,959,000 in Q3 2025[35] - Total other operating income for Q4 2025 was $14,201,000, an increase from $13,507,000 in Q3 2025[35] - Net interest income for Q4 2025 totaled $62.1 million, an increase of $0.8 million, or 1.3% from the prior quarter, and an increase of $6.3 million, or 11.3% year-over-year[4] Asset and Liability Management - Total assets as of December 31, 2025, were $7.41 billion, a decrease of $12.2 million, or 0.2% from the prior quarter[11] - Total liabilities were $6,816,660 as of December 31, 2025, a slight decrease from $6,833,412 on September 30, 2025[34] - Total equity increased to $592,581 as of December 31, 2025, from $588,066 on September 30, 2025, representing a growth of 0.3%[34] - Total loans were $5.29 billion at December 31, 2025, a decrease of $78.1 million, or 1.5% from the prior quarter[12] - Total deposits increased to $6,609,764 as of December 31, 2025, compared to $6,577,684 on September 30, 2025, reflecting a growth of 0.5%[34] Efficiency and Ratios - The efficiency ratio improved to 59.88% in Q4 2025, compared to 62.84% in the prior quarter and 75.65% in the same quarter last year[9] - Return on Assets (ROA) for Q4 2025 was 1.25%, up from 1.01% in Q3 2025 and 0.62% in Q4 2024[51] - Return on Equity (ROE) for Q4 2025 was 15.41%, an increase from 12.89% in Q3 2025 and 8.37% in Q4 2024[51] - The leverage ratio for Central Pacific Financial Corp. was 9.8% in Q4 2025, up from 9.3% in Q4 2024[32] - The common equity tier 1 capital ratio increased to 12.7% in Q4 2025 from 12.3% in Q4 2024, reflecting stronger capital position[32] Credit Quality - Provision for credit losses decreased to $2,396,000 in Q4 2025 from $4,172,000 in Q4 2024, reflecting improved asset quality[30] - Nonperforming assets totaled $14.4 million, or 0.19% of total assets, unchanged from the prior quarter[14] - The ratio of allowance for credit losses to total loans remained stable at 1.13% in Q4 2025, consistent with Q4 2024[33] - The company reported net charge-offs of $2,457 thousand for the quarter ended December 31, 2025, compared to $2,658 thousand in the previous quarter, a decrease of 7.6%[42] Shareholder Returns - The Board of Directors declared a quarterly cash dividend of $0.29 per share, an increase of 3.6% from the previous quarter[20] - Cash dividends declared increased to $0.28 per share in Q4 2025, up from $0.27 in Q3 2025[35] - The Company repurchased 529,613 shares of common stock at a total cost of $16.3 million during Q4 2025[18] Non-GAAP Measures - The company utilized non-GAAP financial measures to provide additional insights into its financial performance, excluding certain non-recurring transactions[43] - The tangible common equity (TCE) ratio as of December 31, 2025 was 8.00%, an increase from 7.21% in 2024[51] - Adjusted tangible common equity (non-GAAP) reached $593,748 thousand, reflecting a quarterly increase from $589,233 thousand[52]

Core Viewpoint - Central Pacific Financial Corp. reported a significant increase in net income and earnings per share (EPS) for the fourth quarter of 2025 compared to both the previous quarter and the same quarter last year [1] Financial Performance - The company achieved a net income of $22.9 million for Q4 2025, which is an increase from $18.6 million in Q3 2025 and $11.3 million in Q4 2024 [1] - The EPS for Q4 2025 was $0.85, up from $0.69 in the prior quarter and $0.42 in the same quarter last year [1] - For the entire year of 2025, the company reported a net income of $77.5 million and an EPS of $2.86 [1]