Central Pacific Financial (US:CPF)2024-07-31 20:09Financial Performance - Net income for Q2 2024 was $15.8 million, or $0.58 per diluted share, compared to $14.5 million, or $0.53 per diluted share in Q2 2023[183]. - For the first half of 2024, net income was $28.8 million, or $1.06 per diluted share, down from $30.7 million, or $1.13 per diluted share in the same period of 2023[183]. - Pre-provision net revenue (PPNR) for Q2 2024 was $22.9 million, compared to $23.3 million in Q2 2023[184]. - PPNR for the first half of 2024 was $43.7 million, down from $46.4 million in the same period of 2023[184]. - The decrease in PPNR for Q2 2024 was primarily due to lower net interest income of $0.8 million compared to the previous year[187]. - Other operating income for Q2 2024 was $12.1 million, an increase of $1.7 million or 16.2% from $10.4 million in Q2 2023, driven by higher mortgage banking income and service charges[213]. - Total other operating income for the six months ended June 30, 2024, was $23.4 million, up by $1.9 million or 9.0% from $21.4 million in the same period last year[214]. - Total other operating expenses for Q2 2024 were $41.2 million, an increase of $1.2 million or 3.1% from $39.9 million in Q2 2023[215]. Credit Losses and Provisions - The provision for credit losses in Q2 2024 was $2.2 million, a decrease from $4.3 million in Q2 2023, attributed to lower loan balances and improved economic forecasts[183]. - The company recorded a provision for credit losses of $6.2 million for the first half of 2024, unchanged from the same period in 2023[184]. - The company recorded a provision for credit losses of $2.4 million for the second quarter of 2024, compared to $4.1 million in the same period last year[233]. - The allowance for credit losses (ACL) totaled $62.2 million at June 30, 2024, down from $63.9 million at December 31, 2023[232]. - Criticized loans declined by $14.8 million to $35.3 million, or 0.7% of the total loan portfolio, as of June 30, 2024[229]. Interest Income and Expenses - Net interest income for Q2 2024 was $51.92 million, down from $52.73 million in Q2 2023, while total revenue increased to $64.04 million from $63.17 million year-over-year[188]. - Net interest income for Q2 2024 was $52.1 million, a decrease of $0.8 million or 1.6% from $52.9 million in Q2 2023[197]. - Taxable-equivalent interest income increased to $76.0 million in Q2 2024, up $6.5 million or 9.3% from $69.5 million in the year-ago quarter[199]. - Interest expense rose to $23.9 million in Q2 2024, an increase of $7.3 million or 44.2% from $16.6 million in Q2 2023[200]. - The net interest margin for Q2 2024 was 2.97%, up 1 basis point from 2.96% in the year-ago quarter[200]. - Average rates paid on interest-bearing deposits increased by 64 basis points to 1.83% in Q2 2024, contributing to the rise in interest expense[200]. - Net interest income for the six months ended June 30, 2024, was $102.4 million, a decrease of 4.6% from $107.3 million in the same period of 2023[204]. - Interest expense rose to $48.1 million, an increase of $18.9 million or 64.8% compared to $29.2 million in the previous year, driven by higher rates on interest-bearing deposits[208]. - The net interest margin decreased to 2.90%, down 12 basis points from 3.02% in the prior year, attributed to rising rates on deposits and long-term debt[209]. Asset and Equity Changes - Total assets as of June 30, 2024, were $7,394.2 million, a decrease of $59.6 million from $7,453.8 million in the prior year[204]. - Total equity increased to $505.3 million, up $34.6 million from $470.7 million year-over-year[204]. - Total deposits decreased by $265.1 million, or 3.9%, to $6.58 billion at June 30, 2024, from $6.85 billion at December 31, 2023[236]. - Core deposits amounted to $5.91 billion at June 30, 2024, a decrease of $74.0 million from $5.99 billion at December 31, 2023[237]. - The company's book value per share was $19.16 at June 30, 2024, compared to $18.63 at December 31, 2023[241]. Market and Economic Conditions - Visitor arrivals to Hawaii decreased to 4.8 million in the six months ended June 30, 2024, down from 5.0 million in the same period last year, with total visitor spending at $10.26 billion, a decline of 4.8%[192]. - The unemployment rate in Maui improved from 8.4% in September 2023 to 3.1% in June 2024[191]. - Sales of Oahu single-family homes increased by 6.7% in the six months ended June 30, 2024, with a median price rise of 3.3% to $1.09 million[194]. - Real personal income in Hawaii is projected to grow by 0.9% and real gross state product by 1.5% in 2024[195]. - Average daily visitors to Maui were down approximately 22% in June 2024 compared to June 2023, but recovery is underway following the reopening of West Maui[191]. Regulatory and Compliance - The effective tax rate for the second quarter of 2024 was 23.41%, down from 23.60% in the same year-ago period, with total income tax expense of $4.8 million compared to $4.5 million[218]. - The Company elected to delay the estimated impact of CECL on regulatory capital, with the transition period ending on December 31, 2024[250]. - The Company's leverage capital ratio was 9.3% as of June 30, 2024, above the minimum required ratio of 4.0%[252]. - The total risk-based capital ratio for the Company was 15.1% as of June 30, 2024, exceeding the minimum requirement of 8.0%[252]. Liquidity Management - As of June 30, 2024, the company had $298.9 million in cash and approximately $2.56 billion in total other liquidity sources, with total available liquidity sources at 121% of uninsured and uncollateralized deposits[265]. - The company has maintained higher levels of on-balance sheet liquidity throughout 2023 due to precautionary actions taken in response to regional bank failures[264]. - The company performs regular liquidity stress testing to ensure adequate liquidity under various potential stress scenarios[264]. - The company has access to various short-term and long-term funding sources, including the Federal Home Loan Bank and secured repurchase agreements[265].