Central Pacific Financial (CPF) - 2025 Q2 - Quarterly Results

Q2 2025 Earnings Release This report details Central Pacific Financial Corp's Q2 2025 performance, including financial highlights, detailed analysis, and consolidated statements Financial & Operational Highlights 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] - For the fourth consecutive year, Central Pacific Bank was named Best Bank In Hawaii by Forbes Magazine in 2025[5] Detailed Financial Analysis The company's Q2 2025 performance featured higher net interest income, an expanded margin, and a slight contraction in the balance sheet Earnings Analysis 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] - 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] - Other operating expense rose to $43.9 million from $42.1 million sequentially, driven by higher salaries and benefits[8] - The efficiency ratio improved to 60.36% in Q2 2025, compared to 61.16% in Q1 2025 and 64.26% in Q2 2024[9] Balance Sheet Analysis 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 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] - The allowance for credit losses as a percentage of total loans was unchanged from the previous quarter at 1.13%[15] Capital Management 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] - The Board of Directors declared a quarterly cash dividend of $0.27 per share, payable on September 15, 2025[17] 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 This section provides conference call details and outlines forward-looking statements and associated risks Conference Call Information 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 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][21] - Investors are urged to review the 'Risk Factors' section in the Company's SEC filings for a more detailed discussion of potential risks[22][23] Consolidated Financial Tables This section presents detailed unaudited financial tables supporting the earnings release narrative Financial Highlights (Table 1) 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) 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) 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) 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) 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) 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 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% |