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

Part I. Financial Information Financial Statements (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 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 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 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 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] - The company repurchased and retired 180,393 shares for $4.7 million in the first six months of 2025[19] Consolidated Statements of Cash Flows 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 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 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 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] Results of Operations 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 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 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] Quantitative and Qualitative Disclosures About Market Risk 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] Controls and Procedures 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] - 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] Part II. Other Information Legal Proceedings 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][297] Risk Factors 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] Unregistered Sales of Equity Securities and Use of Proceeds 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] Other Information 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] Exhibits This section lists exhibits filed with Form 10-Q, including CEO and CFO certifications and Inline XBRL documents