Central Pacific Financial (US:CPF)2025-10-29 21:03Financial Performance - For the three months ended September 30, 2025, the Company reported net income of $18.6 million, or $0.69 per diluted share, compared to net income of $13.3 million, or $0.49 per diluted share for the same period in 2024[216]. - The Company's pre-provision net revenue (PPNR) for the three months ended September 30, 2025 was $27.8 million, compared to $19.9 million for the same period in 2024[218]. - For the nine months ended September 30, 2025, net income was $54.6 million, or $2.01 per diluted share, compared to net income of $42.1 million, or $1.55 per diluted share for the same period in 2024[216]. - Adjusted net income for Q3 2025 was $19,741 thousand, up 25.5% from $15,667 thousand in Q3 2024[225]. - Adjusted diluted earnings per share (EPS) increased to $0.73 in Q3 2025, compared to $0.58 in Q3 2024, representing a 25.9% growth[226]. Efficiency and Ratios - Return on average assets (ROA) for the three months ended September 30, 2025 was 1.01%, up from 0.72% in the same period of 2024[220]. - Return on average shareholders' equity (ROE) for the three months ended September 30, 2025 was 12.89%, compared to 10.02% for the same period in 2024[220]. - The efficiency ratio (non-GAAP) improved to 62.84% for the three months ended September 30, 2025, down from 70.12% in the same period of 2024[224]. - The adjusted return on average assets (ROA) improved to 1.08% in Q3 2025, up from 0.85% in Q3 2024[227]. - The adjusted return on average shareholders' equity (ROE) increased to 13.67% in Q3 2025, compared to 11.75% in Q3 2024[227]. - The efficiency ratio improved to 60.81% in Q3 2025, down from 65.51% in Q3 2024, indicating enhanced operational efficiency[230]. Credit Losses and Provisions - The Company recorded a provision for credit losses of $4.2 million during the three months ended September 30, 2025, compared to a provision of $2.8 million during the same period in 2024[217]. - The Company recorded a provision for credit losses on loans of $3.4 million and net charge-offs of $2.7 million, compared to a provision of $3.0 million and net charge-offs of $3.6 million in the same period of 2024[287]. - The Company's Allowance for Credit Losses (ACL) on loans totaled $60.4 million as of September 30, 2025, compared to $59.2 million as of December 31, 2024, and $61.6 million as of September 30, 2024[286]. Loan Portfolio and Assets - The Company aims to maintain a strong and diversified loan portfolio, primarily in Hawaii, with selective expansion into mainland markets[210]. - As of September 30, 2025, loans, net of deferred costs, totaled $5.37 billion, an increase of $34.4 million, or 0.6%, from $5.33 billion as of December 31, 2024[277]. - The Hawaii loan portfolio decreased by $100.7 million, or 2.2%, primarily due to decreases in home equity loans of $66.1 million and residential mortgage loans of $53.0 million[278]. - The U.S. Mainland loan portfolio increased by $135.1 million, or 18.0%, driven by increases in commercial mortgage loans of $108.0 million and construction loans of $41.5 million[280]. - Nonperforming assets totaled $14.3 million, or 0.19% of total assets, as of September 30, 2025, compared to $11.0 million, or 0.15% of total assets as of December 31, 2024[283]. Deposits and Equity - Total deposits were $6.58 billion as of September 30, 2025, a decrease of $66.3 million, or 1.0%, from $6.64 billion as of December 31, 2024[294]. - Core deposits totaled $5.98 billion as of September 30, 2025, a decrease of $59.0 million from $6.04 billion as of December 31, 2024, representing 90.9% of total deposits[295]. - Total shareholders' equity was $588.1 million as of September 30, 2025, compared to $538.4 million as of December 31, 2024, primarily due to net income of $54.6 million[300]. - The ratio of total shareholders' equity to total assets was 7.92% as of September 30, 2025, compared to 7.21% as of December 31, 2024[301]. Economic Conditions and Tourism - Visitor spending in Hawaii reached $14.62 billion for the eight months ended August 31, 2025, a 4.5% increase from $14.00 billion in the same period in 2024[234]. - The number of visitors to Hawaii increased by 0.7% to 6.6 million during the eight months ended August 31, 2025, compared to 6.5 million in the same period in 2024[233]. - The company’s performance is sensitive to local economic conditions, particularly those affecting real estate and tourism in Hawaii[232]. - Hawaii's tourism sector is projected to decline by approximately 1.3% in visitor arrivals to 9.58 million in 2025, down from 9.71 million in 2024[235]. - Visitor spending is expected to decrease by about 1.4% to $20.19 billion in 2025, compared to $20.48 billion in 2024[235]. Regulatory and Capital Management - The Company’s regulatory capital ratios exceeded the required Capital Conservation Buffer (CCB) as of September 30, 2025[319]. - The Company had $309.9 million in cash and approximately $2.33 billion in total other liquidity sources as of September 30, 2025[331]. - The Company’s estimated net interest income sensitivity for a +300 bps rate change is 1.71% (gradual) and 3.20% (instantaneous) as of September 30, 2025[326]. - The Company performed regular liquidity stress testing to evaluate its ability to withstand potential liquidity stress events[328]. - The Company has access to various funding sources, including proceeds from loan maturities and investment securities, as well as secondary funding sources like the FHLB[330]. Internal Controls and Governance - The Company's management evaluated the effectiveness of its disclosure controls and procedures, concluding they were effective as of the end of the reporting period[334]. - There were no changes in the Company's internal control over financial reporting that materially affected its financial reporting during the covered period[335].