Central Pacific Financial (US:CPF)2023-01-25 20:10Financial Data and Key Metrics Changes - For the full year 2022, net income was $73.9 million or EPS of $2.68, with pretax, preprovision income excluding PPP income increasing by $29.1 million or 45% year-over-year [24][33] - Fourth quarter net income was $20.2 million or $0.74 per diluted share, with a return on average assets of 1.09% and return on average equity of 18.30% [33] - Total deposits increased by $180 million or 2.7% from the prior quarter, primarily due to successful time deposit campaigns [56] Business Line Data and Key Metrics Changes - The total loan portfolio increased by $133 million or 2.5% sequentially in Q4, and by $454 million or 8.9% for the full year 2022 [31] - Net interest income for the fourth quarter was $56.3 million, an increase of $0.9 million from the prior quarter, with a reported net interest margin remaining flat at 3.17% [58] Market Data and Key Metrics Changes - The Hawaii tourism sector is performing well, with visitor arrivals holding at about 90% of pre-pandemic levels, and visitor spending strong at $1.5 billion in November, an increase of 13.7% compared to the same month in 2019 [21][54] - The Hawaii housing market remains healthy, with single-family home sales down 23% in 2022 compared to the previous year, but housing prices are strong with a median price of $1.1 million, up 11.6% from the previous year [22][30] Company Strategy and Development Direction - The company is focused on prudent and disciplined risk management, with a strategy to enhance core deposits and expand in the Japan market [55][41] - The Swell Banking initiative is being cautiously rolled out, focusing on acquiring profitable customers rather than broad customer acquisition [46] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the Hawaii market, believing it is less likely to experience a material downturn compared to other U.S. markets due to strong tourism and military presence [55] - The company anticipates continued strong loan growth in 2023, except for the Mainland unsecured consumer segment, which is being allowed to run off until the economic outlook improves [23] Other Important Information - The Board of Directors approved a new annual share purchase authorization of up to $25 million for 2023 and declared a quarterly cash dividend of $0.26 per share [35] - The effective tax rate declined to 24.9% in Q4 due to higher tax-exempt BOLI income, with expectations for the effective tax rate to be in the 25% to 26% range going forward [59] Q&A Session Summary Question: What are the competitive dynamics in Hawaii regarding deposit growth? - Management noted that the market is rational, and they are actively managing funding sources to optimize performance in the current environment [63][64] Question: What is the status of the Swell Banking initiative? - The Swell initiative is currently in pilot testing with about a hundred customers, and a wider launch is planned for the first half of 2023 [68] Question: How is the company managing its deposit mix going forward? - Management indicated a near-term expectation of a 50/50 mix of time deposits and core deposits, with a gradual return to pre-pandemic levels anticipated as rates ease [88]