Central Pacific Financial (US:CPF)2020-04-22 20:02Financial Data and Key Metrics Changes - Net income for Q1 2020 was $8.3 million or $0.29 per diluted share, with a return on average assets of 0.55% and return on average equity of 6.21% [32] - The total provision for credit losses was $11.1 million, influenced by the new CECL methodology and the economic impact of COVID-19 [32] - The allowance for credit losses stood at $59.6 million or 1.32% of outstanding loans [34] Business Line Data and Key Metrics Changes - Total loans increased by $63 million or 1.4% sequentially, primarily from residential and commercial mortgage loans [16] - Core deposits grew by $45 million or 1.1% sequentially, while the average cost of total deposits decreased by five basis points to 36 basis points [16] Market Data and Key Metrics Changes - The bank has seen significant demand for the Paycheck Protection Program (PPP), approving over 4,200 loans totaling nearly $490 million [18] - Approximately $300 million in loan payment deferrals were granted, representing less than 7% of the total loan portfolio [21] Company Strategy and Development Direction - The company is focused on digital initiatives, including the development of new online and mobile banking platforms as part of the RISE2020 initiative [11] - The company is committed to supporting employees, customers, and the community during the COVID-19 crisis, including temporary branch closures and remote work arrangements [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the gradual return of tourism to Hawaii by late summer or early fall, contingent on the pandemic's trajectory [7][54] - The company is prepared to handle the crisis with strong financial, credit, liquidity, and capital provisions [36] Other Important Information - The efficiency ratio increased to 63.9% in Q1 2020, primarily due to a decrease in other operating income [34] - The company has suspended its share repurchase program and implemented cost-saving measures across various operational areas [31] Q&A Session Summary Question: Are you accepting applications from new clients for PPP loans? - The majority of applications received were from existing customers, but non-customers were also accepted to support the broader community [40] Question: How do you view the RISE2020 initiatives amidst expense-saving opportunities? - The company continues to progress with RISE2020, focusing on technology and infrastructure, while postponing non-essential components [42][43] Question: What are your thoughts on the allowance for loan losses? - The allowance for loan losses increased to 132 basis points, with potential for further reserve builds depending on economic conditions [46][47] Question: What is the current sentiment among your customers? - There is significant concern among businesses in the tourism sector, while other sectors like grocery and construction are performing well [49][50] Question: What is the outlook for mortgage banking? - The company projects a strong pipeline for Q2, estimating about $220 million in production driven by unique partnerships and market conditions [61] Question: Can you provide an update on your construction lending? - The construction portfolio is now focused on supporting middle-market affordable condo builds, significantly different from past practices [71]