Central Pacific Financial (NYSE:CPF) held its first-quarter earnings conference call on Wednesday. Below is the complete transcript from the call.
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View the webcast at https://events.q4inc.com/attendee/325405077
Summary
Central Pacific Financial reported strong earnings in Q1 2026 with net income of $20.7 million and EPS of $0.78, reflecting a 20% increase from the previous year.
The company maintained healthy credit quality and capital strength, with a return on average equity of 13.90% and a net interest margin of 3.53%.
Loan growth was driven by commercial real estate, while deposits increased by $90 million, with core deposits making up over 90% of total deposits.
Central Pacific Financial was named Hawaii’s US Small Business Administration Lender of the Year for 2025, highlighting its commitment to local businesses.
Management expects modest loan and deposit growth for 2026, with net interest income projected to rise by 4-6% over the prior year.
The company plans to continue returning capital to shareholders through dividends and share repurchases, with $44.5 million remaining under the share repurchase program.
The outlook includes maintaining a strong balance sheet and focusing on disciplined and sustainable growth strategies amid a resilient Hawaiian economy.
Full Transcript
OPERATOR
Good afternoon ladies and gentlemen. Thank you for standing by and welcome to the Central Pacific Financial Corp. First quarter 2026 earnings conference call. During today’s presentation, all parties will be in a listen only mode. Following the presentation, the conference will be open for questions. This call is being recorded and will be available for replay shortly after its completion on the company’s website at www.cpb.bank. i’d now like to turn the call over to Mr. Gerald Rubago, Senior Strategic Financial Officer. Please go ahead.
Gerald Rubago
Thank you Rob and thank you all for joining us today as we review Central Pacific Financial Corp’s. Financial results of the first quarter of 2026. Joining me this morning are Arnold Martinez, Chairman, President and Chief Executive Officer David Morimoto, Vice Chairman and Chief Operating Officer Ralph Mesic, Senior Executive Vice President and Chief Risk Officer and Dana Matsumoto, Executive Vice President and Chief Financial Officer. We have prepared a supplemental slide presentation with additional details on our earnings release. The presentation is available in our Investor Relations section of our website@ir.cpb.bank during today’s call, management may make forward looking statements. These statements are based on current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially. For a complete discussion of these risks related to our forward looking statements, please refer to slide two of our presentation. With that, I will now turn the call over to our Chairman, President and CEO Arnold Martinez. Thank you Gerald and Aloha to everyone joining us today. joining us today. The first quarter represented a strong start to 2026 with solid earnings performance and continued execution across our franchise. We delivered growth in both loans and core deposits, maintained strong credit quality and continued to operate from a position of capital strength. This momentum reflects the strength of our relationship focused banking model and our continued commitment to serving the people, businesses and communities of Hawaii. Our results also demonstrate the durability in organic earnings power of the franchise. With return on equity above 13% and robust capital levels, we remain focused on disciplined sustainable growth and thoughtful capital allocation. From a shareholder perspective, we remain committed to deploying capital in ways that enhance long term value. This includes supporting organic growth, maintaining a strong balance sheet, returning capital through dividends and share repurchases, and preserving flexibility to respond to market opportunities. We were also pleased that CPB was named the Hawaii US Small Business Administration Lender of the Year for 2025. This marks the 17th time CPB has received this recognition and reflects our long standing commitment to Hawaii’s small business community. Turning to the broader environment, Hawaii’s economy remained resilient during the first quarter, visitor arrivals and spending increased and the state’s unemployment rate remained exceptionally low at 2.3%. While oil prices have increased due to the conflict in the Middle east, the direct impact on Hawaii’s economy has been limited to date and we continue to monitor conditions closely. At the same time, Hawaii continues to benefit from ongoing construction activity, military spending and a resilient local economy. Recent storm activity and flooding, including impacts from the Kona Lo, caused isolated but significant damage in parts of the state. We remain committed to supporting affected customers and communities as they recover and rebuild. Against this backdrop, our strategy remains consistent. Support local businesses through prudent lending, grow and deepen core deposit relationships, invest thoughtfully in our franchise and manage risk with discipline through the cycle. With that, I will turn the call over to Dana.
Arnold Martinez (Chairman, President and Chief Executive Officer)
Thanks, arnold for the first quarter, net income was $20.7 million and earnings per diluted share was $0.78. Return on average assets was 1.12% and return on average equity was 13.90%. Compared to the year ago quarter, our eps increased by 20% reflecting revenue growth and expense discipline as we continue to successfully execute on our strategy. Net interest income totaled $61.4 million and net interest margin remained healthy at 3.53% compared to the prior quarter. Results reflected typical seasonal factors and balance sheet timing including lower day count and lower average loan balances. The decline in our loan yields were partially offset by the improvement in our deposit costs. For the second quarter. We are projecting NIM of 3.50 to 3.55%. Our guidance for full year net interest income remains at a 4 to 6% increase over the prior year. Across a range of potential rate environments. Our balance sheet positioning and funding mix continue to provide meaningful resilience. Total other operating income was 11.6 million and declined from the prior quarter by $2.6 million. In the prior quarter we had one time BOLI death benefit income of $1.4 million. Current quarter BOLI income was further impacted by equity market volatility. Additionally, Q1 seasonality typically results in lower levels of fee income in the mortgage, banking and wealth areas. We continue to expect our full year other operating income to increase modestly over normalized priority. Prior year total other operating expense was $43.7 million and declined by $2.0 million from the prior quarter. The decline was primarily driven by higher incentive accruals in the prior quarter and lower deferred compensation expense this quarter. We expect our expenses to increase over the year, but our full year expense Growth is still expected to be modest and at 2.5 to 3.5% from 2025 normalized in the first quarter, we paid a cash dividend of $0.29 per share and repurchased approximately 321,000 shares for a total of $10.5 million. With our strong earnings and capital position, our board declared a second quarter cash dividend of $0.29 per share. We had 44.5 million remaining available under our share repurchase program as of March 31st and we plan to continue to utilize it as part of our capital allocation strategy. I will now turn the call over to David.
Dana Matsumoto (Executive Vice President and Chief Financial Officer)
Thank you, Dana. During the first quarter, our total loan portfolio grew by $31 million, bringing total loans to $5.3 billion at quarter end. The majority of the loan growth came near the end of the first quarter. Therefore, we will see the benefit in our net interest income in …
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