Central Pacific Financial (CPF) Q3 2024 earnings summary

Executive summary

• Q3 2024 net income was $13.3M ($0.49 EPS), impacted by $3.1M in pre-tax strategic expenses; adjusted net income was $15.7M ($0.58 EPS).

• Net interest margin expanded to 3.07%, up 10 bps sequentially and 19 bps year-over-year, with core deposit growth of $53.9M.

• Tangible common equity ratio improved to 7.31%; quarterly dividend maintained at $0.26 per share.

• Opened a new branch in Kahului, Maui, and welcomed a new Chief Risk Officer.

• Recognized as Best Bank in Hawaii by Newsweek, Forbes, and Honolulu Star-Advertiser in 2024.

Financial highlights

• Net interest income was $53.9M, up 3.7% sequentially and year-over-year; other operating income rose to $12.7M, mainly from higher BOLI income.

• Other operating expense was $46.7M, including $3.1M in strategic expenses and higher compensation costs.

• Adjusted diluted EPS was $0.58; reported EPS was $0.49.

• Efficiency ratio was 70.12%; adjusted efficiency ratio was 65.51%.

• Provision for credit losses was $2.8M, down from $4.9M in Q3 2023.

Outlook and guidance

• Management expects continued NIM pressure from high rates and deposit competition, but forecasts NIM in the 3.10%-3.20% range for the next quarter or two.

• Hawaii’s economy remains resilient with low unemployment (2.9%), strong real estate, and ongoing recovery in tourism.

• Effective tax rate expected to remain in the 22%-24% range.

• Focused on managing expenses, supporting core deposit growth, and maintaining strong capital and liquidity.

• Open to share repurchases as capital ratios improve, targeting Tier 1 leverage ratio of 8%-10%.