CPF - Earnings call transcript Q4 2017 | Central Pacific Financial Corp.

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Operator

Good afternoon, ladies and gentlemen. Thank you for standing by, and welcome to the Central Pacific Financial Corp. Fourth Quarter 2017 Conference Call. [Operator Instructions]. This call is being recorded and will be available for replay, shortly after its completion on the company's website at www.centralpacificbank.com. the to turn to like call Mr. over I'd Chief Morimoto, Executive Officer. President, Vice David Financial sir. ahead, go Please

David Morimoto

Thank thank the Credit Anita, Catherine Anna review XXXX. you, Hu, and me Ngo, our as joining With President Executive financial we President us Executive and results Officer; morning Vice Officer. for this fourth Chief of you quarter are, all and for Chief and

today's of course call, the make statements. management During forward-looking may

actual involve these believe on are to risks those that from statements cause they we While reasonable projected. may based results materially differ assumptions,

For statements, to a now, recent the to complete discussion over of And Catherine. risks filings please related forward-looking I'll SEC. call our refer the turn to with

Anli Ngo

you, and morning, Thank David, everyone. good

by the to solid in which company's Act. implemented and on onetime year a David income in core reduction the of DTA strong well mortgages. a growth of mortgages, rate by basis, million recently or company's part year accounts. period same the provide deposits. in a were and savings pleased the a Cuts growth. in of deposit loans adversely deposit period growth area $XXX impact the were more the earnings loans by details resulted ago, previous revaluation, $XX financial drivers was basis, per sequential are or On deposits $XXX million from quarter, on driven and the share on quarter up the from as reflected portfolio year-over-year money as and from assets, basis. a deposits, quarter consumer by deferred same tax key by report due loan a growth From was the our year-over-year corporate million or Total XXXX. market will year X.X% our income income the quarter on or X.X% on reduced X.X% We demand tax as of of and The commercial resi to key ended Tax year a Jobs was previous demand expense. with as million the $XXX million fourth the revaluation which the loan Core and increased X.X% basis were by Net for We DTA, the for sequential or impacted quarter net our performance the ago. as and deposit $X.X well and in quarter

quality declining leases. Asset loans to X.XX% and significantly continued of assets nonperforming improve, total with to

the and generating growth Our year. has economic focus strengthening allowed Hawaii credits, on for in market relationships quality conditions quality monitoring closely asset and customer the throughout

unemployment Our of capital repurchase repurchased of for XXXX, XXXX. outlook per visitor XXX,XXX The and steady Job million March quarterly the industry a in open the in $X.XX XXXX growth increased shareholders were for for workforce by previous and payable national The market increase XX, year reflects XXXX. X.X%. XXXX, the following indicators year. shares XXXX. X.X% Hawaii and and throughout performances plan of via previous December year-over-year X.X% forecast XXXX to Hawaii projected our strong the Approximately total of quarter, representing unemployment projected forecast over XXXX. as in X.X% in share to or low to historic as be is with by rate growth by in personal our of last economic dropped of X.X%, to $X.XX projected leading X.X% economic to by for in to XX, to on X.X%. visitor The of will in The a the from year income current enjoyed positive continued XXXX of be projected for X% record X.X% February a solid XXXX and visitor for X.X% at visitor increases dividend December issued shares common Real in arrivals visitor by dollars, cash the be at total of the program increase and over by civilian XXXX. XXXX outstanding and XXXX and continued the The is expenditures rate $XX.X expenditures the in executed current increases successfully XXXX year, is at X.X% is was a to by continued in by stock were of cost arrivals X.X%. rate compared X.X% share XXXX and XX,

previous the to and turn into Urban to is projected XXXX grow While by XXXX Honolulu. large-scale to over to David? be David of year. in time, Central projected this cycle in XXXX with in expected developments Honolulu performance. continued high-rise Real continue increase is resi the addition to X.X% highlights Index construction in and Hawaii increase year. to in several in previous the The call the in Consumer review is by X financial the X.X% XXXX GDP I'll and mid-XXXX, At XXXX in Price by Oahu X.X% XXXX, construction to the strong activity developments expected and over in over peaked our X.X% of

David Morimoto

$X.XX on diluted the per Catherine. Return compared the or last fourth share equity million in share net quarter assets was $XX.X average was quarter return on basis income average per reported million $X.XX quarter. you, Thank income of Net points XXXX and diluted X.XX%. was of XX for fourth $X.X to or

estimated quarter million were Catherine, As the mentioned deferred fourth of for $X.X onetime results charge by an by negatively revaluation net impacted asset. our our tax

line results were our reforms, impact with the Excluding tax generally in quarter of expectations. our fourth

loan and an beginning the million increases and margin reported interest net yields. to XXXX by result in by in balance federal income quarter interest corporate in X net were benefit sequential increase X.XX%. the to we fourth investment the points will margin The in the net onetime take interest increased primarily XX%. tax our and while from increases charge basis of income in we interest and of loan rate reduction sequential increased the quarter, quarter did Net Finally, $X.X

During compared of quarter. a quarter XXXX operating to the December million charge-offs for X.XX% Other charge-offs losses provision the million quarter. million $X paid. the totaled loan allowance for loans compared onetime Current nonexecutive the credit other was of effective XX, our reform, quarter $X.X assets. the credit for expense in the deferred or to recorded our bonuses primarily and XX% $X.X million. fourth we In ratio and in in nonrecurring was outstanding million to $XX.X a our With At $X.X to we fourth effective million to fourth December approximate negatively rate $X.X XX.X% to prior recorded all prior charge a Net negatively the as XX.X% in by tax the paid expense quarter quarter expect loan XX%, quarter, was of due tax lease million totaled for operating of totaled lease was and the the net income onetime tax $X.X impacted The bonuses tax employees fourth quarter, leases. losses our fourth Fourth million. other was expense operating $XX.X quarter net efficiency impacted XXXX. by on nonrecurring to reevaluation rate forward. for going and

XXX,XXX cost common an the at XXXX, shares repurchased we stock fourth of average share During of per $XX.XX. of quarter

I'll We at completes now That of the $XX.XX January shares per the an average have share. cost also call repurchased in summary. an additional to month-to-date And return financial XX,XXX Catherine.

Anli Ngo

David. you, Thank

you with our are on encouraged process going to as customer the the strengthening organization continued year focus and our as as like to by we and and our we XXXX continued our in organization. relationships. our being At have. may favorable made to any into time, this and operational address will the would our am opportunity customers be plan to conditions the work towards I that employees, for We shareholders continue economic goals. business confidence improvement new I this confident take happy their track market on progress well we support are in thank achieving questions

Operator

Instructions]. [Operator

today comes Rabatin with from first Jaffray. Brett question Piper The

Brett Rabatin

in just be in is? just kind outlook what if 'XX, you XXXX maybe production stuff what guess about for the kind think and the you'll talk talk what is the the and you'll growth loans of fourth and mainland quarter the I first, you about and on gulf growing added of do the and

Anli Ngo

Sure, Brett.

portfolio, exception of the condo the to to the couple reduction in growth in growth speaking quarter-over-quarter with in here tower the that including in related here projects a construction And and loan saw really we portfolio. across downtown the First, our classes, Hawaii, all completion a asset of portfolio Honolulu. construction of of

the far in existing growth as the growth largely to the As fourth to Mainland loans customers. quarter, related

of the to mid-single our over be loan both looking I growth, first, in digit Mainland. I and across classes range, and going all full forward, on As seeing would the and XXXX the Hawaii in year growth say asset expect growth at

Brett Rabatin

been us that's be with Or base, Okay, maybe then, you've there making the to wanted leverage to lower just thoughts hope lower color. managing a operating give you XXXX in some going what cut, Are of you And base as good this tax you're can on to the function expense rate? and year? achieve two investments tax with years. past expense flat the that ask to the

Anli Ngo

Sure.

comp to So increase wages And wages regard benefits. and level we end $XXX,XXX that the tax for at minimum moving increase lower first last did up an our that about announce hourly with to of the the to year results we were savings, employees. in

you range. the can bump $XX and of again think loan up -- $XXX,XXX, in expense with range about for we $XX coming the by that And the the if salaries have range, So so expect million the operating a and other moved the benefits, be to and range. in being to it component million year, you

Brett Rabatin

down the And fee and Okay, you there's you see what that. banking a do for in a Mortgage income one. guess have I as operation for outlook in one was lot as great, 'XX? it? XXXX of What's income last obviously fee -- the function banking, drivers mortgage then, then

Anli Ngo

Okay, sure.

mortgages, Let mortgage the first that then me healthy condo in And and the downtown completion on is to one towers question the I'll to all, Honolulu. discuss to turn million. mentioned we of of earlier David in the income. But quarter $XXX a take saw the I of projection fourth fee it

increase XXXX. So fourth the of that drove quarter -- an production into in in

ahead protection quarter expect be XXXX, we $XXX to to range. million million the the of $XXX first to Looking in

income fee David me question. the -- turn to to it Let

David Morimoto

our taper things, as banking a in did product also That the and loans. And production less competition margin than we we was higher quarter, have year. over market one, in be then of mix. Hey to of did portfolio was second in -- fourth income come fourth a production. due couple slightly loans last the the the mentioned, Brett, was due year, you we government XX% that historically then to half the second the off saw local and the quarter, was intensify we during of through higher tend finally half just There during to it did portfolio those mortgage price of percentage the little; of

On just the was percentage the purchase of positive during quarter, fourth the purchase under our XX%, originations was mortgage. side,

what going be, as rising positive So rate that a forward, we a view in environment. appears to possibly

Operator

The with Laurie next comes from Hunsicker Point. question Compass

Laurie Hunsicker

sort want the just I just sure back I to this expenses. got for to tax of want one I've to go make right. reinvestment and

all call million So about was additional. maybe benefits, know, in you're $XXX,XXX we million of million $XX which now million, of it, about expenses, were and there's were if and I $XX in to we probably where an thinking running, don't additional, $XXX,XXX salary kind $XX to $XX.X

So expense right way? I increase, about that your the about thinking Am $X.X numbers basic round is million.

David Morimoto

right, think that's Laurie. I generally

Laurie Hunsicker

up Okay. It And quarter. that? about a this be as in we specifically pretty was pertained to it how the expense line, should then jump thinking just big advertising

David Morimoto

line tends when that in little It's Laurie, we're doing a of function doing be Yes, production. item to activities lumpy. we're when a advertising,

So around a lot. it has been bouncing

And on basis. been we kind been an think I basis, pretty it's annual on flattish. it at year-over-year, -- look if more it of So at look an it's you annual

Laurie Hunsicker

deposit the Okay. that you And I core that did? to related some campaign mean, of was

David Morimoto

Yes.

Laurie Hunsicker

we that about core be should campaign? how And deposit thinking

David Morimoto

third the the So fourth some the campaign have it in into for deposit quarter. core may of and made came been there quarter some that the expenses through

basis. So It's largely And a would there. that another decision to how you're decision. we really, we it something is we on -- similar going or forward, another that's a that periodic do do look committee campaign, do regularly. right whether then not at something on The

that's flagship something Exceptional not for if our done Exceptional in sure And I'm something always that's as the those be the see will is a way product. in So good campaigns but to us. option an bring account account future, We customers. new

periodic a So do we basis. is something that on it

Laurie Hunsicker

then, campaign XXX, can around jump. maybe margin how how about thinking we a little pretty linked CD And thinking talk over Can you deposit should your -- we Okay. be around quarter, about you CD had and just XXXX? about, bit just big should obviously your the ramp, a that talk around the about be just for is

David Morimoto

large you say chunk, our large $XXX,XXX, sequential Laurie, when quarter. there CDs, actually a Sorry, was CDs, declined, over large

Laurie Hunsicker

So of XXX I XXX, have, million, now the those I'm $XXX basis million, and they're at costing the costing points. looking and duration rate, $XXX your

David Morimoto

Got it. it. Got

Laurie Hunsicker

Right.

million. on the $XXX So they're still, I can then about how the numbers, funds? the round mean, standpoint from with also getting they're mean, XX% around us was same But think along more of deposits. -- you where we're your update I I number still I guess it of are public thinking just you and lines,

David Morimoto

Yes.

deposit best the to and So again, the think at to sensitivity rate look portfolio. is I the portfolio way segment

deposit XX/XX, a basis months at beta the the rate billion, over of $X XX core And portfolio last was points. weighted with roughly the average of So rate X X%.

portfolio a beta. that lower very rate and it exhibit to low So continues is costing

of weighted the last referencing However, that beta totaled of $XXX million, months, has that large over you at XX/XX, X.XX%. average XX CD And a the portfolio, rate portfolio are rate XX%.

it's sensitive. So very rate

as So deposit portfolio, portfolio. fund last is that primarily public comprised quarter, of discussed government portfolio a we

roughly year-end. So looking the it did at our we to ways higher fund million sequential the deposits, shrink at beta so to public looking reliance are on quarter, was portfolio and -- $XXX reduce

Laurie Hunsicker

think just quarter, should that are loan this just provision. to on loss could be jump we good you about growth, to But we thinking is you provision credit in then, over great. Okay, loss pristine. your do XXXX? Obviously, if about, we the how how the grew loan And XX% loan extent putting

Anli Ngo

do take that? you Anna, to want

Anna Hu

Laurie. Hi

the were an I to as we of expect and charge-offs. XXXX, point, ago, that support the at see of inflection for look growth had we as think portfolios, within about our at asked point So you we are inflection, just where for and couple quarters a net whether there, loan the do we well

Operator

with Don The next from comes question Raymond James. Worthington

Donald Worthington

quarter, were you any the that purchased? there During loans

Anli Ngo

Yes.

million in $XX range. there portfolio was auto an purchase So the

Donald Worthington

I'm sorry, $XX million?

Anli Ngo

$XX million.

Donald Worthington

the million, mainland okay. in $XX And is portfolio? that

Anli Ngo

That's right.

Donald Worthington

doing? and/or think going Okay. of kind might And the what up of impact that regarding benefit question you've more than then do forward, deployment previous the following of on taxes, dividends you lower repurchases so been

David Morimoto

all Yes. Hi, with else equal, would roughly reform, Don. anticipate, tax earnings Yes, being by it to increases obviously, I XX% XX%.

minimum we've it dividend to to that sense, made, reinvestment stock makes list that as price, is program. a will think continue a past remainder capital that share so I wage some with already on our and the announced, we'll that Obviously we've ratio business, increased would then to would and reinvested, options for no payout a been anticipate market have that have but calendar. open back deploy on extent be the our And our repurchase a We'll the accelerating decisions been practice plan. continue consistent portion in projects of then, evaluating into of peers. company the possibly the yield a pay our comparable I based

Operator

[Operator Instructions]. question O'Neill. Deer Aaron The from with comes next Sandler

Unidentified Analyst

This Gagan for on is Aaron Thomas [ph] Deer.

any other since sensitivity reflect quarter stock considerations? just just flowed were this from any repurchases, just does So or wondering, you the prior end, mentioning the price we repurchases were

David Morimoto

retain the Thomas, earnings. executing I largely, eliminate along think we their plan -- were to

might So slightly I a think have the for third quarter higher quarter been repurchases.

was blackout do part to the plan earnings. periods the what to slope cover a for second use us of over And is just the that think the blackouts. I So led We slowing. part then XXbX-X

advance. XXbX-X plans in set And sometimes, to our parameters in have the we

And a we sometimes result set slowing parameters the of in repurchases. those way

much I So into it. read wouldn't too

Unidentified Analyst

we little wondering And turning a widening an then, expect just seen quarter. bit noticed inflection to we've just we this And and it point, the margin, here? that ticked continuing that are up could from if we

David Morimoto

pleased on asset widening something highly that is with Thomas. quarter seen, bearing repricing matching quarter. were we're interest and something assets in We interest the sequential And earning up focused because in. the on I tax the liabilities be to think the very that fourth so that's mean, monitor the of negatively that -- say reform, will margin we I X I basis we have our municipal of to impact this will that the points portfolio, bond change, closely. liability, by we factor

for think I the to being, guidance the time on probably where couple the over NIM it's flattish been is quarters. next of the

Unidentified Analyst

to in the kind that. this? question, that. related were Great. how just you And the competition environment for is yields on What the of affecting production? current new follow-up information on Thank loan rate the And one

Anli Ngo

that one, loans. take on the I'll

in in, say with would does competition on terms. to and coming portfolio on yield then as X.XX%, and And does were the in compares there I fourth strong yields competition, average the of be continue loan the the as X.XX%. that So market quarter that that far include pricing

Operator

from comes question KBW. next The Bohlen Jackie with

Schalise Vancura

Vancura is you but wanted of the Do back on This increase. lessen for the actually my that expect some from mentioned low questions been have of to help unemployment that, -- rate? just go had Jackie. I Schalise pressure to will you minimum wage Most the asked,

Anli Ngo

It say But banks will the have I responded that similarly. will certainly other help.

course, hourly retain have rates. ways continue they wages, up bumped to focus component other continue and of that. certainly, so our But to but being employees, to good on an we wage And of important also their

Schalise Vancura

you the that? just anything Okay. rate from seen hike, additional with any or on pricing consumers And like have pressure December then, deposit,

Anli Ngo

do take David, to that? you want

David Morimoto

rates, upward been has shorter-term some CD there pressure on yes, Schalise, CD rates.

be shorter-term continues on movement both the commercial. and been and to there some has CD retail rates, So there

basis X points. hold we as billion $X core at the continues mentioned, However, portfolio deposit to in

been that's beneficial. So

Operator

to to closing remarks. any conference Catherine This for would concludes the turn back like over Ngo our question-and-answer session. I

Anli Ngo

fourth to opportunities for future We you. progress. quarter in look XXXX. to you our for forward update Thank participating our earnings of Thank you on the call

Operator

is conference now presentation. This you Thank concluded. today's attending for

You may now disconnect.

Central Pacific Financial (CPF) 24 Jan 182017 Q4 Earnings call transcript