CPF - Earnings call transcript Q3 2018 | 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 Third Quarter 2018 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.centralpacificbank.com. the to turn to like call Mr. over I’d Chief Morimoto, Executive Officer. President, Vice David Financial ahead. go Please

David Morimoto

Financial Chief Anita, Ngo, Subsidiary; you, Executive as quarter Central Chief our morning the us you Bank Chairman Yonamine, Chief Credit we third me President and Pacific Vice Executive are, for of Paul results Officer, Thank Hu, financial thank and review and and Catherine Officer. Anna all Executive With and this President Corp. for joining Officer

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

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

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

Paul Yonamine

everyone. executed David, understanding just level. the efficiencies Corp accelerating more been and Pacific Financial I morning team for CPF being weeks better My our focused and Catherine goal on to you, on future are Central at good three strategies strategies growth. work joined ago, with have is and ground the immediate our Having how Thank

of and each As do with let you this to my arms files month better. That afford I and Central the I you you. for each to and getting effort thank every get time share one of me and your my in first hope said, more to supporting Pacific I ahead, around insights of know and

and the Key labor revenues. positive strong indicators conditions in the tourism through Now, have Hawaii for XXXX. to personal growth to of market results track economic outlook leading industry, relative income and year-to-date growth on tax continues XXXX and be for turned

in year. The consumer projected and by X% businesses to to in provide months, the year. the X.X% consecutive X.X% increase Hawaii's to X.X% of the X.X air XXXX, this for Hawaii, X.X% in In year billion. price of for the State months the Economic income spending will in report million At Honolulu remaining The forecast increased the by increase by for X.X% eight by economic Development three of X.X% spending previous over X.X% Hawaii is a over increase after the visitor the by unemployment banks The for period compared capacity XXXX jobs personnel upward business year, is the consumers and by revised same the been the expected expected to XXXX index increased of and to quarter. slightly past visitors Department to real conditions end Hawaii. the have of to previous September also total of previous and first seat the with is Business, last X.X% by projected increase and and arrivals X.X% X.X% increased $XX.X arrivals Overall, Catharine to Hawaii. growth Tourism month the at the During highlight by provide increase tailwind quarter and this X% time, visitor to compared end third rate GDP some arrivals the has spending and by continued By of year. over an with steady local of in the

Catherine Ngo

Thank you, Paul.

of in provide as income components growth as net which improved a XX.X% year and by Act. well third quarter factors net our impact the a stable Tax the interest income and interest more XX.X%. share year the ago, to and can in strong a driving loan net pleased Jobs of We’re per later financial report the attributed strong will The performance same containment income expense positive improved to margin, earnings net on Cuts primarily the detail period compared be and of by to call. this increased David

lot a of have outstanding position share capital strong CPS of announced the and approximately program basis as continue common on us executing end to to year-to-date repurchase the X.X% a our on XXXX. consistency shares which earnings Our of

We XX.X% homes led the increased asset million which the through industrial loan year-to-date. distributed equity as or growth previous increased our across $XX from or continue quarter as loans in million million by by a loans by period all loan long $XXX same over X.X% $XX from while year previous or portfolio. also realized was a ago. loan ago. to X.X% or commercial quality $XX end resi Total mortgage growth Increases quarter million or maintaining by types realize and the strong period the X.X% and and from the by same Loan by were quarter commercial mortgage, year

continue quality with and which X sequential Total was and $XX deposits. the our a with by or reduced with interest stable margin in increase Competitive yield. points $XX assets. of which offset improve by investment local risk escalating $XX on pricing non-interest in rate balances $XX million to market increased significantly basis core profile increased to timing quarter deposit year-over-year basis, remain million on million quarter-over-quarter, and deposits will demand included assets in environment, way credit non-performing in Assets a for On has X.X% increase million interest The in deposit an deposits a of however bearing or increases rising million loan core of increase been the growth. $XX total or project. reduced of led were X.X%. X.X% increase basis deposits a Government by in time other total net

to quarter. near-term and the call technology the still continue efficiency further in recent David. financial operating I time, to the turn our David will We more detail to review highlights efficiencies improve leveraging At performance. of investment this efficiency to consecutive initiatives. management in is by and our information reduced opportunities the our over in improve ratio for There third

David Morimoto

held million Thank or third steady margins million the and million $X.XX on and we redemption last and net the XX.X of which assets of $X.XX was long was XX was quarter basis. XXXX quarter per the net today on net will reported submitted in by debt occur Net and floating a quarter interest our redeem preferred balance diluted will XX.XX%. Return on million average net sequential diluted X.XX% I a We reported income interest that income on rate Net for to interest The interest return securities, compared on preferred share X.X per term X.XX% in average notice trust equity you, in ’XX Catherine. include income perspective announced December increased XX.X share third quarter. or margin. to trust income sheet. at

net loan X.X million compared losses to X.X of charge debit quarter, of for or loans to in and as compared lease the quarter. the third X.XX% a million the prior charge recorded million At offs outstanding During of we million the losses prior quarter was X.X XXth, of our September the XX.X a recorded lease in Net and totaled X.X credit and loan offs third quarter. million allowance to provision for provision leases. in

for by the previous XX.X million. XX.X% The XX.X% was was was other the expense XX.X improvement higher to Third in due debt million. the which sequential was income in quarter an ratio sequential owned Other The slightly quarter. for third The driven from efficiency in insurance increased quarter. primarily increases computer quarter to recognized benefit the operating bank primarily quarter life increase third totaled on third XXXX operating software income X.X expense. quarter quarter million the

We to the by XXXX. continue quarter to XXs low efficiency the expect the of ratio towards fourth trend

an an also XXXX, During the repurchased cost share average cost average quarter shares $XX.XX. month-to-date XXX,XXX We've per at stock of third of roughly $XX.XX common of of stock shares share. we additional per repurchased common an October of at on XX,XXX

Finally, the financial our I’d like by to the summarizing of some close highlights quarter third summary results. of

target. stable margin and net at capital ratio strong X.XX%, return loan the call driven and and now, will to And trend we growth, continues towards in to growth interest ratios quality strong quarter-over-quarter income low Paul. Continued a improve efficiency by interest asset XXs

Paul Yonamine

David. Thanks

While and I’ve customer confident areas the management in organization ability address in toward the Board their year, our am be Directors On of June just quality have. of Xst our to and for happy served our business Catherine organization behalf coming like milestones you profits plan recently our key advance last the appreciation time, customer years. I At our team’s of shareholder to our digitization, I’d since in any my the on employees, work attaining team, may support confidence to in and of we of we’ll on growth. as improvement, continued and express October questions joined you. and this Thank relationship and

Operator

We’ll now Deer Aaron with question [Operator the O’Neill. ahead. begin Instructions] today first go comes The Sandler from Please question-and-answer session.

Aaron Deer

that got I to drove to am loan given I guess growth in the know, in the there anything strength the if that book? like particularly fairly with Mainland you begin quarter, quarter, be this the curious C&I bump just strong. particularly to this which seemed I’d

Catherine Ngo

in Hawaii. primarily the quarter Good was morning, Aaron. third loan The in increase

So, in million and growth you million really we quarter-over-quarter, which growth saw here, asset of with that that XX million a Hawaii. classes, XX was XX it starting saw was $XX all across was C&I, that million here

strategy relationships our increases nicely saw fact say with off is that would I So, the paying we in of that Hawaii it’s in building book. the here in Hawaii

Aaron Deer

to in going guess this liquidity role And you a margin, keep you that deposit have Charles the grow to guys net seems quarter. maintaining then well. But stability that it looking grow I given earning that at more Certainly, the shift income assets seems capacity margin to the the the to play meaningfully as have. in to doing interest have

given economic and interest about So, income thinking of how net growth are you the current year deposit rate the and over growth environment? coming kind

Catherine Ngo

new turn make on an course yield, the compared loan loan portfolio and saw Yes, of and net we loan but helped a so, I'll yield coming at margin of interest X.XX%. X.XX% want is with David, in it comment just overall which has quarter I this to

you I'll about to David, So now, turn it the side. then deposit talk to

David Morimoto

things and we that able had Yes, in sequential obviously, yielding lower in a the higher we the mentioned, as loan were Catherine. net flat quarter. can were this we and the the decline, are the And investment portfolio. it to in margin composition margin, the balance securities quarter In decline yielding that we hopeful turn net pleased interest future shifting send from we are you have Thanks sheet. benefited that hold net margin that interest earning shift interest into the The in quarters. assets,

to as see We’re starting portfolios improving Catherine in the re-pricing mentioned. also loan

the sensitive, less yield. And customer lower So, was, from CDs, fund beta shift the margin to which interest public roughly see an now portfolio into CDs we are to loan contributor -- more final million quarter net rate on this uptick government we’re starting CDs, XX in deposits. the overall did

helped things what this So, quarter. are us together pull all those

and our it -- as liability strategizing what function forward, help quarters. Going future growing committee mentioned, positive is a asset for you front be to is core that will is on going

Aaron Deer

the And But a just legacy then the out for where on item and but moving guessing really you me I’m leverage I range, to know into expenses and fourth XX be can software, might poked Operating the that on million don’t into have next some in line seem do hit. did thoughts quarter been, expectation that little guys last you year? above to target your some as range if look kind XXXX, one of have operating to just stay that of XX on just out expense you front. write-down million your

Anna Hu

So, be in expect million $XX the other op expense line See, range. $XX to I’ll to the that. we million take

the see did catch third you to where a accruals. slightly expense software quarter, in that on related uptake some really computer up the was On

you that range. expect be $X.X on the number million to can Going forward,

Operator

next ahead. question Jackie KBW. The go with comes Bohlen Please from

Jackie Bohlen

preferred number Which Just trust trust be question redemption. redeeming? that is the on you’ll

David Morimoto

David. It's Jackie.

Statutory December, CPB of redeeming end mid the at Trust So, we’re III.

Jackie Bohlen

other And tranche? redeem there particular you in was was or opportunity cost whether it that it characteristic some that was anything whether particular

David Morimoto

in $XX at trust. tranches disclosed have two issue currently filings, million in it's or preferred, higher have through is SEC -- trust Jackie, As of four margins. different And our outstanding we there there trusts current, the

three Trust margins quarterly III XX month Trust -- basis in II, points. have outflow, of outflow the LIBOR So,

Jackie Bohlen

Trust of II? look might at to you do redemption And similar

David Morimoto

That’s option, Jackie. an always

nice on other of the be rather of a been it. to options than For the it's change, these holder end

it's option future. the we So, an that for have

Jackie Bohlen

be payable And there will be redemption? on redemption? that the an of will the other Are there or interest penalties any outside crude of alongside fees sort and everything

David Morimoto

are beyond lockout their periods. all four trusts No, that

pay So, redeemable interest the dats. quarterly par on they’re all at

Jackie Bohlen

And for me. one then last just one

of some had off. have good steady recoveries the You’ve offset that amount left what’s that bucket? to a in of I charge growth continued guess

Catherine Ngo

I turn Anna. am going question to to Anna? that over

Anna Hu

Good morning, Jackie.

Our quarter-to-quarter, there recoveries flat. -- not from is it's

there is left. that offs work been The through, processing charge We in really what's have been to nothing we at looking say we recovery. hard but have there

Jackie Bohlen

recovering based it Is guess are of more Okay. most more Mainland you’re they base? -- main or Hawaii now, what I

Anna Hu

based. Hawaii

Jackie Bohlen

variable have in hard I can given So, similar and obviously there some some is data and that in to this in Is understanding unique what that XQ, that you is you it you continued the know, recoveries very possible thing XQ had levels it? XQ see items a have at predict.

Anna Hu

think south what We the nice have barring the at of I really quarter. we’ve it it's Yes, that don’t third unique may item, had but I us, think level. that reported for in surprises through come be that some sustainable

Operator

from Hunsicker go Please Point. ahead. Laurie comes Compass question with next The

Laurie Hunsicker

Wonder, the us, funds your to what comparable are remind if September being million? in you XX back just we margin number June go could Can with XX here. public of XXX

David Morimoto

so under XXX in XXX range. just was Laurie, it a million,

Laurie Hunsicker

that into plan head as then, we is And for year? your next what

David Morimoto

a to the bit based put their funds our of going little the on there, basis, are. function On wholesales where the bid of institutions and sources entities pricing. forbid to of it's borrowings be public -- daily out Laurie, we our local alternative

really funds. function extent the to we we'll bid win, growing it us public make sense a will for bidding So, where be and the of it the is

a is where of function they're priced. being it So,

Laurie Hunsicker

points And X still under T-Bill they're basis roughly has or that slowed? costing the

David Morimoto

we but is Federal roughly Home from can term. T-Bill we for it the where Loan range, what to It's comparable around the compare Bank borrow

Laurie Hunsicker

question back And trust then just going on preferred. the to Jackie's

of of two cost about So is there pick in this cash, just the spending basis points line thinking sort bottom a no basically margin? I’m right is two of redemption, points you’re other the that way of in drop to that terms assuming just lot obviously up basis

David Morimoto

That's correct.

a annualize net basis, On up an interest the about million it's in on half margin. $XX million X interest redemption net come pick basis in point

Laurie Hunsicker

you've about is of you referenced question been you, bit see talk growth. a that maybe where your Can just to in what growth than then, currently vision And has CPF Paul, you like for doing? in In bit last little terms be CPF quality as would Or usual a changing the bit a more you little or and to is that more other box going talk just might words, growth? if the just you efficient where about outside of strategy? business little different

Paul Yonamine

I’m to the here more And team and employees I and David, been a as bit to have it again, still and trying our the with Once process of profit not exactly of quite been to to really spending the addressing so three responding that a question. and customers. rest weekends, of hobbling But Catherine, of I’m improvement, on do further so. lot trying quality with technology use refine in for avoid our time that, having weeks, strategy forth also

Thank detail a your would you. please you come give into the time, you a effectively. granular bit to months some for the on back more like So, respond could little I and and of call get Laurie, to more question to bit if ahead more little

Operator

from Deer Sandler Aaron Please comes O’Neill. is question Next with a go ahead. from follow-up

Aaron Deer

follow-up the trust a vis-à-vis with -- story of having obviously, part dip redemption, be attractive. might on like it here. taken and repurchases, that’s return the seems a your the stock It good been even capital bank the Just more quick stocks

So thoughts just the in on know, this terms quarter curious over coming your repurchases has of to any redemption two? or if impact

David Morimoto

XX from approval the regard our was, with that the continuing III our repurchase plans. these Statutory plans that redemptions be wanted get sought the with them approval with while and we obtained we to we current regulators. do do to million informed we prior we our Trust these When And to deemed to

is repurchase have plan, we what impact do to So, obviously the but management’s discretion. side the with it not at repurchase does

Operator

question-and-answer the now to Paul concludes to would Yonamine I for over back like session. This our closing call turn any remarks.

Paul Yonamine

Actually, to Catherine, if that call? Catherine. I’ll could you over defer close the

Catherine Ngo

progress. in participating much for forward the earnings on opportunities of very We you to you the thank XXXX. our look third update Sure, our to call future quarter

Operator

you Thank presentation. has for This conference concluded. attending now today’s

now disconnect. You may

Central Pacific Financial (CPF) 24 Oct 182018 Q3 Earnings call transcript