CPF - Earnings call transcript Q1 2019 | Central Pacific Financial Corp.

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Operator

Good day, ladies and gentlemen. Thank you for standing by, and welcome to the Central Pacific Financial Corp.

First Quarter 2019 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 Morimoto, Chief Officer. Financial David ahead. go Please

David Morimoto

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

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

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

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

Paul Yonamine

you, good and everyone. David, Thank morning,

pleased first the of per We performance on net quarter million of report share and are solid income year diluted earnings with $X.XX. $XX a for to of this

represents XX.X% this nonrecurring increase of last quarter, in there call. were covering in income quarter first the which in of the later an compared items will some the be year, While to David net

to our XXX,XXX as XXXX. indicators, for net efficiency moving the asset a in increase per have in key to the income, continued outstanding is Consistent with a the and steady from pace X% improvements stock also repurchase direction. quarter including our continued for economy earnings Overall, in the shares at The of margin, XXXX. achieve stock shares $X.XX allowed on or common quarter, $X.XX Hawaii strong by the to approximately in in at of Activity of share growth of Directors X.X% previous ratio quality net performance performance steady end interest outlook the average repurchase quarterly of share. per pace return program trends of are We interest and our equity. continue company's in cash our dividend the Board right

a expenditures For X.X% $XX arrivals the to XXXX same months visitor the billion a or year, by and end X% declined XX.X% by the government respectively. this permits upwards and Catherine grow with is entering market the unemployment and Construction banner to of year. rate total in the quarter. expected the visitor to activity X.X% by building provide and in are The year. compared to X increases in Airline remain compared with At as Hawaii ticked Catherine? increase the visitor The year a of last XXXX X.X% will for first this of was X.X%. increased forecast of of with by arrivals time, bank's the highlights national of X.X% unemployment XXXX. Southwest is expenditures by in some expenditures increasing awarded March seat X.X% increasing private X.X%, expected both of strong Hawaiian rate value XXXX. capacity period over contracts average to Airlines

Catherine Ngo

Thank you, Paul.

X.X% $XXX loan deposit in quarter a in across $XX.X was start million types. year-over-year growth period commercial from the the X.X% loans resi of loans from ago. all loan basis, the were increases $XX.X loan and for Total of first loans. loan by total million balances slow quarter increase the sequential in seasonally in by a basis, by year. and increased distributed mortgage quarter driven year was a results million The On On and mortgage of previous end growth a reflective same

quarter basis. remained nonperforming relatively profile strong risk X year-over-year and on points total credit with our assets and of at flat basis remain assets. sequential Total quality Asset deposits a a

sharp deposits. million and detail the At in from turn Competition in deposits for relationships delivery. David? reduction time, base deposit $XX.X and we with our and large gathering of an increase in core million deposit the strong I'll customer has quarter core $XX.X offsetting our the to time highlights market an composition remains end shifted performance. deposit on service our of However, previous review our government David in of this more to with financial building call focus continue over to and

David Morimoto

common $X.X Class million. of stock a expanded $XX.X A XXXX common $XX.X return was you, diluted In and Thank the the average interest on average $X.XX to longer income in first compared of first the equity on $X.X quarter the million for We Net net was income to Net of Catherine. $X.XX income per $XX share MasterCard. quarter. B to to and margin at last Return Class reported per basis. our first a Class million X.XX% shares the shares share quarter increased net hold of and on no converted interest million sold or sequential MasterCard A's quarter stock by holdings was diluted of we or gain X.XX% XX.XX%. XXXX, quarter assets any of million

$XX.X to of totaled outstanding loans million allowance the million recorded compared leases. or $X.X for compared provision loan first million prior of million net quarter in our lease a provision in losses XX, the recorded $X.X for loan lease $X.X During March of quarter. and we At first and $X.X the charge-offs Net losses and quarter, X.XX% recoveries prior credit million the quarter. a to was of in

First compared totaled to other majority due MasterCard quarter sales and on income income stock. operating increase $X.X of million The to quarter. million in the sequential gain the the was $XX.X operating quarter other of prior

there an million quarter. quarter prior commitments to for to the reported a salaries the was in primarily decrease $X.X our was for increase the due mentioned The quarter. quarter million reserves million unfunded compensation higher plan improvement previously and to compared first was plan increase XX.X% in gain. a in plan. have operating Other of effective efficiency an first we and, quarter, the stock XX.XX%, forward, equity The resulted in tax the million by we used compensation $XX.X was The employee ratio $X.X expense prior to the deferred quarter plan insurance current plan. due Additionally, XX.XX% reserve sequential benefits gains market on was higher of was and the the deferred MasterCard approximately driven be which compared in for to the first going life in the expense. aforementioned the quarter $XX.X from the risk million Furthermore, XX%. quarter in expense of higher rate the insurance compensation income rate primarily to that to is tax last correspondingly market Current expect effective the life to quarter, company-owned to deferred $X.X mitigate XX%

shares XXXX, will the stock common of call in Paul. per $XX.XX. quarter repurchased cost shares return of an an we During share repurchased of XXX,XXX at April common average month-to-date additional And to average of the XX,XXX first at also now, $XX.XX cost share. stock of We've per an

Paul Yonamine

to for We focus placed pleased we're our growth Overall, of deeper to start development David. our to the we of with infrastructure needs, you, lot the confident the efficiencies. executing has and their been and customers engagement the on Thank year. on with strategies performance A remainder solutions remain our for New Year delivering forward like we commitment for generation, and with that financial continue coming revenue plan. attaining look operational forth much. work be and time, in any customers key our goal organization to year. may you our this confidence in and happy very have. toward address At milestones we our Thank as shareholders continued of will behalf their we'll employees, business our our I in the thank management to XXXX achieve support the set would questions you On team,

Operator

Instructions]. [Operator

question is Deer Our Sandler of Aaron O'Neill. from

Aaron Deer

I I'll guess, there. than a margin I was with start in little the coming better expecting,

or were prepayment First, the the quarter? yield interest that there loan in enhanced items average any penalties recoveries, other

David Morimoto

first of it's was prepayment the David. $XXX,XXX or penalty interest quarter, generally income type whether that prepayment income have nonrecurring every roughly but loans. quarter, in Aaron, of of Yes, it's some interest on during income income, we nonaccrual -- there

Aaron Deer

Okay.

So any it wasn't outsized in way?

David Morimoto

outsized. too Not

Aaron Deer

guess, out going kind through kind a margin and sense yield costs for given you portfolio, on and pause at coming while, your move of where expectation look the the the curve kind remain funding that year? the on we for the the your today loans are Okay. to are where kind as of of And new of is what's as to flatness here the that, I

David Morimoto

the Yes, on the last keeping with We're will quarter we be Right side. guided we're now, X.XX%. high-end to a obviously of of on funding X.XX% range The guidance. to wildcard the range. that

yields was loan nice the loan new We quarter X.XX%. first yields, improvement in yields, are seeing the so loan average on

So we little bit a the It's a are there. movement funding cost seeing of that's wildcard. nice a

Aaron Deer

you do of are year? Okay. think it today growth expectations in here high-single-digit seasonally do for for to the stand and pipeline kind was then, Aaron, sounds growth take back like the can presumably you quarter, first full year I'll it slower the Where higher. the And get Ngo a Catherine that. guys

did gave we regard off growth We're holding quarter yes, year. growth slow we loan the for for start in a and the So get results, the the last for of seasonally year. that QX good remainder expecting to but loan on are QX of range the guidance to we the in mid-single-digit

Operator

Compass is Hunsicker question Laurie of next Point. from The

Laurie Hunsicker

core of are moment, in deeper you wanted deposits. side Just low go margin Aaron your could into was where cost and funding maybe to that the hoping guys for a bit in a stay on really unique little we just terms because so

some it savings Hawaii, and others small increase in is of Hawaii markets money been has have sharp in comparison. really in think, I pretty the increase some seen a we've but by your

think me looking line planned then item, we David. to us should let should if how So that? turn start Ngo you Catherine at any talk little can that got bit how be in and about So or I'll about we particular, a to specials it you've

of saw in deposits, increase government earlier as to mentioned the in quarter deposits. first took core deposits, all, first the as we in an down regard we we So nice

course, -- core components line core our first building our quarter of We the we you in shift focused What some on see have did the is of deposit. in deposits. teams,

a saw corresponding and demand you in decrease So in a savings. noninterest increase

next shifted a larger of that deposits that is few course, we've earlier demand but quarters, that we customers in line, of One in we to Some we exceptional line. here noninterest that weeks. know exceptional focused campaign. in underway these the building about with savings to hope related are of and I that have DDAs some into good on thing is talked couple deposit bring an

the quarterly call. we will results reporting be the so, next And on at

Laurie Hunsicker

item, Okay. costing that's And the about you just the your of cost? just quarter see that if going line money markets basis would last this XX thinking in where points, deposits, on item savings potentially were X/X line one we about

David Morimoto

moving money all we're composition that we've with Yes. shift mentioned, focused that's The composition from on, a of the line into was all that Laurie, as took DDA deposit been the majority item. March. item place Catherine -- first during line that shift there quarter in

that, the points increase. great to continue to XX does basis So do look that We anticipate line today.

at of last of I of over we year, portfolio XX I do As have initiatives I think going deposit has difficult X%. a a But weighted exhibited more is, on point. a far that It a to the guidance mentioned, forward. have it's beta average rate the of Catherine core the and But that deposit billion we little points, end as at core function still rate as we core on a this line, of think happens focus $X components the deposits. day, think, have what has takeaway is some basis underway bit the

we're So pleased with that. still

Laurie Hunsicker

Yes, it's million. at I balance What is quarter from was your on $XXX last March? amazing. its it that funds? have public What the

David Morimoto

down right It's about quarter. first the came million. million $XX roughly $XXX It during

Laurie Hunsicker

what plans are And the that? on Okay.

David Morimoto

that current function down, continue it $XXX there. it But extent function going of somewhat Again, be growing from million a reasonable the to it's it's was of whether average on of over stabilizes near pricing. we a pricing level, rate X.XX% of it whether a or I weighted see relative to stabilize the The just it borrowings little pricing its to don't bit to that is necessarily could run

Laurie Hunsicker

Ngo has credit consumer Okay. category. Great. just correct to Anna. that your in still your the question coming in then, over over push Am to consumer the jumping but That's Catherine absolutely from mainly been credit. charge-offs pristine, been I have assuming largely that unsecured? helpful. I'll And Certainly

Anna Hu

Laurie, yes.

Hawaii a unsecured, have from mainland, -- it's focus but So from the it's with consumer local it customer market our we we're it's seeing as what on really purchases primarily coming the in done the coming and category.

Laurie Hunsicker

consumer In the category.

the not auto, it's And correct? that is Okay.

Anna Hu

No. To a auto. smaller degree,

Laurie Hunsicker

Okay. And your total what on Ngo is have Catherine consumer the Do balance unsecured? that, you Anna?

Anna Hu

you to Catherine one? be... back get would Can we unsecured on Consumer Ngo that

Laurie Hunsicker

what I later. but because smaller you your I piece, it's plans seemingly about just picture Ngo follow-up are Let can there for differently Are that that know X because in where are coming. that's question or absolutely. book Yes, unsecured that bigger guess, that book. me that Catherine on you thinking maybe with consumer charge-offs are sort book? your take a of components I

is local first unsecured that And Hawaii continue to the the refine the portfolio. preapproved on analytics So we book.

and pricing. get And kind so, as the that target that we and focus thing targeting customers, better And Hawaii customer. go right better of book preapproved we out the think will as we on is on about in we will other

-- profile those sure pricing as book for unsecured mainland as of sure is a our we Prosper, first the of excuse the the appropriately credit from coming and then, a purchased And risk. have far making making on we we first that looking the the the purchase quarter. are was mainland so, in into other same about It And $XX me, did customers that the second small we And from that before. provider, the at have book. are million quarter, it's And component book.

Laurie Hunsicker

Okay. of consumer rest you the the follow-up actually have with it Catherine have Ngo you I now. unless details. on later those Great. I can questions

the it's So $XXX million.

Anna Hu

as million in about have we have as here $XXX Hawaii that's We combination on a what and well consumer our at mainland. the book of

Laurie Hunsicker

that? strip Okay. I And the how if out much auto, is

Anna Hu

running Strip million. just the $XXX over out it's auto, about at

Laurie Hunsicker

$XXX Over million.

will that how back have is Catherine Okay. you, Prosper? one, to And Laurie. much Ngo then, get to the we So

Laurie Hunsicker

enough. Fair

just share Paul, can forward? and may directionally what you. the you you through for us when you first then differently hopefully how I on and look be going joined. everything know that question you've to Okay. that But start should I you think about vision, thinking to last guess, your about we with Good. do now put chance one I And a spot, had

Paul Yonamine

we're it One I Laurie, previously, a the taking I look think front. touched that there hard fundamentally are at. but on on technology three areas is

come digitalization Pacific Central the progress. months So specific definitive And further to with in it's in next couple everybody back or to the of hoping for so. work a and something more and I'm

our we're a to area We core good a ability Second and trying wanting at Hawaii area continuation in of and goes -- better trying investors we're to third into to this Japanese us. deposits really develop what new big is funding back And very in some heavily see the sales looking attract here for to costs, market. to strategy of I interest part around is the the on companies opportunities call and that's like execution. Japanese

next share are with And And around and next to together Laurie, so, that months, and more think, more to hoping currently processes things in hopefully we trying are determine more in well, and so, that. I'm rigor working coming or that of I quite with discipline the everyone. couple our quarter have we'll management in

Operator

question next Worthington from of The James. Raymond is Don

Donald Worthington

least quarter was activity down bit, gain It's linked banking, the the mortgage take Catherine that or I'll looked on of Don, quarter of Ngo do going you a kind that. where here. at see Catherine next like terms In X? it sale

-- we what So -- in consider seasonally in indeed, QX but I what volume have seasonally light, particularly would mortgage. light was

our brokers purchase $XXX earlier our and relationships and in given production, we $XXX and share a composition our had to to percentage you here be believe real just calls about refi million as first higher good with quarter. QX a developers opposed I we one in thing in the the in So in on add, the the fortune market. have talked production And production this million production estate of expecting that is with expect will range of having mortgage just that the I we're we stronger we've I'll range.

And so in was QX, the purchase percentage XX%.

Donald Worthington

the Okay. is stock stock? for David. card then, of domestic maybe Great. was What this And sold, the amount

David Morimoto

Class were me you A. getting converted is It time to Let A, shares. hold that there roughly we number. Don, that the on, can to to B way continue MasterCard works once see. of that convert shares we're it Class amount limited the of is, Class Hang And a shares was XX,XXX

we -- shares the to So quarter. first sell shares the the in decided

Donald Worthington

you that of How much And I paid right. one expansion? January. truPS know contribute All Okay. in the did the to off then, margin early

David Morimoto

off So paid $XX $XX points We was mid-December. January, the million improvement. you early million in as paid mentioned. think second basis And we combined, it off X in in NIM I about

Operator

[Operator Instructions]. The Jackie next from question Bohlen of KBW. is

Jacquelynne Bohlen

on discussion I lengthy last it call. touch we wanted know the I buyback. quarter's on a to on had

Looking of to this level was be this the Do of to view perhaps fourth just accelerated quarter. or as the in different much quarter, pricing? from where pace it in that quarter, all repurchases you was it it it the seem normalized didn't given

David Morimoto

more was it latter. Jackie, the

the run first the expect prices -- of you along stock in the we likely to the was quarter. rate. As than for so Yes, fourth know, quarter, full quarter returned year. pace the probably stock to to XX% coming was I wouldn't of income rough were out first depressed there with and that I higher be market the -- net year the full necessarily continue think XX% buyback

Jacquelynne Bohlen

added helpful. That's quarterly year swing secondly, that quarter, then, generation growth? commitments some a does fund boost in good reserve there to help later imply with had that Okay. a unfunded that and in loan And the you that being to this may or provision the

David Morimoto

increase Yes. the There in unfunded commitments. was an

You are Jackie. correct,

Jacquelynne Bohlen

in somewhere or those were else? they were And Okay. construction

David Morimoto

C&I.

was construction. think it I in C&I and

Jacquelynne Bohlen

Okay.

coming projects online. Just more

David Morimoto

Yes.

Jacquelynne Bohlen

-- more say Hawaii saw the a Hawaii year standpoint? I of we quarter asset and some how and so outlook X -- relatively amount for is QX. in Ngo construction in the growth the for but in see Catherine quarter Yes, so looking And X the construction, net -- would rest is that light a loan pickup the the for expect from year. the here of Okay. in you classes. We rest growth particularly in do other expect And in -- then, the

Operator

other time. to at would like This to remarks. Yonamine this turn conference the our for closing no are questions concludes Paul over There back session. I question-and-answer

Paul Yonamine

the very call progress. for much. on much look you our quarter Thank to opportunity update you you participating very Thank XXXX. future first for our earnings in of to We forward

Operator

concluded. now conference The for presentation. attending today's has Thank you

now may You disconnect.

Central Pacific Financial (CPF) 24 Apr 192019 Q1 Earnings call transcript