CPF - Earnings call transcript Q4 2019 | 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 2019 Conference Call. [Operator Instructions].

I'd like to turn the call over to Mr. President, Officer. Vice Executive Morimoto, Chief Financial David Please go ahead.

David Morimoto

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

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

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

For our related to recent a our to the the with refer SEC. please complete discussion filings of forward-looking risks statements,

I'll call And turn over the Paul. now to

Paul Yonamine

report quarter company's the XXXX you, performance for XXXX financial of year. on the for Thank good pleased and David, the fourth solid well morning, as as everyone. full to I'm

to We basis. and loan and quality deposit core asset quarter continue a solid sequential both generate maintain strong a and ratios, growth capital and on year-over-year

For efficiency call. the net income later our this compared noninterest highlights we year, be margin, interest interest last and our financial to net David the improved details income, will in providing of full ratio. XXXX year

during repurchase Our XXX,XXX quarter. capital us position CPF stock profitability and enabled the shares strong to fourth of

capital shares XXXX cash with dividends, common XXX,XXX the our of During year, of this of we $XX.X shareholders XXXX. Combined we in or our the million X.X% roughly to repurchased past stock returned end outstanding year. as have

of and new excited efficiency. online system drive quarter, pilot initiative improve our better website our are returns. the stronger growth and long-term our launched mobile well, platforms continue employees platform and shareholder loan domain that banking the to We first cpb.bank commercial drive the quarter. The origination to fourth end-to-end progressing is new new in the an and our and with to name will development under enhance experience, RISEXXXX implemented customer execute In profitability, we

million and in the Hawaii ATM continues area with selected. at milestones were achieved our underway toward steps growing Hawaii well set new continued constructions the the with annual to modernization headquarters the importance military and The exceed and strength arrival first the of ever, XXXX of construction in Key our U.S.'s branch activity Indo-Pacific ATM branch in for to time for main perform Strategy. economy visitor XX our

this time, highlights. balance for Catherine? Catherine it turn to over sheet At I'll our

Anli Ngo

Thank you, Paul.

of Our previous assets increase $X billion at reflected total year-end. mark the X.X% year-end the surpassed and from an

consumer loans loans continues X.X% by in year-over-year sequential a $XXX previous right On Our broad in quarter increased growth to was by core basis, the deposits. and $XX balance in year-over-year. in based focused $XX mortgages. in growth sheet move Total basis, loans led million by resi the $XX X.X% growth million increases On were a million in or all composition quarter loan and with million almost or $XXX in and growth million direction the categories. loan over

quarter Asset basis Total nonperforming basis increased on million, by of to points strong quality assets sequential $X.X be and total assets. X.X%. of X a which continued by deposits year-over-year X.X% with represented

was bearing all in increase X.X% year-over-year that sequential in The $XXX $XXX deposits X.X% noninterest-bearing led balances. growth deposits. balances government market were core to a a million decreases by offset deposits time increases or Importantly, increase savings and contributed in led X.X% The sequential quarter increase XX.X% in higher-cost X.X%, core by a and in quarter by demand. or in million deposits, interest of demand of a increase increase with year-over-year, core planned both and money

of the of year. XX% was as ratio Our end loan-to-deposit the

strategies and deposit growth. in targeted development have in efforts yielded results Our deposit business gathering successful

platforms. strengthening further these continuing ramp and to efforts of in XXXX, by are supported our up technology We teams

call the to detail turn review I'll highlights in David? our over time, the financial this more to performance. of David At

David Morimoto

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

and For income the XXXX per income average was per prior assets or average XX.XX%. net on compared Return $XX.X year, year. return million diluted of share to for or XXXX million equity was was the the in share full year $XX.X $X.XX $X.XX net X.XX% on diluted

million pre-provision the year totaled revenue For was increase X.X%. $XX.X full pretax which or $X.X net XXXX, year-over-year of million, a

a pull Net interest interest to quarter basis by and are for increases X.XX%. margin quarter fourth represented positively net quarter which in our million are and for quarter which costs. basis margin quarter the investing margin. basis, dividend our while deposit able net was $X.X $XX.X million $X.X future and We loan average The quarter income to through fourth sequential income we sequential in sequential impacted million X.XX%, net interest income net normalized was net and borrowing normalized nonrecurring solid XXXX was interest the expansion interest-bearing margin on results by fourth increase. included driven initiatives. in the and balances On The point X interest pleased interest a a RISEXXXX interest increased decreases

portfolio. million consumer million totaled Net provision compared for of quarter a During charge-offs losses $X.X of net loan came fourth the $X.X of charge-offs to in in and the $X.X quarter. charge-offs prior million quarter, million compared we a fourth the to prior the recorded in the primarily $X.X provision The recorded loan lease Hawaii quarter. from

for loan banking At Fourth the $X.X income. $XX.X in quarter December to X.XX% leases. million compared to allowance The or quarter. lower due was and million loans and other decrease operating of mortgage $XX.X million outstanding XX, totaled income prior primarily was lease losses our

and increases and ratio Other computer due operating $XX.X million to for efficiency quarter. return the to quarter higher to The higher benefits increase accruals the rate for in expense. by prior was to adjustments. fourth the quarter also employee prior XX.X% These to quarter. quarter expense The and compared driven $XX.X in tax was million fourth compensation. effective in software incentive sequential to compared was XX.XX% provision salaries The increased initiative the XX.XX% RISEXXXX our include relate

Going to range. expect tax to effective we XX% the the XX% forward, in rate be

return to Now Paul. the back we'll call

Paul Yonamine

Thanks, we are quarter with David. positive off continued momentum pleased Overall, another XXXX finished solid we as and year. the the

coming Thank to hard we this our look Our to address working team will At over sharing time, have. you is be quarters. we any happy on commitments, you. with and RISEXXXX deliver our progress the may you to forward questions

Operator

Instructions]. [Operator

of from comes question Sandler. Deer Piper first The Aaron

Aaron Deer

a that this quarter. results margin like on was very encouraging since I'd guess I to on start the that

that. in want of that might begin, nonrecurring then portfolio, than the that any securities just confirm I done this be highlighted the other I played might of point? to Let's out there that wasn't pressure the that's guess, that particular, side kind repricing also asset the the to but we asset within the at have see the sense you continued Or at within, on there, benefited needs first, item of noise that all loan book that largely is yields? drivers your looking And other it that

David Morimoto

Aaron, it's David.

variable. item million yes, times, On the normal, and The side quarter. part on were quicker react in side. as is unusual to able And in nonrecurring income, on the the the a question, our we're the only asset asset through the a asset higher to way XX% don't of work interest lot the liability the side, than rate the XX:XX, portfolio. have fourth XX:XX, repricing side percentage about then of We needs We variable liability $X.X of generally its the first quarter was the questions, dividend loans.

the quarter. in good repricing asset sheet the then deposit is to We the pleased had liability of very balance quarter. for on core side there growth, So again, some and fourth still very potential were of downward fourth we're side. the result the the we well with able the reprice But

Aaron Deer

guess, particularly your be was meaningfully. it down -- to that, thoughts this, of level? then, for Or And that margin is happens there? that your too, there hold there's outlook cost are more to X what your some? Is deposits deposits? it of Or guess, kind overall to opportunity kind going your what impressive, that in bring pretty market that of mid-X.XXs dependent down going on are quite the for Yes, is I pricing I sense about overall in very given

David Morimoto

on Yes. had We're we've several the the the guidance for margin sticking that quarters. last to

rate to in opportunities but to the X.XX% in that high So degree do adjustment we're the today, -- saw obviously of to sticking the probably last The a the think some We normalized same to guidance. further, on the Fed fourth October. on X.XX% stable We're the quarter. assuming there's reprice was stays range we that last not basis. end

the annualized. higher quarter quarter growth that highlighted. It's a that linked was The core that actually saw the at DDA I XX% that liability linked side deposit the able a the to but helped other not just a lot have than move obviously, thing going move Catherine the we Core the run of on And things. been really growth was degree same deposit to we repricing think, margin quarter. So annualized up was has even growth, fourth through, few on in the basis.

So that also helps.

Paul Yonamine

of Paul increase We're around going forward. going core is to trying rigor this Yonamine. deposits and to lot Aaron, a continue focus

And focused come deposits. is think As increase latter naturally, platform core then again, RISEXXXX we getting really part the initiative, we're make in to us deposits. I further investments to, trying on year, to workforce in hoping alive trying digital core our our see the to help drive further whole of really

Anli Ngo

just I'd in discipline about like NIM on in side, Aaron, book. and earlier sorry, the calls to new loan on the talked to regard coming to loans on -- the on the -- we it

in at overall QX, of portfolio average our new yield an and And loans so with in X.XX%. yield, compares came that X.XX%

of finance, we kind they to in of instilled that as discipline continue. work officers -- all with expect that so would our And in our is and

Aaron Deer

just quarter, or was the -- wondering then, loans? the automobiles amount And bucket loan And was it of the looks guess, That's some the which did you what If in in maybe there. terms pretty great. was that. student Obviously, was like quarter? was I that refilled during consumer good. what growth I it

Anli Ngo

question. I'll that take Yes.

So downs portfolio on in the the consumer did pay in we fourth book we refill the yes, saw as the mainland. quarter,

the have So mix we was did unsecured. fourth a and quarter, of purchases auto and in it

in million auto in $XX $XX purchased even, So million and about then unsecured. about

Operator

The next Point. Laurie Compass comes question of from Hunsicker

Laurie Hunsicker

growth 'XX? with be how thinking year Just staying full should about we loans, loan for

Anli Ngo

Yes.

we're digit. guiding mid-single XXXX, For to

to said As hope earlier exceed calls, currently. in communicating the always we but we're guidance, we digit mid-single

Laurie Hunsicker

right Great. most then cheapest. attractively And your deposits priced now, I mean, mean, all I core of in same on Okay. the Hawaii. deposits. are question the

those we XXXX? keeping so to how growth do book And that and trends, you in focus if on look think about your grow

Anli Ngo

we in to too. hoping as again, far of talked be about guidance. way in as but to relationship given looking And exceed So high-level mid-single to guidance, account to that earlier do the low to higher going we base and into account. that customers, deposit we're continue customer balances, And at calls, as earlier will our talked just the digits, that's that exceptional cross-selling base, be tend kind a they a our focus, a calls,

Laurie Hunsicker

Okay. you've any if Or quarter, number deposit of this deposits? that? it And growth your then was on got was a from Japanese

Paul Yonamine

Paul. this Laurie, is

from So from steady into in progress we're We've number quarter, we've of seminars, year. I terms a of focused stay a think more month, of getting stayed that Hawaii. can lot fourth and feature that I number in opportunities of was pretty had to And some I continue new last quarter, believe personally the new to have number you to great outs. making Japan this that harvest accounts. plan penetration a but last we and a we of in trying tell much in investment opportunities current conducting I ins new prospects the

Laurie Hunsicker

hoping And if or Okay. for line? sharp a that? you 'XX there about of about us I was heard that we've you you some number as XXXX? RISEXXXX, how And increase on think banks? noninterest Or just the all then there around was refresh in a expense even didn't expenses, we just more I be to just in how last spend. broadly, the to about had Is going $X know had we from total that? the XXXX The refresh terms was And number think I Great. should the other then so think should pretty we if and could should a how Hawaii of from million,

David Morimoto

forward. becoming Sure. think business it. your latter like part Laurie, is how the just would we I our going of operating expense because question it's David. exactly It's the to Yes, is overall of really other view RISE part

on in quarter guide that, total also and RISE the XXXX. other Having $XX quarterly before, the million we've gains overall as revenue just operating business, the $XX in XXXX. a per basis So mentioned said is to plan expense million includes business on

to on So range XX% the the guide the throughout efficiency the XX% to year. remain ratio is in

Operator

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

Jackie Bohlen

I extent you're any of be provide able when on us let able. not, just And see to details if some wondered to might if you the might CECL we know those?

Paul Yonamine

Yes.

CECL that we'll of disclose a said believe impact industry. broader will plan. expectations and Our along February. disclose manageable file reserves CECL CECL range -- been XX-K be the And plan proceeding the obviously, for late range the our are seeing we preparations, of do Having in we when that, we we've to within

Jackie Bohlen

starting covered. was return consistent in a that? repurchase there we're and helpful. growth? you I of you've That's rest new one a for year, strategy, change outside just I consistent but Or it capital know had had just one, of level that And then Okay. made then consistent internal activity a is kind is now any pretty last what of dividend everything

Paul Yonamine

exactly where know, capital. had you we That's excess time, right. Jackie, There a Yes. period as was of some

returning beginning -- net we that. year, we last We So from income. definitely back sort of XXX% were of stepped

million this So new we're quarterly plan. more Board plan and payout just we dividend definitely yield then comparable repurchase month. with are open repurchase and a little opportunistic obviously, market approve our to a the share maintaining with And peers being the the did $XX the share ratio

Operator

from follow-up Sandler. Piper a of we Deer have Aaron And

Aaron Deer

Just of revenue in follow quarter. on. mortgage, quick on to items couple One was the the down up a a housekeeping bit is

the first was of Just quarter any, if benefit MSR? year? on be -- still there adjustment what remaining might I in curious might assessment how see FDIC if to we And the an any, that or if just terms amount, reflects And X of the the was credit wondering -- then in that from secondarily, quarter? much a in this

Paul Yonamine

the is this on on first me touch question that. Paul. your address FDIC I'll And question, latter Aaron, on -- and just let on David the have on mortgages,

Dovenmuehle. outsourcing very you the in were DMI, tell During we -- ahead fourth outsourcing the have with any to And our servicing just to that process, going of mortgage successful quarter, I it it's whole always like to always the transitions, well. team you takes sometimes I focused did to great a these servicing job of admit quite have is through herculean the ongoing people a But when go and externally. effort. internally stay think I that type than

fourth lot those that And second still great be the the the the at year. real of vibrant. of of David, of of ventures here news occurred the quarter first you like performing the should feel this market of care companies were so joint I some if think think a coverage our market, presence real dynamics that quite we're our operator be the but lot I a taken ease by on DMI. estate the going very And quarter, Through in of back is look right mind we in in with Hawaii days, that the part? these will forward various estate in and well I track servicing

David Morimoto

Yes. credit. the small Aaron, on assessment bank

after the have we quarter, credits $XXX,XXX So fourth roughly remaining. in

quarter year, quarter, and quarter $XXX,XXX that back the the half issuance would the to assuming in second And of where get currently deposit roughly the then probably the $XXX,XXX. is load of in -- year. in we'd costs of the half paying in full the level the expense would back around X roughly we back then the per first issuance maintains we some So expect have fund at, it deposit it

Operator

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

Paul Yonamine

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

Operator

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

You may now disconnect.

Central Pacific Financial (CPF) 29 Jan 202019 Q4 Earnings call transcript