CPF - Earnings call transcript Q1 2021 | Central Pacific Financial Corp.

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Operator

Good afternoon, ladies and gentlemen, thank you for standing by, and welcome to Central Pacific Financial Corp.

First Quarter 2021 Conference Call.

During today's presentation, all parties will be in 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.cpb.bank. the to turn to like call Mr. over I'd Chief Morimoto, Executive Officer. President, Vice David Financial ahead. go Please

David Morimoto

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

have a to Investor at The available We prepared we website slide will the in presentation presentation refer in Relations that our today. section of our remarks cpb.bank. is

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

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

complete the a to refer now, two For to related of over risks call statements, to I'll discussion our presentation. please forward-looking of And turn our slide the Paul.

Paul Yonamine

good morning Thank you, everyone. David and

appreciate efficiency As our RISEXXXX Pacific Central revitalization key other digital completed We your banking quarter Plaza Financial milestones. Pacific Pacific which and completed enhancement, always, included XXXX, Central first the interest revenue of initiative, the of we initiatives. lobby, In several Corp. Central our and in

system opening Further, to banking online new consumer we Additionally, upgrades online quarter, term banking we we technology launched online for and consumer business best-in-class as implemented quarter, and our small system. enhancements our and deposit loan. we in consumer launched continue commitment platform mobile and further banking new digital the first this to account a our

originating $XXX our loans, to over small Pacific Central quarter, over During million. the first again up totaling support business PPP by X,XXX community stepped

employees enabled hard these of working to results. team our accomplish proud are that have of milestones and us We

the achieving continue and to financial on highly successes our targets. building upon be focused We

for a quarterly financial income quarter with were strong highest first very since Our results the pre-tax XXXX.

and financial Based on and to I'd to and Directors of Company's like position, state dividend have status. increased results now our asset Catherine? our cash quality, update share. our over on to the strong continue also per liquidity, an our quarterly Board provide turn solid capital. We $X.XX to pandemic to Catherine call

Catherine Ngo

progress of Paul. you, The is State making Hawaii economic recovery. toward Thank

rate so Our is peak significantly declined X% year. and in March, unemployment to of from elevated, its April in while down XX% last

be program been Our nearly tourism recently and the of third Travel to levels. industry two Real XX,XXX passport extremely Hawaii for strong Visitor The with about pre-pandemic the for case have Safe starting the very high returning in low a of summer. to $XXX,XXX March. have of a potential a running nation is Hawaii in in averaging the capita the or per per our Oahu with estate rate single-family program late continues rate on in record our basis. continues lowest a vaccine in well medium COVID infection arrivals price home with day hitting State

currently eighth with vaccination is in the us high good Our also nation. state over putting our quite of residents vaccinated, fully the XX% progress

At reopen. Central March and Martinez, we over are Arnold fully many employees point. to I'd essential Officer. access and and our our this COVID strong call these Banking service the Arnold? President Pacific, like the therefore states to in Executive safely given now vaccinated starting deemed stats, to to the vaccination Chief are With at continue in turn were Vice

Arnold Martines

Net forgiveness their approximately loan and we from loans supporting XXXX. PPP loan in second The and primarily million, required PPP apply our of new X,XXX PPP first March application. in continue loan QX. the processed Catherine. total loan you, forgiveness In applications PPP us equity new commercial shift and we to have and our applications, home our over originations. originations, processed our portfolios. over for totaling to we million, of we in in the our resulting in by Thank industrial, QX, X,XXX $XXX XXst, in portfolio $XXX Concurrently, SBA, over inclusive funded mortgage, round to construction, business million consumer quarter, of in was paydowns. PPP in $XXX resulting which million existing commercial, resources In QX to paydowns to team in customers loan of the borrowers represented draw attention which grew due portfolios, commercial declines increased forgiveness of assist XXXX PPP To-date, of PPP the through offset with over round loans by XX% residential loan origination processed our $XXX mortgage,

continues loan first business team new CPBs $XXX the supported needs approximately PPP customers deposits by with business and our to expanded increased quarter offerings. meet to small XX% Total fundings government small during banking and with other their was engage To-date, and product banking Our about customers. we X% help to relationships stimulus. broader by have sequential the quarter, support service our which or million of

the basis Additionally, points is by three prior points. our from total declined now and down cost deposits just quarter basis of to six

the Hawaii economic continue our a bank. bankers will in the until customers gains to pipeline new healthy support our of traction, business As engage recovery and for

Anna? our would Executive to management Credit credit like turn President of our over risk Anna to Chief Hu, provide Officer details Vice I to activities. portfolio Now, and call the

Anna Hu

Thank $XX.X significantly with At secured. real million deferrals excluding At quarter is commercial. of the to of March portfolio, of loan total balances loan the end, sequential portfolio XX% XX% excluding billion PPP quarter the Approximately balances. on X.X% $X.X the or balance $XX.X total consumer you, by million estate portfolio, payment PPP loan declined XX% Arnold. XXst, total and loans totaled

Total as XXst. loans end. and loans quarter declined in commercial loans. deferral had further real through April loan no several consumer payment assistance next were months. continuing anticipate million plans on commercial on and the deferrals portfolios residential payment provide over provided modifications of Additional to estate We loan our and deferrals payment $XX.X repayment We industrial to at and

the quarter, balances. declined loans primarily of $XX.X increase loan to by due The X.X% million criticized loan classified sequential the X.X% by the to million the portfolio, The million balances, PPP $XX.X $XXX.X being excluding mentioned portfolio, excluding classified primarily million million upgraded or and mentioned loans. $XX.X consumer residential or decrease or loans loans of total to X% operating of loans and result to are increased Special borrowers balances. to loans of quarter declined $XXX.X excluding in portfolio, by total million our as special are due a total loan $X.X During performance. improvements PPP in in loans PPP

in high-risk industries food balances rated is is X% also classified. service borrowers total mentioned, million our classified total monitor or $XX mentioned and and of rated special accommodation XX% to special the continue balances of received We $X loan. million of PPP an Approximately

and Additional Chief special portfolio. quality in Morimoto, XX, call Vice continued found our details on and XX. on now the strong can turn remained asset and loans XX, Officer. our Financial mention slides see our I'll and classified loan Executive President to and our high-risk be David expect rated improvement industry David? over loans Overall, we to

David Morimoto

two income on fee and equity quarter to in prior in Net per three diluted the prior PPP quarter Anna. for forgiveness. margin in $X.X quarter. recognition loan $X.XX PPP compared as due unearned rounds of in return to The first PPP $X.X average for $X.X interest income income primarily prior net XX.XX%. was to quarter. was well yields. interest and compared for income margin as X.XX% due Return to and net assets was to X.XX% net the in compared first normalized million The was less the quarter At fee X.XX% interest March the due net fees from the decreased loan which quarter, fees prior in one X.XX% in lower the to the recognition Net million, PPP decrease or and X.XX% million included Thank average Net share. first fees for XXst, on net quarter. billion. net first quarter you, was was $XX.X interest the quarter The interest million was income was for million to $XX.X $XX the lower the income lower PPP round decreased first

$X.X income to Other increase was in $X.X million the $X.X of from due of mortgage life bank-owned operating prior primarily to banking million. first $XX.X The carried from lower lower quarter. totaling million other million, insurance XX.X The expense quarter. quarter prior First million. income decrease operating a included was expenses the for which compared one-time quarter million $XX.X income the $X.X of totaled prior million and quarter through was

provision the for in quarter X.XX% This million the to to X.XX% quarter the first were effective prior charge-offs XX.X% net or expenses quarter. first the XX.X% Additionally, economic origination At $X.X deferred in our in quarter of first as slight a in capital million decline first current for loans The the compares quarter, quarter of in prior prior the ratio to forecast the The $XX.X to in from quarter, loan prior losses was utilized a the charge-offs rate the million efficiency PPP carry-backs. the to $X.X recognized one-time to prior in reported totaled the in compared decreased $X.X to loans. the improvements the loss methodology. Net cost losses the was the allowance end. excluding compared outstanding million credit we of million our primarily PPP $X.X quarter, in due salaries as credit for in XX.X% XXst, credit and benefit due CECL March quarter. In tax from benefits. quarter, we

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

strong testing. Our and stress liquidity and capital robust to remain continue we perform positions

declared earlier, call a the was share, $X.XX Paul. of cash our Paul the the return now an of Board as I'll per prior increase Finally, which from quarter. $X.XX Thanks. Directors And in dividend noted to quarterly

Paul Yonamine

make providing committed our as happy employees, the may we'll and credit and On and in any Thank Thank confidence continued employees, has we remain you. strategies. our Pacific have. we a customers to Further, progress your questions support support and positive you our progress and you community forward capital behalf to this you, Central thank through recovery. be the summary, position, David. address we time, continue solid of organization. our team economic for At to financial management liquidity to on In

Operator

from question-and-answer Go the Instructions] session. question begin James. from now will ahead. is Our Feaster [Operator first David We Raymond

David Feaster

Hey, morning, everybody. good

Paul Yonamine

Hey David.

David Feaster

like PPP program to a in It I just on start out the growth. distraction the wanted sounds quarter. was

have the where up, seeing the just originations then of pulse is you're Just how maybe curious And of How the client, shaping demand second the customer? the quarter? trended? pipeline heading kind in into

Paul Yonamine

begin on probably and is of with. But just also, first that recognition might PPP pass I Banking I before you I team always Arnold And hard the to David. continue community. quarter start to a think whole as slow to working the Office, the in our all on Chief again, despite win loyalty Sure loans, the quarter that, Martinez, know, PPP

We the little to the on you bit bring digit balance over what in accounts our the continue is loan Arnold? let other very previous year. pipeline more to still call, committed for of bank. tell me into details. we're been we and have can new have But the Arnold I a And growth some the about meet high-single touch

Arnold Martines

Paul. thanks Yes,

we resi, with pipeline. CRE residential So, restarting, pretty $XXX Hawaii, the area, year regard we nice overall was our resi to in million. production quarters good come. lending healthy, very improving. The see our CRE, -- outlook small feel our quarter some market loan about the portfolio looking consumer to at at We're particularly The we feel pretty we're first lending. restarting our progress to in really pipeline moving the We business that going in the strong for as the at good see is in looking our growth into our conditions

David Feaster

base much from guess economic the you just of in within in program how of the this the sentiment from -- your how Okay, among improved that's versus talked hires much about you any new acquisition And I the have client new new helpful. pipeline, increased investor customer outlook? PPP. acquisition sense PPP Do is that

Arnold Martines

were did just some we the in job bring -- the Yes, million for to able conversion PPP year to us. with we've on --- $XX to range deposit about that's of customers million great effort. PPP we And we $XX last the nice the leading XX% all and a that already in new the non-customer a converted growth to those the PPP trend clients quarter,

so new effort very really, a I really on We customer have to these to a converting point as result, acquisition customers year. some bank. business that more nice throughout do for of focused see And we're nice believe, the going your this new

Paul Yonamine

Yes, David this is Paul.

well. kind as me of Let just in chime

deposits a of PPP a in work to areas of as of a the quite lot we So, quarter first that. referenced. lot seen that as and accounts And And as hopeful now, seen we've a some result seeing Arnold of of are new we've I the think be the returning, in economy other we'll harvest that result banking. we definitely continue growth things

again think, right course. I So, it's on

David Feaster

mix trough I XXX, asset then Do good growth get this we I growth think organic in, excess you it guess XXX think supplement liquidity, guess forward. any you stay taking I with kind approaching and And NIM loan it potential we're a on altogether, accelerates like sounds going do come color. about to realm? And Okay, that all improves. earning that's just has but then, guess how the is just core that thoughts in the purchases as can to growth? And organic of

Paul Yonamine

mean David, you or purchase repurchase loan stock purchase? stock do --

David Feaster

Loan pool purchases.

Paul Yonamine

do want All to that? take right, David, you

David Morimoto

always as Yes, option what We is risk and augment Hawaii purchases opportunity know, ourselves is there abate our relative to past David, that's seeing we're will originations, that an to our so reward issues. always portfolio locally. considered the if loan -- mainland you so what purchases, mainland have

So margin the prior And always the part trough net the we same guidance excluding quarter interest of core core interest PPP. that this the is of interest interest the XXX, XXX consistent remains margin, your to can then question mentioned, that middle net second net on the have still around net We're PPP. margin hopeful available. margin, The you year. with that net

a you give to Just little color. more

X slower of to NIM points remaining was excess one to that about due liquidity to We the balance points that So, sheet. basis that The the was points. basis reported to down forgiveness. PPP due disclosed of XX basis related -- fee pulled less on we two fine, is income

to quarter. So basis four to really three the sequential balance sheet re-pricing is point down

So, we're getting close.

David Feaster

Okay, that's everybody. Thanks great color.

Paul Yonamine

David. you, Thank

Operator

next from is from Bohlen KBW. Go Our Jackie question ahead.

Jackie Bohlen

as Hi, the on management good want capital. tremendous I to it start deposit morning you're it's and relates sheet growth obviously increasing mean, to balance everyone. balance sheet. having NIM I

wondering if no And on it in that?, on number two, just any thinking about you're or other one. repurchases number had the how there share were that? factors if So, quarter play impact that

David Morimoto

growth. you beyond the deposits. But deposit exceed can origination -- deposit strong if growth PPP will very and obviously Yes, loan deposits, loan goes PPP tell as just deposit it

on we're the that capital It forward. a which utilized making, the a to where But and at it's So, degree into that we never there forward. definitely discretion, excess be of going share thinking sheet some we're of with function growth to some was going just $X that could is are restart ourselves believe deposit The in short to the obviously. is, that referenced being outlook capital. going Paul repurchase organic to. price our have How billion, plays for May. the of still be opportunity we even bail sheet it capital management's balance to And going looking balance decision we management plan

getting economic the are comfortable We more outlook. with

Paul Yonamine

Jackie, is Hey this Paul.

really The tourism Just in add spring I somewhat was that. to slow. to in kicked it spike break. Prior that, since still mean has

And or within indicators a of that are month was so. for very last so positive lot now, just this economic really Hawaii but the

are table. definitely back repurchases David stock So, looking as forward mentioned, on the

to just add Okay, that wanted color.

Jackie Bohlen

great. Okay,

are it stimulus potential just only to I more have trends. probably Now, it of look makes those a forgiveness, outflows to be deposit to PPP and within realize just color of or But know this last if the I that's the next past it's loan terms stickier? things in it outflow for obviously talked to kind that at with about might the the PPP predict. deposits good And anticipated in positive. that seeing to wondering if But that's expected we've new you're challenging mere looking impossible the you flow, little month proving those is

Arnold Martines

Yes, Jackie this is Arnold.

some we really think given no, some at is deposit But that small obviously, despite, nice -- is say of to the some because seeing real growth QX, we're rough this seeing some roughly rough, but business money. number it's are outflows spend organic are -- also in are We nice we the portfolio that that nice I looking going organic about [Indiscernible]. $XXX of a in growth. million probably the

So, we feel -- pretty for growth strong and us. good about really the difference growth, being organic momentum

given well. continue Although money will the a will that to of in outflows I be all people the coming say caveat, as expectation will continue obviously they money, quarters will flow spending stimulus out as and the some some

Jackie Bohlen

Okay.

I'm basis you to full obviously, of it organic to factor like absolute doesn't it XXXX XXXX sounds some like that's X%, convert PPP, also outflows relationships, up and as add of -- but good up. So, growth from some some but at customers an improved obviously PPP, looking sounds XXXX on deposits a that related those over

Arnold Martines

That's correct.

Paul Yonamine

Jackie, Paul this again. is

are looking with deposits for there. hopefully can and will now from we coming the so growth the and -- businesses mid-single in We economy stimulate forward year, still to digit work back, further

Jackie Bohlen

Okay. Great. everyone. Thank you,

Paul Yonamine

you. Thank

Operator

Our next is question from Andrew Instructions] Piper Go Liesch [Operator from ahead. Sandler.

Andrew Liesch

everyone. good Hi, morning

Paul Yonamine

Good morning.

Andrew Liesch

How trends the more my portfolio forecast. mortgage to like does $XXX mortgage the bit pretty number The was all release a question as seeing out? had the on declined that come back, -- press little It the strong front, in going you What's production? sale gain on banking you're well is portfolio mortgage and some of follow-up shake at of the revenue, are the short million. on looked residential of declined that

Arnold Martines

million QX, at production. looking at the really is this what as is far -- $XXX we're a versus $XXX million, be on to on million in the $X.X And $X again, we seeing sell strong. we function is in looking of portfolio In probably Yes, the going as in The sale Andrew, million and production portfolio. the We're to But Arnold. we're the is what's gain sale, versus overall, it's of marketplace function a on of what we based future. we're gain what range. to what decide sell view our looking

Andrew Liesch

on are gain seeing narrowed you it. on Got to What spreads sale those all? at

Arnold Martines

starting the so normalization The spreads are in we seeing Andrew. some to spreads are normalize,

Andrew Liesch

back to But add if then that nicely some comp. deferred declined that's on Great, say going basis, a And of helpful. obviously I'm that good, core a the was this good from Okay. expenses is from when expenses in and a rise as you transactions? have comes Is forward maybe could activity that here economic back think this $XX.X or million. going use rate customer run more you to I to

Arnold Martines

We guide it'd $XX $XX And one the million. to million other be say continue done in million. pandemic spend and have to how thing $XX lot of were that whether during million and headcount is demonstrate with a I expenses that line still we on we've on restraint and no to $XX

Andrew Liesch

Got it. helpful. That's really

so Thanks You've I'll all other questions. covered much. back. step my

Arnold Martines

Thank you.

Operator

Our Laurie ahead. next Hunsicker question is from Point. Go from Compass

Laurie Hunsicker

morning. thanks. Yes, hi Good

no I'm one So, payment, only deferrals. I to in to meaning no I Are partial confirm think just interest accretive the loans down number? to extent just they're the deferral want returned to deferrals, have question, fabulous. that C&I, obviously those included

Anna Hu

Yes, so, that is million forbearance. $XX.X to down while are the loans on numbers primarily

Laurie? reinstated you're that loans that return are the in not number. asking that Is So, have question

Laurie Hunsicker

is only in no on No, that so it's was on if previously a deferral back longer in that counted and, and interest only. that deferral? but or now Is interest it's you've deferral got loan

Anna Hu

it's no Yes, longer counted.

Laurie Hunsicker

Okay.

accounted deferrals? no so longer I'm Interest only are clear. in just, So

Anna Hu

Correct.

Laurie Hunsicker

Okay.

Thank it. very you much. that's Okay,

Paul Yonamine

Thanks Laurie.

Anna Hu

Laurie. Thanks

Operator

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

Paul Yonamine

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

Operator

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

may disconnect. You now

Central Pacific Financial (CPF) 29 Apr 212021 Q1 Earnings call transcript