CPF - Earnings call transcript Q1 2024 | Central Pacific Financial Corp.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

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

First Quarter 2024 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.cpb.bank.

I'd like to turn the call over to Ms. Vice Director Senior Accounting. Finance Group Matsumoto, President of and and Dayna go Please ahead.

Dayna Matsumoto

Chief and Vice for Chief and quarter and you we you, Arnold Vice Corp. thank Thank Eli, President morning this all President David for Pacific financial Hu, Credit are Anna Morimoto, of With Executive me and President Officer. review results Officer; joining Officer; the Chief XXXX first and and Financial of Martines, Central Executive Financial Executive the as us Senior

We in presentation on have website that provides our release a supplemental prepared slide Relations our additional and the of details is section cpb.bank. available at Investor

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

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

the a related our of discussion For forward-looking to refer statements, Slide to of risks X complete please presentation. our

Arnold I'll now and President And CEO, the our turn to over Martines. call

Arnold Martines

hello, Financial results interest and updates your and everyone. with appreciate we Dayna, share latest to and you, pleased Corp. Thank our We Pacific you. Central in are

special a XXXX. had start to We

anniversary celebration with XXth mid-February, where time First, our to honor of took we our the founding. in

our of War [indiscernible] in by we Lender recognized employees. and SBA of to founders in started As you our mission, II with underserved this for bank District. March, as Hawaii. were long-standing help World the special the celebrated time customers loyal many veterans We the occasion know, many was Year our Hawaii Consistent XXth with

to all very proud We the continue legacy. are

with insights first let a provide the The me and usual, believe an we will on performance additional pipeline. reflect strong positioning performance. as positioned optimize We the quarter the Hawaii team detail in coming quarter first Our But well quality healthy quarters. our with and market. capital liquidity, start asset in update on financial our financial results and are to

visitor year from increase, In XX% total month yet prior Hawaii a to month the from of that of Visitors have economy year and recovery. headwinds down continues statewide pre-pandemic to X% be XX% to levels the about XXXX. the XXXX. same census of average about proved despite daily measured day the remained about impacted the due in The up XX% was continues ago by from Japan February, resilient leap

As it in relates February about wildfires continues. recovery visitors the prior to in year were Maui, the total following XX% as

Total Hawaii XX%, was national of The was statewide and down Hawaii's rate from rate rate March very the in to X.X% to forecast, with remain unemployment at hotel March rate from year year statewide X.X%. X.X% an average in continues down University a X.X% adjusted of ago Organization unemployment a the ago. daily outperform occupancy $XXX, and low XXXX. X.X% of Economic state in Research seasonally unemployment

Oahu down condos back of price in in was year. median the homes, volumes compared single-family up estate area to but first for median million, prior quarter the the and values, up $XXX,XXX home the the March. were sales X.X% real increased X.X% price Hawaii $X.X In single-family to condo for sales Home

it active is inventory with increase strong, single-family X.X% welcoming a inventory housing levels the With in to March. remaining in demand for homes see for increasing

Overall, we about Hawaii's outlook. remain optimistic economic

closer our the impacts before the slowed term, from the have are we recovery in wildfires near Although Maui getting recovery.

in In forecast the billion XXXX. $X Hawaii to to for government said, the modestly grow total state economy latest all highs in in addition, XXXX. military with that and continue all-time in at is of are contracts total With awarded contracts

Morimoto, over our call to Officer. David the now Chief Financial David? I'll turn

David Morimoto

you, Thank Arnold.

quarter, diluted Return average XX%. ratio to or our the equity was our assets In efficiency share. on Net was earnings million Turning X.XX%. quarter was and primarily was per income for quarter, portfolio $XX.X average estate portfolio, runoff first results. the to on first XX.XX% loan good real in $X.XX loan total commercial planned sequential portfolio Hawaii and where opportunities. due or X.X% are growth offset in $XX.X our partially our decreased by Mainland there by consumer the risk/reward million Return

for we approach to second healthy, continue quarter pipeline is a and balanced take and Our beyond to the loan loan growth.

portfolio million time included quarter Our decreased or total by [indiscernible] sequential in decrease $XXX.X high-cost million X.X% $XXX government which deposits.

quarter, the our deposits highest and we During forward. will excess liquidity our reduced paid help going which cost down NIM

margin $X income the X point down only decreased and from was The by Net net quarter for prior million quarter. $XX.X basis million sequential interest interest was quarter. the first X.XX%,

of in total beta first X.XX% was was auto cycle-to-date Our repricing XX%. deposits cost our deposit the quarter, and

on swap And received started has March in securities NIM float We our pretax bottomed believe the and million $X on municipal modestly rates, expand Our quarterly. adds pay quarters. $XXX coming approximately million XX. in will of fix current at income

the took last other we loss office normalized $XX.X operating the on quarter income of the in $XX.X million, and on portfolio the restructuring quarter early in termination First following first normalizing quarter. also gain quarter, the in investment branch fourth was year. which sale lease after Other operating totaled nonrecurring million charge expenses the fourth

and effective XX% going range to believe was forward. XX.X%, continue XX% tax we will to Our rate the be in

first XX,XXX we repurchased of quarter, shares the at cost During total a $XXX,XXX.

record will of to Directors quarterly $X.XX Board declared May be cash Our shareholders payable of dividend XX per a on on which XX. of share, June

Anna? the to turn Credit Chief Anna our Officer. over call I'll Hu, now

Anna Hu

Thank you, David.

Our first net situation. to due loan favorable the and residential one-off remained strong Nonperforming increased ] charge-offs. [ with trends slightly quarter and mortgage asset loans in assets quality criticized

not However, anticipating are we well collateralized are any and losses.

and on estate credit secured in. to have a with XX% solid portfolio be of loan-to-value the and we expertise and XX%. strong segments is of real average focus strategy continues weighted that lending industries risk Nearly diversification, standards, loan underwriting on based stable consistent collateral by Our supported a

of is with X% remainder Our commercial XXXX. in represents of maturing total portfolio of across this in real estate XX% asset portfolio all types outstanding diversified and balances loans the

weighted loan-to-value maturity. The The loans, a portfolio XX% of average weighted average exposure loan-to-value total average and and commercial has real Our has XX estate maturity. respectively. to portfolio retail office office weighted weighted X.X% low average months months and XX% XX retail to at of remains a and X.X% of

to loan with nearly have The portfolio off regular status total all loans consumer $XXX million XX run returned just X deferrals of year related as on and a total U.S. continued with million. to a $X.X Maui $XXX Mainland ago. to to Our of or March compared principal loan deferral loans balance remaining of payment X.X% million

from a decreased Criticized $XX.X total X.XX% to moved loans X.XX% with seasoned quarter, the of $X.X a total point are continues $XX.X were XX loans trend an quarter prior these into increase quarters. the $X.X over for A the a assets loans X the or due or previous of of charge-offs were to majority basis primarily of million residential decrease Nonperforming X.XX% from or of well average million X that from This first on the basis Net million points mortgage loans of status. reflects decrease million previous an quarter nonaccrual basis. last loans strong loan-to-value. and quarter. annualized assets, downward

for Our quarter, credit losses was on $XX.X or we provision due for loans the loans. primarily charge-offs. $X.X allowance million million to net first a outstanding losses X.XX% recorded credit of In

of commitments unfunded credit recorded quarter. we the provision losses $X.X a million a million for $X.X Additionally, provision total during for the to credit for

quality remains we our and monitor environment continue Overall, credit closely. strong, economic to the

to Arnold? back call the turn Arnold. I'll Now

Arnold Martines

our credit liquidity, we organization. you, exceptional team, summary, success. for Anna. believe and for capital our your we positioned to are with combined that Thank I confidence with thank strong continued our support positions, want and you In well in

may questions be time, to we will you any At happy have. address this you. Thank

Operator

[Operator Instructions] Our from question first from David Feaster comes Raymond James.

David Feaster

side. just the Maybe on loan touching

consumer pipeline. healthy hearing if could from what of think opportunities some runoff you curious loan how your a about portfolio? I'm in where are on the competitive of just the complexion you borrowers you and you're the continued the growth about pipeline, talked You given today? maybe, seeing dynamics, And maybe touch the

Arnold Martines

just deeper a Thanks, strength the we transitional quarter we business was start segment well David. into small expecting in Arnold. I'll quarter's core normalization in for as our call. estate as commercial seeing XXXX last earnings us, saying as We're This the that this XXXX. as we progresses. loans Yes. are ramp-up real activity mentioned move in I and see area. more at a by the we'll And environment QX believe is

do pipeline, we is it a marketplace. the that in a demand based albeit lower on So have healthy

far market, it As the landscape, as continue does in the given that volume be the overall down is to competitive. fact

So we're decisions on we forward. wise making risk move reward as

David Feaster

then seeing whether is optimize you're and Japanese just initiative And about and your other funding helpful. Terrific. trends trending? think core Curious inflows on growth And that or seen how maybe you driving and the on impacts how you've to do looking That's then wildfires base? some growth funding you're touching from going forward deposit ways other the side, of deposits. maybe that touch underlying the the

Arnold Martines

I'll Morimoto. that then to let to of it David, But and me has manage balancing good a the environment. team turn act. a job done deposits. over start, It cost then growth I'll and economic is It's say just just David

expansion And balancing that we future. can of so those improve very decisions for the position so we've in been cognizant our NIM

But David and outflows. more to I'll on for turn it over color inflows deposit

David Morimoto

Thanks, Yes. David. Yes, Arnold.

we $XXX noted down CD million runoff. quarter higher-cost as release, -- quarter. was million intentional The government deposits But in total first our sequential were government $XXX

quarter more $X.XXX been So look annualized. some the due the to it experiencing, was but needing X% by million, runoff than that was we've to of also but was cash. was some or it use at little normalized works bit was so sequential it primarily seasonal runoff, or deposit $XX roughly to needs it core fire, the when to -- linked out a related That customers, cash [indiscernible] you businesses quarter

quarter. quarter forward. we first going do was gain the think that think We traction transitional we'll a So

the on small growth sector. core highly deposit we're Again, in focused business

couple growth We so It's have -- call flagship are then business we single-digit total account. our still business coming checking out year 'XX account. in on low a what the exceptional targeting of we full range. deposit And our small promotions

to expect make we quarter. first up do So the

David Feaster

How were Could the in core January deposit and quarter on the you first throughout much bit of the outflows maybe the like within of quarter? the on progression trends the trends? kind a elaborate

David Morimoto

Yes, David.

it the weighted was throughout way think one pretty other. quarter. much I I don't or heavily it Yes. was think the

David Feaster

then trajectory of Fed together, talked the the in And year? margin about margin the about you cuts? think to all opportunities maybe the kind that to putting over you it and do protecting course how And confident is considering very swaps margin, rate the just and other sensitivity we're that the of it that manage Curious, Okay. maybe as kicking you're troughed. against relates

David Morimoto

year. interest Yes. points on swap to XX Sure, from of add income. the a March started risk million an The rate basis on will NIM sheet balance the quarterly this to standpoint. matched is $X interest quarterly relatively roughly David. well net It interest Again, rate X basis,

that of quarter. effect full this So the we'll get

interest range, forward net our the which X.XX% a nice ] X.XX% is the quarter. guide uptick So to on [ the X% is margin first in the in from

David Feaster

have you cuts? comes include the next -- do of -- swaps much is rate how And that quarter And does [indiscernible]? in with that this

David Morimoto

anticipate don't any quarter. We Yes. cuts in rate this

the is in But guide where of NIM is think the the probably good, think to to we we X.XX% second I cuts half X quarters, X% of couple X are now next year. the for David.

Operator

Sandler. Liesch Question Piper comes from Andrew from

Andrew Liesch

the David, forecasting. I kind I mean, But the lower control. drill expense base in efficiency a was in to it to of think presentation expense you just looking wanted like ongoing release looks we at I little pretty here. down should in just the press how bit came still, forward? It expenses on I than initiatives. good some on still referenced going or be I guess,

those So expenses affect that be going curious might might how and what forward?

David Morimoto

focused better of expense a of initiatives. Andrew, the for been be as on David. year. more now we've stating office been Yes, the We've oriented. It lot to tends part probably Yes, it's back

called as So through talked service automation. core we MuleSoft now connected we previously, ServiceNow middleware ]. to implemented [ leveraging technology, We've our workflow about a

see beginning So last we're spending leveraging of really And be to on the we year technologies. hope at a of expensive the we've starting that been it'll show way of reduction our foundation now expenses do the those a to is building lot we're but of able faster expenses. not obviously, to than And to what is grow revenue, efficiencies. up likely the --

pace, single-digit the keep revenue low growth. have expense flat, at stronger So base relatively growing maybe but

obviously positive leverage operating So is goal. the

Andrew Liesch

with swap. be right. back that you'll a the the And pay base you funding. $X here it. Got there. to quarter it guess, like But asset then [indiscernible] margin, also interest from All million shifting maybe I smaller helpful color really to higher have of looks the off the earning used income then, cost off operating That's liquidity this

where going at the you So -- sheet you just grow balance from it's do Or is income you that here? think to stay if out interest do think net steady? look shaken should

David Morimoto

the margin income X%, million is net quarter. $XX guide so net uptick is guide first to probably million net is again, interest Andrew, The which interest a from to guide, the Yes. quarter, X.XX% an interest income $XX

Operator

Raymond [Operator Instructions] David Feaster Our James. from next from question comes

David Feaster

Just [ at kind is curious relatively growth of about ] priorities. this capital Obviously, point. muted

think You David? -- bit little this bought at you Curious deployment guys about how were point, back of a stock. capital

David Morimoto

the plan Yes, capital changed. David. hasn't

XX% So dividend payout do to that plan, share and have ratio in continue judiciously. to range. repurchase the XX% we'll the We use

been As volatile. little a you know, has the banking industry

And those ultimate overall we as for as and buying under continue great some the opportunity. banking downward the insider are where and leverage see so days company is there we'll sector that opportunities to the pressure,

David Feaster

on touching [indiscernible], just, maybe then And helpful. credit. That's

through with losses? conservative credit you've how hyper credit? you on where you a side. consumer culture. curious watch about think worked more that I'm the closely? then a on And you broadly, maybe book are obviously, think those focus [indiscernible] there's realizing Obviously, got First What Curious CRE.

of consumer well going kind book forward? your as credit credit broadly the of how approaching thoughts and you're management Just outside curious on

Anna Hu

Anna. David, this is

watching regard the get the Mainland continuing to particularly into and conditions side, we mode, runoff but mainland would closely to back with the with as are consumer So and are we when economy we lending. book, market at consumer the the the looking

forward-looking the lending mentioned. quarters quarter Mainland the think, couple real small Hawaii We we I stopped the business is -- the continue and the front. that on of in Arnold to Hawaii really commercial current not and have do loans and in in as consumer here estate But opportunities,

David Feaster

your you're trends? just Okay. watching worked we've consumer curious the then anything credit And there all though. you that is the at Maybe there? you standpoint? CRE Or as touch Like seeing -- some side the on more stress credit issues think quality maybe closely in I'm that through look Do of what the you're portfolio? are -- book, the anything from

Anna Hu

charge-offs book, Yes. on credit seeing real standpoint, as coming From we and optimistic we issues quality stabilized the respect that Mainland [indiscernible] optimistic numbers will in estate have the down. not the really those any to start that the With we're book, the Mainland there. portfolio, we're believe are

any Our in our total quality issues low office very a our there. book as Overall, credit percentage not and in to retail remain continues loan book. of really remain strong and seeing loan

Operator

back any now, right over I'd the of final don't As questions. to for to their hand we management have like remarks.

Arnold Martines

quarter to and earnings Thank the in you, our Eli, thank participating you you very look first opportunities all of you for Thanks our progress. forward future much. for XXXX. on update We of to call to

Operator

a for Thank attending day. hope you wonderful call. you, conference have We today's everyone,

wonderful may You now disconnect. day. all a Have

Central Pacific Financial (CPF) 24 Apr 242024 Q1 Earnings call transcript