CPF - Earnings call transcript Q3 2024 | 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 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. Director, Accounting. SVP, Group Matsumoto, Finance and Dayna Please go ahead.

Dayna Matsumoto

Financial you joining and results Arnold Vice Executive us Morimoto, you, Central recently the John, we Martines, for thank and Pacific Risk Officer; for Financial Chief XXXX financial and Chief Mesick, Thank Chairman, and as President morning all review quarter of me and who Officer; Vice and Anna Corp. With Executive Officer; this third are of President President Credit David Hu, us Chief Senior as joined President Senior Executive Chief Executive Vice Officer. Ralph the

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

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

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

turn Slide our Martines. refer a our presentation. And of statements, For discussion complete I'll please call risks related forward-looking CEO, X Arnold of President our and the to over to the now Chairman, to

Arnold Martines

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

risk Ralph Ralph's Senior expertise joined years will quarter. be Chief Hawaii, Mesick, regulatory by executive into in team experience the as our and in the the as environment to third broad now of grow start to me Officer. With Let industry future. Shifting services Executive in here introducing and President we XX Vice who Risk nearly the continue managing financial invaluable

well and and sheet balance core in liquidity, asset positions. expansion quality to NIM achieve as improvement with strong our continue of We continued areas deposit growth as capital meaningful key

and growth to but rate economic rates developing. see we remained broader starting challenged, positive loan trends the Given move down, with environment,

in million $X.X included strategic opportunity. evaluation of to quarter our expenses pretax this results and assessment related a Our

Overall, our to our no remain the future under parties and favorable right card in and conditions. we longer opportunities navigate discussions, capitalize opportunity trends the confident currently the ability remain and terms successfully interested the on in landscape. and are engaged are in While economic we changing growth

a business During in the serve and presence of neighbor for The new and Maui state-of-the-art the opportunities to to branch also key create look the community we our well in is Maui. the needs expand consumer equipped growth as market ongoing quarter, Kahului, opened on islands. this we branch will

XXXX, strength tourism We expected continue Hawaii resilience in construction market the to monitor offsetting economy. the permits weakness in building generated X in slight the of the units the continued increase stable prior industry, $XX.X increased the first months billion and the conditions XXXX, our to compared remain is over up about industry to local Hawaii the construction have were authorized with optimistic growth year. XX% the value in prior year. of residential Hawaii XX% of In sector. The from of and a XX% number private

up were XX% visitor of Japan year On front, from first X.X% in total about yet the XX% August, prior X year of down year-to-date remained the from a XXXX. ago, levels Visitors XX% XXXX. statewide arrivals and the months about pre-pandemic visitor were in through were from

home September, values adjusted Home for with home were and continues who in sales $X.X a to more stronger estate remained in our the increasing Chief price the positioned housing were market. Overall, total the real the coming island over September reenter of median David are reflecting million may now outperform turn years. I'll to of prior in David? encouraged remained August combined the The X.X% growth X.X% inventories X.X%. Hawaii prior Maui, of With economy Officer. For call for Morimoto, rate and but X.X% sidelines year-to-date single-family unemployment buyers at volumes about statewide up year. Hawaii's on mortgage in well through low Financial was XX% of down be the single-family the very seasonally year-over-year to visitors compared X%. Hawaii's homes, increase a the strong. decline for Oahu robust year-to-date unemployment gradual national to condos year. is rate rates,

David Morimoto

Thank you, Arnold.

our Net third earnings share. results. to the was income $XX.X or diluted $X.XX Turning for million quarter per

the decreased million respectively. In continues expenses loan million to X.X% Excluding the income come the in sequential or total and quarter. estate $X.XX, commercial types. in $XX.X C&I third runoff by $X.X portfolio diluted portfolios, and offset net quarter, other pretax the million and by to related $XX strategic were EPS our Growth from real opportunity, loan

remained total portfolio Our deposit relatively quarter. flat sequential

favorable a reduction and offset $X.X by of investment is time driven for bank-owned funds in totaled quarter. $X.X by mix operating normalized income other is the quarter. typically million, with NIM core increase operating X in quarter, opportunity. primarily million million, was XX% income up $XX.X the the deposits. $XX.X to remains interest quarter relatively in third in Average of prior the expenses deposits in equity The see million compensation balances total on by deposits securities offset increase income basis quarter the total quarter deferred of market and other sequential income cost BOLI an of deposits. Net our did by margin $XX.X to on fluctuations we point insurance government related $XX by interest DDA were our the while impacted and net portfolios, life million X.XX% decreased net included by operating strategic $XX expenses. to increased stable. and basis cost shift income. remain rate million is noninterest-bearing in at the approximately the million, XX deposits a Importantly, loan run fairly points higher which to due quarter. Other was deposits deposit higher-cost flat of third and sequential yields for Total higher quarterly. Other were The expansion The an X.XX%, income from increase interest third our time expense

approximately higher directors to were due quarterly. expenses expense other $XX million and normalized salaries during compensation run Additionally, total primarily quarter on and the benefits is rate timing fluctuations. The market operating and deferred

was Our from XX% benefited We and XX% third the in BOLI in XX% credits. more forward. We going the will tax any to effective rate third low the quarter income effective the not be and higher in believe shares tax income tax-exempt housing range tax rate did repurchase quarter.

on cash December the of Board our quarterly now on declared Mesick, Our call XX. I'll of a be turn over November Directors payable to share, which to per Officer. of will dividend record Ralph? XX shareholders Ralph Risk Chief $X.XX

Ralph Mesick

David. you, Thank

serving lucky to support have the and CPB Chief Anna a bank. exceptional time forward I've covering long risk thankful thoughtfully known and Hu's partnership start at as to few particularly our your to we build Anna look comments. gratitude Credit for and me by that, team to our bank's out me organization. with Officer. as who the in working banker. my her and grow and to management make the expressing everyone a the the capacity here Let of an her turn slides welcomed let I'm credit for she's I intentionally. With We're to rest me attention

acceptable final strong month Our to the credit quality XXXX. into going and of asset bank enjoy costs continues

points average broader This basis few total suggest $XX.X assets slight million charge-offs assets points rather residential mortgages concerns. and the a were basis systemic was placed increase than X a For on point might loans the days the $X.X related points. from from XX quarter these of to due on X basis annualized point classification life specific the points, quarter increase prior loans quarter. loans issues were a basis of related plus million or XX just that basis basis criticized represents were to X bank's at commercial events nonaccrual. prior basis quarter, XX net The decrease the to loans. fell borrower or The down end, points from X XX third Past quarter. Nonperforming just prior

end million allowance hold we thresholds the an capital of level well-capitalized in we a outstanding strong serves credit X.XX% maintain Our a offset risk-based about quarter, as third a a regulatory and a the million, allowance of backstop. Total unfunded for by cushion loss the quarter commitments capital for $X.X $XX.X the the add representing expense million $X loans. In of to amounts Supporting our at was provision a that was reduction bank. of for meaningful reserved $XXX,XXX. was healthy above XX.X% allowance, additional third or

let appendix in our customer, me product, in segments. With the call highlighted exposures as end as was geography to higher-risk the outsized portfolio quarter diversified that, presentation, and the back Arnold. turn Finally, with and no of industry, loan across balanced to collateral

Arnold Martines

support value happy third Thank this while we you. supporting navigating any to Thank you, shareholders. the conditions time, summary, community had for and your have. you and existing address will may continued and questions confidence clients and be our remain quarter, our to In Thank a driving we effectively market to in Ralph. strong the our organization. At committed we you

Operator

[Operator Instructions] line comes James. question from of David Feaster first from Your the Raymond

David Feaster

wanted I loan side. on touch the to

your kind at issue? kind the timing the on curious, Just is curious and that's just growth And going it's thoughts broad-based. of pretty and much loan versus maybe loans, for up pipeline less in appetite decline how demand-driven how looking I'm of a of shaping forward. side growth the just

Arnold Martines

respond demand with point. David, a this high It that at rates this Arnold. to question. is I'll the is being basically issue

about to loan there out the come for than and us demand. being down are or believe rates decline we We with going projects. the that move that have more of for rates folks said, pent-up that there. cautious is selective kind growth. With demand sideline is loan forward that seen waiting There muted being say know whole as on to I'll forward, we year It's it more

up comments, in As the prepared projects I building that the pipeline. earlier in That year-over-year. there's are signals permits mentioned

especially assuming quarters, to to an so reduce we're the the going for loan uptick that year optimistic rates. next start in see demand, And we'll into Feds future that continue

Operator

Andrew from Piper of comes the question next line Sandler. The from Liesch

Andrew Liesch

like the out you state? what On on the what's guess lines, margin, deposit helped on swap like run along the forward? And expansion I a going competition here the bit. rate those the it are looks out seeing little maybe good in

Arnold Martines

David?

David Morimoto

pleased start repricing Yes, net were liabilities. we Andrew, interest income maybe assets roughly interest on on it's of David. XX% was X/X, and quarter just impact I'll net sequential question. margin, the About the of organic, with expansion. that that

X.XX% the two positive to the Right NIM So now, quarter we're next X.XX% in that's or in range. the forecasting go-forward for NIM forecast.

interest about $X And in quarter. billion we the balances the roughly that were we've balances core have average is on And drawdown quarter, quarter the balances in average third quarterly So and flattish. and DDA after positive balances story there average income, average again, positive. checking of has interest-paying are interest We've been accounts, the And balances, deposit margin. On those been net our net are true on flows, we quarterly seeing noninterest-bearing tracking those deposits, what been IPCA. diminishing have there. been the

hopeful So and the the we're there that growing quarters. can those start in balances future corner we turn

Andrew Liesch

Got it. that in seen you've other know than And some competition improvement rates? seen offering higher curious then maybe any have been deposit unions locally rates have what standpoint. a But you just banks. from I'm there's credit I

David Morimoto

Yes.

XX would by expect, it's responding been to Andrew, Fed. have been banks -- As rate the point you cut the basis

for promo we promotional at ourselves, roughly XX our definitely X.XX%. That CD the points. CD current CD, X-month promo, a basis down So have equivalent come of has

Andrew Liesch

helpful. you. Got in on you there point why currently there longer just strategic then is anything Very can opportunity, engaged that is are to anything no discussions? And about you --

Arnold Martines

about is it. -- further comment cannot can't we on at further. We just Arnold. this this we Unfortunately, this remain comment point, Andrew,

Operator

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

David Feaster

following of on kind capital the Just side. up

You capital release, other capital curious for the about is there deployment the like in appetite in you're been we talks of your of short run. any buybacks opportunities? kind on stalling And Just thinking focused change with about talked or preserving press that. guys have kind how in

David Morimoto

range X.X% David, a it's it XX%, TCE open the one the capital ratio ratio, currently we're to I of forward. repurchases. are of we we like market, a X% capital like tangible but X.X%. leverage improve it We With Tier of going at think consider wanted ratio. X as the to target today, have to will function we David. that of said, share uses always we the the Yes, being is it's something But at in

range. So we of are towards inching that the higher end

opportunity going excess an utilize and a just function forward. the of it's options we is for there So capital, have capital to what

David Feaster

Okay.

production then or got months loan And rates I to and the next in where yields you the are rates? where as to driving And growth side. -- disconnected, portfolio maybe new guess, curious, you you and like XX repricing growth, dynamics back touch the about I think loan how could the pipeline? helpful. Where roll-off so then the add-on are That's are loan most in relative of I'm you on the having kind the hopping seeing success but Okay. today? sorry,

David Morimoto

Sure, X.XX% new average David. to about In compared portfolio weighted the were the as third X.XX%. loan volume quarter, yields in

So that there And down we a little just the repricing would yields future volume a runoff, new replacing nice in was runoff. of quarters. come would think

X.XX% portfolio as third the So a still then think yields, to maybe there what closer to similar saw from would we or be but I X%. as in it's be would pickup far it nice growth incremental repricing. And think opportunities, asset the And quarter. you

in the estate sector, and commercial I real think the C&I. growth commercial opportunities remain

David Feaster

think deposit bit, opportunities, you mean, I'm some about Okay. the margin And the naturally obviously, things? your the the then impact kind of rate you cuts material to as right, given to you're think how think seemingly of rate types deposit kind balance more of able pricing the just just you curious, maybe but in I a some and being mean, just about do assuming do of you as touched repricing I how positive margin, and contemplating are nature about sheet. trajectory on side. with pretty of those But curious, horizon? some the lag sensitive, trajectory, the on react

David Morimoto

Yes, we're know you asset Yes. slightly David. I sensitive. said

the more -- think over neutral. we last become we've year, I

our sheet that is interest neutral there back we've do the rate move net past. balance the risk. to the where an see been opportunity now, But margin right to is in So interest pretty we -- towards

range. room to level. is type There of back X.XX% been definitely get in that the we've to So

Operator

this As at there back I call would time, are Central turn the to the no further like team Pacific questions more closing to over for remarks.

Dayna Matsumoto

you. for our our quarter to participating We for Thank with very the you next sharing call quarter. you progress third in XXXX. look much earnings Thank of forward

Operator

for concludes That you all Thank today's joining. meeting.

disconnect. now may You

Central Pacific Financial (CPF) 30 Oct 242024 Q3 Earnings call transcript