CPB Q1 Earnings Call Highlights

Key Points

• Strong Q1 results: Net income was $20.7 million with EPS of $0.78 (up 20% year-over-year); net interest income totaled $61.4 million and NIM was 3.53% with Q2 NIM guided to 3.50%–3.55% and full-year NII expected to rise 4%–6%.
• Margin and funding dynamics: Deposit costs fell to 0.90%, roughly $480 million of CDs (WA rate 2.8%) roll in Q2 while new CD rates average ~2.5%, new loan yields averaged 6.0% versus a 4.9% portfolio yield, and the bank has about $100–$150 million of excess cash to deploy.
• Growth, credit and capital return: Loans rose $31 million to $5.3 billion and deposits increased $90 million to $6.7 billion, credit metrics remain near cycle lows (NPAs $14.5 million, ~19bps), the total risk‑based capital ratio was 14.7%, and the bank paid a $0.29 quarterly dividend while repurchasing $10.5 million of shares with $44.5 million of repurchase capacity remaining.

Central Pacific Financial Corp. CPB NYSE: CPF reported a “strong start to 2026” in its first-quarter earnings call, citing solid profitability, continued loan and deposit growth, and credit metrics that remained near cycle lows.

Chairman, President and CEO Arnold Martines said the company delivered “solid earnings performance and continued execution across our franchise,” while maintaining “a position of capital strength.” Martines also pointed to Hawaii’s resilient economic backdrop, including higher visitor arrivals and spending and an unemployment rate of 2.3%, while noting the company is monitoring rising oil prices tied to Middle East conflict and assisting communities affected by storm activity and flooding, including impacts from the Kona low.

Quarterly earnings and profitability

Executive Vice President and CFO Dayna Matsumoto said first-quarter net income was $20.7 million, with earnings per diluted share of $0.78. Return on average assets was 1.12% and return on average equity was 13.90%.

Matsumoto said EPS increased 20% from the year-ago quarter, attributing the gain to “revenue growth and expense discipline.” She added that net interest income totaled $61.4 million, and the net interest margin (NIM) was 3.53%. Compared with the prior quarter, she said results reflected “typical seasonal factors and balance sheet timing,” including a lower day count and lower average loan balances.

Looking ahead, Matsumoto guided to second-quarter NIM of 3.50% to 3.55% and reiterated full-year guidance for net interest income to increase 4% to 6% over the prior year. She described the balance sheet positioning and funding mix as providing “meaningful resilience” across different interest-rate scenarios.

Margin drivers, deposit costs, and liquidity positioning

On the call, analysts focused heavily on margin dynamics and funding costs. Matsumoto said deposit costs decreased 4 basis points quarter-over-quarter to 0.90% and indicated that, with the Federal Reserve “on hold,” deposit costs should “level out somewhat.” She also highlighted potential repricing benefits in certificates of deposit, noting that roughly $480 million—slightly less than 50% of the CD portfolio—matures in the second quarter with a weighted average rate of 2.8%, while new CD rates are approximately 2.5% on a blended basis.

Asked about asset repricing, Matsumoto said the company typically sees $200 million to $250 million of loan runoff per quarter. She said the weighted average new loan yield in the first quarter was 6.0%, compared with an average loan portfolio yield of 4.9%. On the securities side, she said cash flows are about $30 million per quarter at a weighted average rate of 2.8%, while new security purchase yields have been around 5%.

At the same time, Matsumoto said competitive conditions are affecting new loan spreads and yields. In response to a question from KBW’s Kelly Motta, Matsumoto said the weighted average new loan yield moderated to 6.0% in the first quarter from 6.8% in the fourth quarter.

Regarding liquidity, Matsumoto said the company’s cash and liquidity position was “very healthy” at March 31, helped by deposit inflows. She estimated “excess cash” of about $100 million to $150 million that could be deployed as opportunities arise, depending on loan risk-reward and continued core deposit growth.

Loan and deposit growth trends

Vice Chairman and COO David Morimoto said total loans grew $31 million during the quarter to $5.3 billion, with loan growth driven by commercial real estate. Morimoto said the bank continues to see “good risk reward opportunities both in Hawaii and the mainland,” and that loan production volume was roughly balanced between the two geographies in the quarter. He noted, however, that loan runoff was greater in Hawaii because it represents more than 80% of overall balances.

The average loan portfolio yield was 4.93% in the first quarter, down from 4.99% in the prior quarter, which Morimoto attributed primarily to the impact of fourth-quarter Federal Reserve rate cuts on repricing and new loan yields.

On borrower demand, Morimoto said what the bank is hearing from customers “hasn’t changed much from prior quarters,” but opportunities are currently more concentrated in commercial lending than retail categories, which he said are “subdued right now as a result of the interest rate environment.” He characterized current opportunities as primarily focused in commercial mortgage, and “to a lesser extent in commercial and industrial.”

Deposits increased $90 million during the quarter to $6.7 billion, Morimoto said, adding that core deposits represent more than 90% of total deposits, with continued growth in non-interest-bearing and relationship-based accounts.

Management maintained its full-year 2026 guidance for loan and deposit growth in the low single-digit percentage range, citing a “solid” loan pipeline across Hawaii and select mainland commercial real estate markets.

Credit quality, provision, and capital return

Senior EVP and Chief Risk Officer Ralph Mesick said the bank continued operating within its risk appetite and that the credit profile was unchanged at quarter end. He said credit metrics remained near cycle lows, with non-performing assets totaling $14.5 million, or 19 basis points of total assets. Net charge-offs were 18 basis points, and past-due trends were stable. Mesick said criticized loans were less than 200 basis points of total loans, and changes reflected relationship-specific dynamics rather than broad-based credit trends.

Mesick said provision expense was $2.4 million in the quarter, with $2.7 million added to the allowance and a $300,000 decline in the reserve for unfunded commitments. He added that the company identified “no material matters impacting our customers” from the Kona low flooding.

On capital, Mesick said the total risk-based capital ratio was 14.7% at quarter end, which he said provides “ample flexibility to manage through adverse conditions.”

Matsumoto detailed shareholder returns during the quarter, including a $0.29 per share cash dividend and repurchases of approximately 321,000 shares for $10.5 million. The board declared a second-quarter cash dividend of $0.29 per share, and Matsumoto said $44.5 million remained available under the share repurchase program as of March 31. Asked about capital priorities, Matsumoto said the company’s top priority remains using capital “for loan growth and to support our clients,” with ongoing quarterly dividends and share repurchases considered for excess capital beyond organic growth needs.

In response to a question on proposed capital rules, Matsumoto said the proposal would be “beneficial” to the company, particularly due to residential mortgage risk-weighting changes. While still evaluating the proposal, she offered an early estimate of a 50 to 100 basis point improvement in the common equity Tier 1 ratio, adding that the change is not expected to alter the company’s capital strategy.

Martines also highlighted franchise recognition during the quarter, noting CPB was named the Hawaii U.S. Small Business Administration Lender of the Year for 2025—its 17th time receiving the award—reflecting, he said, the bank’s commitment to Hawaii’s small business community.

About CPB NYSE: CPF

Charoen Pokphand Foods Public Company Limited NYSE: CPF is a Thailand‐based integrated agro‐industrial and food conglomerate. Headquartered in Bangkok, the company is a subsidiary of the Charoen Pokphand Group and has grown into one of the world's leading producers of livestock feed, meat and seafood products. CPF's businesses span animal feed milling, animal breeding and hatchery operations, meat and seafood processing, and the distribution of fresh, frozen and value‐added food products.

CPF's product portfolio includes poultry, swine and aquaculture feed; fresh and frozen chicken and pork; shrimp and other seafood; as well as ready‐to‐eat and ready‐to‐cook food items.

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