Highlights include:
- Net income of $18.3 million, or $0.67 per diluted share
- Return on average assets of 1.00% and return on average equity of 13.04%
- Efficiency ratio improved to 60.36%
- Net interest margin of 3.44% increased by 13 bps from 3.31% in the previous quarter
- Total risk-based capital and common equity tier 1 ratios of 15.8% and 12.6%, respectively
- The CPF Board of Directors approved a quarterly cash dividend of $0.27 per share
- CPB was named Best Bank In Hawaii by Forbes Magazine in 2025. This is the fourth consecutive year the Bank has made the Forbes list.
Central Pacific Financial Corp, parent company of Central Pacific Bank (the “Bank” or “CPB”), today reported net income of $18.3 million, or fully diluted earnings per share (“EPS”) of $0.67 for the second quarter of 2025, compared to net income of $17.8 million, or EPS of $0.65 in the previous quarter and net income of $15.8 million, or EPS of $0.58 in the year-ago quarter.
“Our second quarter financial results demonstrate the continued strength of our core business and ability to execute effectively in a dynamic market environment,” stated Arnold Martines, Chairman, President and CEO. “The bank’s strong asset quality, capital, and liquidity positions will enable us to grow our business by continuing to support the needs of our customers and the markets we serve. I want to thank our dedicated employees, customers and community for your continued support of our bank.”
Earnings Highlights
Net interest income was $59.8 million for the second quarter of 2025, which increased by $2.1 million, or 3.6% from the previous quarter, and increased by $7.9 million, or 15.2% from the year-ago quarter. Net interest margin (“NIM”) was 3.44% for the second quarter of 2025, an increase of 13 basis points (“bp” or “bps”) from the previous quarter and an increase of 47 bps from the year-ago quarter. The sequential quarter increase in net interest income and NIM was primarily due to higher average yields earned on loans of 8 bps and investment securities of 2 bps, combined with a 7 bps decline in average rates paid on interest-bearing deposits. Interest income on investment securities also included $0.7 million in income from an interest rate swap in both the first and second quarters of 2025.
The Company recorded a provision for credit losses of $5.0 million in the second quarter of 2025, compared to a provision of $4.2 million in the previous quarter and a provision of $2.2 million in the year-ago quarter. The provision in the current quarter consisted of a provision for credit losses on loans of $3.8 million and a provision for off-balance sheet exposures of $1.2 million. The increase in the provision from the previous quarter was primarily driven by higher off-balance sheet credit exposure related to new unfunded loan commitments.
Other operating income totaled $13.0 million for the second quarter of 2025, compared to $11.1 million in the previous quarter and $12.1 million in the year-ago quarter. The increase in other operating income from the previous quarter was primarily due to higher income from bank-owned life insurance of $1.8 million.
Other operating expense totaled $43.9 million for the second quarter of 2025, compared to $42.1 million in the previous quarter and $41.2 million in the year-ago quarter. The increase in other operating expense from the previous quarter was primarily due to higher salaries and employee benefits of $0.9 million, higher computer software expense of $0.6 million, and higher directors’ deferred compensation plan expense of $0.5 million (included in other).
The efficiency ratio improved to 60.36% for the second quarter of 2025, compared to 61.16% in the previous quarter and 64.26% in the year-ago quarter.
The effective tax rate was 23.5% for the second quarter of 2025, compared to 21.2% in the previous quarter and 23.4% in the year-ago quarter. The increase in the effective tax rate in the second quarter of 2025 was primarily attributable to discrete items that lowered the rate in the prior quarter.
Balance Sheet Highlights
Total assets of $7.37 billion at June 30, 2025 reflected a decrease of $35.7 million, or 0.5% from $7.41 billion at March 31, 2025, and a decrease of $17.4 million, or 0.2% from $7.39 billion at June 30, 2024.
Total loans, net of deferred fees and costs, of $5.29 billion at June 30, 2025 decreased by $44.7 million, or 0.8% from $5.33 billion at March 31, 2025, and decreased by $93.8 million, or 1.7% from $5.38 billion at June 30, 2024. Average yield earned on loans during the second quarter of 2025 was 4.96%, compared to 4.88% in the previous quarter and 4.80% in the year-ago quarter.
Total deposits of $6.54 billion at June 30, 2025 decreased by $51.1 million or 0.8% from $6.60 billion at March 31, 2025, and decreased by $37.5 million, or 0.6% from $6.58 billion at June 30, 2024. Core deposits, which include demand deposits, savings and money market deposits and time deposits up to $250,000, totaled $5.96 billion at June 30, 2025, and decreased by $19.0 million, or 0.3% from $5.98 billion at March 31, 2025, and increased by $44.5 million, or 0.8% from $5.91 billion at June 30, 2024. Average rate paid on total deposits during the second quarter of 2025 was 1.02%, compared to 1.08% in the previous quarter and 1.33% in the year-ago quarter.
Asset Quality
Nonperforming assets totaled $14.9 million, or 0.20% of total assets at June 30, 2025, compared to $11.1 million, or 0.15% of total assets at March 31, 2025 and $10.3 million, or 0.14% of total assets at June 30, 2024.
Net charge-offs totaled $4.7 million in the second quarter of 2025, compared to net charge-offs of $2.6 million in the previous quarter, and net charge-offs of $3.8 million in the year-ago quarter. The increase in net charge-offs during the second quarter of 2025 was primarily due to a $2.0 million full charge-off of a commercial and industrial loan. Annualized net charge-offs as a percentage of average loans was 0.35%, 0.20% and 0.28% during the three months ended June 30, 2025, March 31, 2025 and June 30, 2024, respectively.
The allowance for credit losses, as a percentage of total loans was 1.13% at June 30, 2025, compared to 1.13% at March 31, 2025, and 1.16% at June 30, 2024.
Capital
Total shareholders’ equity was $568.9 million at June 30, 2025, compared to $557.4 million and $518.6 million at March 31, 2025 and June 30, 2024, respectively.
During the second quarter of 2025, the Company repurchased 103,077 shares of common stock at a total cost of $2.6 million, or $25.00 per share. As of June 30, 2025, $25.3 million in share repurchase authorization remained available under the Company’s share repurchase program.
The Company’s leverage, common equity tier 1, tier 1 risk-based capital, and total risk-based capital ratios were 9.6%, 12.6%, 13.5%, and 15.8%, respectively, at June 30, 2025, compared to 9.4%, 12.4%, 13.4%, and 15.6%, respectively, at March 31, 2025.
On July 24, 2025, the Company’s Board of Directors declared a quarterly cash dividend of $0.27 per share on its outstanding common shares. The dividend will be payable on September 15, 2025 to shareholders of record at the close of business on August 29, 2025.
Conference Call
The Company’s management will host a conference call today at 2:00 p.m. Eastern Time (8:00 a.m. Hawaii Time) to discuss the quarterly results. Individuals are encouraged to listen to the live webcast of the presentation by visiting the investor relations page of the Company’s website at http://ir.cpb.bank. Alternatively, investors may participate in the live call by dialing 1-800-715-9871 (conference ID: 6299769). A playback of the call will be available through August 24, 2025 by dialing 1-800-770-2030 (playback ID: 6299769) and on the Company’s website. Information which may be discussed in the conference call is provided in an earnings supplement presentation on the Company’s website at http://ir.cpb.bank.
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