- Net Income (Q4 2024): $11.3 million or $0.42 per diluted share.
- Adjusted Net Income (Q4 2024): $19 million or $0.70 per diluted share, excluding investment securities loss.
- Net Income (Full Year 2024): $53.4 million or $1.97 per diluted share.
- Adjusted Net Income (Full Year 2024): $63.4 million or $2.34 per diluted share, excluding investment securities loss and strategic opportunity expenses.
- Net Interest Income (Q4 2024): $55.8 million, an increase of $1.9 million from the prior quarter.
- Net Interest Margin (Q4 2024): 3.17%, up 10 basis points sequentially.
- Total Deposit Growth (Q4 2024): $61 million, with core deposit growth of $74.2 million.
- Loan Portfolio Growth (Q4 2024): Increased by $9.8 million or 0.2% sequentially.
- Other Operating Income (Q4 2024): $2.6 million, impacted by a $9.9 million investment repositioning loss.
- Adjusted Other Operating Income (Q4 2024): $12.5 million, excluding the investment repositioning loss.
- Other Operating Expense (Q4 2024): $44.2 million, including a $1.4 million impairment charge on intangible assets.
- Net Charge-Offs (Q4 2024): $3.8 million or 29 basis points on annualized average loans.
- Nonperforming Assets (Q4 2024): $11 million or 15 basis points of total assets.
- Allowance for Credit Loss (Q4 2024): $59.2 million or 1.11% of outstanding loans.
- Provision Expense (Q4 2024): $800,000.
- Quarterly Cash Dividend: $0.27 per share, an increase of $0.01 or 3.8% from the prior quarter.
- Share Repurchase Authorization (2025): Up to $30 million.
- Warning! GuruFocus has detected 2 Warning Sign with CPF.
Release Date: January 29, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Central Pacific Financial Corp (NYSE:CPF) achieved meaningful net interest margin (NIM) expansion and core deposit growth in the fourth quarter of 2024.
- The company completed an investment portfolio repositioning that is expected to lead to significant income accretion in 2025.
- Hawaii's economy remains resilient with strong construction and military spending, and an improving tourism sector, which bodes well for CPF's growth opportunities.
- CPF's total deposit portfolio grew by $61 million, with core deposit growth of $74.2 million, indicating strong deposit performance.
- The company declared a quarterly cash dividend increase of $0.01 to $0.27 per share, reflecting a strengthening outlook for earnings and capital.
Negative Points
- CPF's fourth-quarter results were impacted by a $9.9 million pretax loss from the sale of securities as part of their investment portfolio repositioning.
- Net charge-offs increased by 2 basis points due to losses on two credits in the commercial and industrial (C&I) segment.
- The company faced a $1.4 million impairment charge on intangible assets related to fintech apps developed in 2022.
- CPF's consumer loan book continues to run down, with some issues stemming from a 2022 vintage.
- The recovery of visitors from Japan remains slow, posing challenges to the tourism sector despite stronger US visitor arrivals.
Q & A Highlights
Q: Can you expand on the loan growth opportunities you mentioned? How much is due to increased activity from your bankers versus increased demand? A: Arnold Martines, Chairman, President and CEO, explained that they are optimistic about loan growth, having seen a pickup in the fourth quarter. The team has been proactive in the market, and additional lending team members have been added to support growth plans for 2025.
Q: What are the key drivers for loan growth, and which segments are you focusing on? A: Arnold Martines noted that growth is expected in the commercial and commercial real estate segments, with healthy demand in these areas. There is also some consumer activity in auto purchases, but the primary growth will come from C&I and CRE.
Q: How are you achieving such impressive deposit growth, and what is the competitive landscape like for deposits? A: David Morimoto, CFO, stated that the team has been successful in growing core deposits while reducing total deposit costs. Seasonal DDA deposits contributed to growth, but the team has also been effective in leveraging market position to attract new relationships.
Q: With the recent margin expansion, do you expect to exceed your previous margin range of 280 to 330 basis points? A: David Morimoto expressed cautious optimism that the previous range might be conservative. The bank has seen consecutive quarters of NII increase and margin expansion, with positive trends in loan yields and deposit costs.
Q: Can you provide more details on the credit issues mentioned and the outlook for consumer credit? A: Ralph Mesick, Chief Risk Officer, explained that recent credit issues were isolated incidents. Consumer charge-offs have decreased, and past due trends are improving. The bank's nonperforming assets are well-secured, indicating a positive outlook for credit costs in 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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