Central Pacific Financial Corp.

Second-quarter net income was $20.8 million, or $0.80 per diluted share, and that was a 19% increase from the year-ago period on a diluted share basis. Return on average assets was 1.12% and return on average equity was 13.94%. Net interest income totaled $62.8 million, and net interest margin rose 4 basis points to 3.57%. Total other operating income was $14.6 million, up $3 million from the prior quarter, while total other operating expense was $46.2 million, up $2.5 million. Provision expense was $4.4 million, allowance was $60.6 million, or 1.14% of loans, and non-performing assets were $16.5 million, or 22 bps of total assets. The company reiterated full-year net interest income guidance of 4% to 6% growth, kept other operating expense growth guidance at 2.5% to 3.5%, and said NIM should remain relatively steady to a slight rise in the second half, with NIM expected in the high 3.50s. Loan and deposit growth are still expected in the low-single-digit range for the full year.

Arnold Martines framed the quarter as a strong one and emphasized disciplined balance sheet management, stable core funding, and margin expansion. He highlighted the company’s relationship-based model in Hawaii, continued investment in talent and technology, and a focus on positive operating leverage. His tone was constructive and confident, while also noting external risks such as geopolitics, oil prices, and inflation.

Dayna Matsumoto emphasized the operating details behind the quarter: stable funding costs, a 4 bps NIM expansion to 3.57%, and a deposit cost spot rate of 90 bps. She said deposit costs should stay fairly steady if the Fed stays on hold, full-year NII should rise 4% to 6%, and other operating expenses should increase 2.5% to 3.5% for the year, with the latest forecast toward the lower end of that range. She also noted capital actions including a $0.29 second-quarter dividend, a declared $0.30 third-quarter dividend, $11.3 million of buybacks for 322,000 shares, and $33.2 million still available under the repurchase program.

Analysts focused on deposit competition, margin upside, loan growth timing, credit migration, expenses, and capital return. Management said Hawaii deposit competition has remained rational, deposit growth was about $90 million year to date, and deposit costs are not expected to face much pressure. On loans, management said second-half growth should be stronger because about $70 million of new construction loans and a solid pipeline will fund later in the year; on credit, the main downgraded credit was a $20 million Hawaii real estate loan tied to an ownership dispute and guarantor issues, but management said it remains well-collateralized with 57% LTV and no expected loss content.