Central Pacific Financial Corp. Q1 FY2026 earnings call

• First quarter was a strong start with solid earnings, loan and core deposit growth, strong credit quality, and capital strength. - Committed to relationship-focused banking model, serving Hawaii communities. - Named Hawaii U.S. Small Business Administration Lender of the Year for 17th time. - Hawaii economy resilient with visitor arrivals/spending up, low unemployment, but monitoring Middle East oil price impact. - Committed to supporting communities affected by storm activity. - Strategy includes supporting local businesses, growing core deposits, investing in franchise, and managing risk.

For the first quarter, net income was $20.7 million and earnings per diluted share was 78 cents. Return on average assets was 1.12% and return on average equity was 13.90%. Net interest income totaled $61.4 million with a net interest margin of 3.53%. Total other operating income was $11.6 million, and total other operating expense was $43.7 million. The total loan portfolio grew by $31 million to $5.3 billion at quarter end. Total deposits increased $90 million to $6.7 billion with core deposits representing over 90% of total deposits.

• Second quarter NIM projected at 3.50 to 3.55%. - Full year net interest income guidance remains 4 to 6% increase over prior year. - Total other operating income expected to increase modestly over normalized prior year. - Expense growth expected to be modest at 2.5 to 3.5% from 2025 normalized. - Second quarter cash dividend of 29 cents per share declared. - $44.5 million remaining available under share repurchase program as of March 31st.

• Potential impact of Middle East conflict on Hawaii economy. - Credit risk related to specific commercial relationship with criticized loans increase, but no broad-based credit trend.

Q: Evan Kwiatkowski from Raymond James asked about borrower feedback, commercial credit targeting, margin funding cost floor, buyback and capital priorities.

A: David Morimoto said commercial area has good risk-reward opportunities, relatively balanced between Hawaii and mainland. Dana Matsumoto said deposit costs likely level out, NIM expected to remain mid-3% range. Arnold Martinez said capital priorities include loan growth, dividends, and share repurchases.

Q: Matthew Clark from Piper Sandler asked about margin guide, construction projects funding, criticized loans.

A: Dana Matsumoto said NIM affected by back book repricing moderation and competitive pressure. David Morimoto said a large residential condominium project expected to close in second quarter. Ralph Misik said criticized loans increase related to one commercial relationship, plan to retain and support.

Q: Kelly Mata from KBW asked about margin loan pricing blended rate, proposed capital rules impact, tax rate, liquidity management.

A: Dana Matsumoto said weighted average new loan yield decreased from Q4. Arnold Martinez said proposed capital rules beneficial, early estimate 50 - 100 basis point improvement in CET1 ratio. Dana Matsumoto said effective tax rate expected in 22% - 23% range. Dana Matsumoto said cash and liquidity position healthy with excess cash deployable to opportunities.