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The Company recorded a provision for credit losses of $4.2 million in the first quarter of 2025, compared to a provision of $0.8 million in the previous quarter and a provision of $3.9 million in the year-ago quarter. The provision in the current quarter consisted of a provision for credit losses on loans of $3.9 million and a provision for off-balance sheet exposures of $0.3 million. The increase in the provision from the previous quarter was primarily driven by the macro-economic forecast used in our current expected credit losses model.

Other operating income totaled $11.1 million for the first quarter of 2025, compared to $2.6 million in the previous quarter and $11.2 million in the year-ago quarter. The increase in other operating income from the previous quarter was primarily due to the aforementioned $9.9 million pre-tax loss on an investment securities portfolio repositioning completed in the previous quarter, partially offset by lower income from bank-owned life insurance of $1.5 million.

Other operating expense totaled $42.1 million for the first quarter of 2025, compared to $44.2 million in the previous quarter and $40.6 million in the year-ago quarter. The decrease in other operating expense from the previous quarter was primarily due to an impairment charge on intangible assets of $1.4 million (included in other) recorded in the previous quarter.

The efficiency ratio improved to 61.16% for the first quarter of 2025, compared to 75.65% in the previous quarter and 66.05% in the year-ago quarter. Excluding the aforementioned pre-tax loss related to an investment portfolio repositioning of $9.9 million, the adjusted efficiency ratio (non-GAAP) for the previous quarter was 64.65%.

The effective tax rate was 21.2% for the first quarter of 2025, compared to 15.4% in the previous quarter and 23.5% in the year-ago quarter. The effective tax rate in the fourth quarter of 2024 included additional tax credits recognized and tax return to provision adjustments.

Balance Sheet Highlights

Total assets of $7.41 billion at March 31, 2025 decreased by $66.9 million, or 0.9% from $7.47 billion at December 31, 2024, and was relatively flat compared to $7.41 billion at March 31, 2024. The Company had $276.9 million in cash on its balance sheet and $2.54 billion in total other liquidity sources, including available borrowing capacity and unpledged investment securities at March 31, 2025.

Total loans, net of deferred fees and costs, of $5.33 billion at March 31, 2025 was relatively flat compared to $5.33 billion at December 31, 2024, and decreased by $66.9 million, or 1.2% from $5.40 billion at March 31, 2024. Average yields earned on loans during the first quarter of 2025 was 4.88%, compared to 4.91% in the previous quarter and 4.67% in the year-ago quarter.

Total deposits of $6.60 billion at March 31, 2025 decreased by $48.0 million or 0.72% from $6.64 billion at December 31, 2024, and decreased by $22.8 million, or 0.3% from $6.62 billion at March 31, 2024. Core deposits, which include demand deposits, savings and money market deposits and time deposits up to $250,000, totaled $5.98 billion at March 31, 2025, and decreased by $64.6 million, or 1.1% from $6.04 billion at December 31, 2024 and increased by $80.2 million, or 1.4% from $5.90 billion at March 31, 2024. Average rates paid on total deposits during the first quarter of 2025 was 1.08%, compared to 1.21% in the previous quarter and 1.32% in the year-ago quarter.

Asset Quality

Nonperforming assets totaled $11.1 million, or 0.15% of total assets at March 31, 2025, compared to $11.0 million, or 0.15% of total assets at December 31, 2024 and $10.1 million, or 0.14% of total assets at March 31, 2024.

Net charge-offs totaled $2.6 million in the first quarter of 2025, compared to net charge-offs of $3.8 million in the previous quarter, and net charge-offs of $4.5 million in the year-ago quarter. Annualized net charge-offs as a percentage of average loans was 0.20%, 0.29% and 0.34% during the three months ended March 31, 2025, December 31, 2024 and March 31, 2024, respectively.

The allowance for credit losses, as a percentage of total loans was 1.13% at March 31, 2025, compared to 1.11% at December 31, 2024, and 1.18% at March 31, 2024.

Capital

Total shareholders' equity was $557.4 million at March 31, 2025, compared to $538.4 million and $507.2 million at December 31, 2024 and March 31, 2024, respectively.

During the first quarter of 2025, the Company repurchased 77,316 shares of common stock at a total cost of $2.1 million, or $27.09 per share. As of March 31, 2025, $27.9 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 9.4%, 12.4%, 13.4%, and 15.6%, respectively, at March 31, 2025, compared to 9.3%, 12.3%, 13.2%, and 15.4%, respectively, at December 31, 2024.

On April 22, 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 June 16, 2025 to shareholders of record at the close of business on May 30, 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 May 23, 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.

About Central Pacific Financial Corp.

Central Pacific Financial Corp. is a Hawaii-based bank holding company with approximately $7.41 billion in assets as of March 31, 2025. Central Pacific Bank, its primary subsidiary, operates 27 branches and 55 ATMs in the State of Hawaii. Central Pacific Financial Corp. is traded on the New York Stock Exchange (NYSE) under the symbol "CPF." For additional information, please visit: cpb.bank

Equal Housing Lender
Member FDIC
CPF Listed NYSE

Forward-Looking Statements

This document may contain forward-looking statements ("FLS") concerning: projections of revenues, expenses, income or loss, earnings or loss per share, capital expenditures, payment or nonpayment of dividends, net interest income, capital position, credit losses, net interest margin or other financial items; statements of plans, objectives and expectations of Central Pacific Financial Corp. (the "Company") or its management or Board of Directors, including those relating to business plans, use of capital resources, products or services and regulatory developments and regulatory actions; statements of future economic performance including anticipated performance results from our business initiatives; or any statements of the assumptions underlying or relating to any of the foregoing. Words such as "believe," "plan," "anticipate," "seek," "expect," "intend," "forecast," "hope," "target," "continue," "remain," "estimate," "will," "should," "may" and other similar expressions are intended to identify FLS but are not the exclusive means of identifying such statements.

While we believe that our FLS and the assumptions underlying them are reasonably based, such statements and assumptions are by their nature subject to risks and uncertainties, thus could later prove to be inaccurate or incorrect. Accordingly, actual results could differ materially from those statements or projections for a variety of reasons, including, but not limited to: the effects of inflation and interest rate fluctuations; the effects of trade policy and tariffs and other executive orders; the adverse effects of bank failures and the potential impact of such developments on customer confidence, deposit behavior, liquidity and regulatory responses thereto; the adverse effects of the COVID-19 pandemic virus (and its variants) and other pandemic viruses on local, national and international economies, including, but not limited to, the adverse impact on tourism and construction in the State of Hawaii, our borrowers, customers, third-party contractors, vendors and employees, as well as the effects of government programs and initiatives in response thereto; supply chain disruptions; labor contract disputes and potential strikes; the increase in inventory or adverse conditions in the real estate market and deterioration in the construction industry; adverse changes in the financial performance and/or condition of our borrowers and, as a result, increased loan delinquency rates, deterioration in asset quality, and losses in our loan portfolio; the impact of local, national, and international economies and events (including natural disasters such as wildfires, volcanic eruptions, hurricanes, tsunamis, storms, and earthquakes) on the Company's business and operations and on tourism, the military, and other major industries operating within the Hawaii market and any other markets in which the Company does business; deterioration or malaise in domestic economic conditions, including any destabilization in the financial industry and deterioration of the real estate market, as well as the impact of declining levels of consumer and business confidence in the state of the economy in general and in financial institutions in particular; changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, changes in capital standards, other regulatory reform and federal and state legislation, including but not limited to regulations promulgated by the Consumer Financial Protection Bureau, government-sponsored enterprise reform, and any related rules and regulations which affect our business operations and competitiveness; the costs and effects of legal and regulatory developments, including legal proceedings and lawsuits we are or may become subject to, or regulatory or other governmental inquiries and proceedings and the resolution thereof; the results of regulatory examinations or reviews and the effect of, and our ability to comply with, any regulations or regulatory orders or actions we are or may become subject to, and the effect of any recurring or special FDIC assessments; the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the PCAOB, the FASB and other accounting standard setters and the cost and resources required to implement such changes; the effects of and changes in trade, monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System; securities market and monetary fluctuations, including the impact resulting from the elimination of the LIBOR Index; negative trends in our market capitalization and adverse changes in the price of the Company's common stock; the effects of any potential or actual acquisitions or dispositions we may make or evaluate, and the related costs; political instability; acts of war or terrorism; changes in consumer spending, borrowings and savings habits; technological changes and developments; cybersecurity and data privacy breaches and the consequence therefrom; failure to maintain effective internal control over financial reporting or disclosure controls and procedures; our ability to address deficiencies in our internal controls over financial reporting or disclosure controls and procedures; changes in the competitive environment among financial holding companies and other financial service providers; our ability to successfully implement our initiatives to lower our efficiency ratio; our ability to attract and retain key personnel; changes in our personnel, organization, compensation and benefit plans; our ability to successfully implement and achieve the objectives of our BaaS initiatives, including adoption of the initiatives by customers and risks faced by any of our bank collaborations including reputational and regulatory risk; and our success at managing the risks involved in the foregoing items.

For further information with respect to factors that could cause actual results to materially differ from the expectations or projections stated in the FLS, please see the Company's publicly available SEC filings, including the Company's Forms 10-Q and 10-K for the last fiscal quarter and year and, in particular, the discussion of "Risk Factors" set forth therein. We urge investors to consider all of these factors carefully in evaluating the FLS contained in this document. FLS speak only as of the date on which such statements are made. We undertake no obligation to update any FLS to reflect events or circumstances after the date on which such statements are made, or to reflect the occurrence of unanticipated events except as required by law.