Central Pacific Financial Corp.

What they do

CPF is a registered bank holding company under the BHC Act and the parent of Central Pacific Bank, which provides full-service commercial banking through 27 branches and 55 ATMs across Hawaii, including 20 branches on Oahu, four on Maui, two on Hawaii Island, and one on Kauai. The Bank accepts demand, money market, savings, and time deposits, and originates residential mortgage, commercial and industrial, commercial mortgage, construction, home equity, and consumer loans, along with cash management, digital banking, and fiduciary and investment management services. The Bank became a member of the Federal Reserve System in January 2025, making the FRB its primary federal regulator.

Revenue drivers

• Net interest income — The primary earnings source from interest and fees on loans plus interest and dividends on investment securities, less interest paid on deposits and borrowings; totaled $62.8 million in Q2 2026, up 2.4% from the prior quarter and 5.1% year over year.
• Loan portfolio — Lending is concentrated in five areas: residential mortgage, commercial and industrial, commercial mortgage, construction, and consumer; a portion of first mortgage originations is sold in the secondary market while the remainder is retained.
• Other operating income — Fees from deposit and other services plus BOLI income; totaled $14.6 million in Q2 2026 versus $11.6 million in the prior quarter, driven largely by a $2.6 million increase in BOLI income from favorable equity market performance.
• Hawaii retail and small business deposits — Described as relationship-based, stable, low-cost funding that supports balance sheet growth and margin optimization; the company also seeks to diversify funding through strategic partnerships with customers in Japan and Korea.

Recent performance

For Q2 2026, CPF reported net income of $20.8 million, or $0.80 per diluted share, compared with $20.7 million, or $0.78, in the prior quarter and $18.3 million, or $0.67, in the same period last year. Net interest margin was 3.57%, up 4 bps from the prior quarter and 13 bps year over year. The company recorded a $4.4 million provision for credit losses, including $3.3 million on loans and a $1.1 million reserve for off-balance sheet credit exposures, up from $2.4 million in the prior quarter. Other operating expense was $46.2 million, up from $43.7 million sequentially on higher salaries and employee benefits of $2.3 million. Total assets of $7.50 billion at June 30, 2026 were flat versus March 31, 2026 and up 1.8% from $7.37 billion a year earlier.

Strategy

Management states that a robust capital position supports future organic growth while returning value to shareholders through an increased dividend and continued share repurchases. During Q2 2026 the company repurchased 321,858 shares at a total cost of $11.3 million, or $35.01 per share, under the 2026 Repurchase Plan, leaving $33.2 million of authorization available as of June 30, 2026. The Board declared a third quarter cash dividend of $0.30 per share, an increase of 3.4% from the prior quarter. The company also seeks to diversify funding sources through partnerships with customers in Japan and Korea.

Risks

• Hawaii geographic concentration — The 10-K states that difficult economic and market conditions in Hawaii would significantly adversely affect the company because of the geographic concentration of its business.
• Real estate collateral exposure — A large percentage of loans are collateralized by real estate, and the 10-K says deterioration in the real estate market may adversely affect financial results.
• Credit loss provisions — The 10-K warns that provisions for credit losses and charge-offs of additional loans in the future could adversely affect results, and the allowance for credit losses may not be sufficient to cover actual losses.
• Banking industry liquidity concerns — The 10-K cites negative developments affecting the banking industry, such as bank failures or concerns involving liquidity, as a risk that may materially adversely affect operations.

Outlook

Management described the quarter as another strong performance and said the company's robust capital position supports future organic growth while returning value to shareholders through the increased dividend and share repurchases. The company cites recognition as the highest-ranked Hawaii company on TIME's America's Best Companies 2026 list and Forbes' Best Bank in Hawaii for the third consecutive year. No specific financial guidance figures were provided in the earnings release.