Central Pacific Financial Corp.’s chief executive said the bank was on its way to one of its best quarters ever when COVID-19 turned into a pandemic.

Since then the state’s fourth-largest bank has been in reactive mode.

It deployed 70% of its staff to work remotely, temporarily closed 13 of its 35 branches and upgraded its sanitation measures for the branches that remained open.

The parent of Central Pacific Bank was due to report today that its net income fell 48.1% in the first quarter after it set aside $9.3 million for potential future loan losses and an additional $1.8 million for potential credit exposures on unfunded loan commitments.

Still, Central Pacific Chairman and CEO Paul Yonamine was pleased with the quarter.

“We had a very respectable quarter, and our pre- provision (loan loss) numbers would indicate that we had loan growth and deposit growth and were looking at one of our best quarters we would have had,” Yonamine said in an interview. “Then COVID struck, and we had to do the prudent thing and go forth with loan loss provisions and naturally, that took our profitability down.

”But we’ve been very fortunate thanks to our loyal customers. We have pristine credit. We have the right loan portfolio, and we’re still going to pay dividends.”

Central Pacific posted net income of $8.3 million, or 29 cents a share, compared with $16 million, or 55 cents a share, in the year-earlier period. Loans rose 10% to $4.51 billion, and deposits increased 3.8% to $5.14 billion. The first quarter of 2019 also included a nonrecurring gain on the sale of MasterCard stock of $2.6 million.

The bank maintained its quarterly dividend of 23 cents a share. It will be payable June 15 to shareholders of record at the close of business May 29. However, like other banks, Central Pacific has suspended its stock buybacks.

RISE2020, the bank’s $40 million infrastructure renovation and technology upgrade project, still is proceeding, although Yonamine acknowledges that the demolition of the main branch would have been postponed if the full impact of the coronavirus had been known at the beginning of February. But he said the technology upgrade “could not have been timed better.”

“We’ll be introducing our new online and mobile platform shortly,” he said. “We also started replacing our ATMs (that dispense cash to accept cash and check deposits without envelopes).”

He said the bank’s staff “has been working around the clock” in processing, as of Thursday, 4,215 Paycheck Protection Program loans totaling about $487 million.

“We probably have the highest number of paycheck program loans here in Hawaii by the sheer number of applications,” Yonamine said.

The bank also electronically distributed about 10,000 stimulus payments totaling about $30 million to its customers.

In addition, Central Pacific has made 2,659 loan modifications to both its commercial and consumer customers, representing $300 million and about 7% of its outstanding loans.

NOTES:

>> The bank set aside $9.3 million for potential loan losses and an additional $1.8 million for potential credit exposures such as home equity loans that haven’t been fully drawn.

>> Total loans: Up 10% to $4.51B

>> Total deposits: Up 3.8% to $5.14B

>> Total assets: Up 4.6% to $6.11B

>> Net interest income: Up 6% to $47.8 (the difference between what it collects on loans and what it pays for deposits)

>> Net interest margin: Up 9 basis points to 3.43%

>> Noninterest income: Down 23.9% to $8.9M primarily due to a $2.6 million gain on the sale of MasterCard Class B stock in the year-ago quarter

>> Bankoh set aside $33.6 million for potential loan losses

>> To read the entire earnings report, go to ir.centralpacificbank.com/News