Central Pacific Bank has been building momentum over the past year with renovations, improved digital products and a catchy advertising campaign.

And now with the threat of the COVID-19 pandemic decreasing, the state’s fourth-largest bank is optimistic it is on the right track after producing its highest quarterly pretax income in 14 years.

Central Pacific Financial Corp., the holding company for the bank, said in its financial report scheduled for release this morning that it posted a 117% jump in first-quarter earnings, increased its dividend for the first time in two years and released $821,000 from its loan-loss reserve amid the state’s improving economic outlook.

“I’m delighted that we are reporting a quarter with the highest pretax income ($23.5 million) since 2007,” Central Pacific President Catherine Ngo said Tuesday in an interview ahead of the earnings release. “And not only that, it was a solid quarter on all fronts, including asset quality.

“We see the Hawaii economy turning the corner on the road to recovery, and we’re looking forward to continuing to support our customers through the recovery. We’re grateful to our employees who have worked tirelessly through the pandemic to help our customers.”

Central Pacific’s net income more than doubled to $18 million, or 64 cents a share, from $8.3 million, or 29 cents a share, to blow past analysts’ forecast of 49 cents a share.

The bank also said that loans on forbearance or deferral granted to borrowers affected by COVID-19 declined 67.1% to $39.5 million, or 0.8% of total loans, as of March 31, compared with $120.2 million, or 2.4% of total loans, as of Dec. 31.

The release of funds from the bank’s loan-loss reserve was a turnaround from the year-earlier quarter, when the bank set aside $11.1 million for potential loan losses en route to setting aside $39.1 million for all of 2020.

With the economic outlook brightening, the bank increased its dividend by 1 cent to 24 cents a share. It will be payable June 15 to shareholders of record at the close of business May 28.

“With this strong start to 2021, combined with the Hawaii economy continuing to recover, we are pleased to announce an increase to our quarterly cash dividend,” Central Pacific Chairman and CEO Paul Yonamine said in a statement. “We believe our RISE2020 investments (a $40 million renovation and modernization project that was completed in January) have positioned us well, and we remain highly committed to continuing to deliver results and achievement of our financial targets.”

The bank spent $1.7 million in the first quarter increasing consumer awareness with a series of amusing television ads featuring animated animals, as well as what it spent on print and social media.

“The feedback on the new ads has been overwhelmingly positive,” Ngo said. “What people appreciate about the ads are that they are fun and they speak to who we are and why we exist, and that, of course, is to support our customers. The ads are bringing greater visibility to our bank and, we believe, will result in bringing more customers to our bank.”

Central Pacific’s loans jumped 13.9% to $5.14 billion from the year-earlier period and increased 3.5% from the December quarter.

“In the first quarter we continued to provide significant support for small businesses with the origination of over 3,600 Paycheck Protection Program loans totaling over $290 million,” Ngo said.

Deposits jumped 20.9% to $6.21 billion from the year-earlier period and increased 7.1% from the December quarter. The increase from the fourth quarter primarily was due to the deposit of PPP funds and other government stimulus.

Chief Financial Officer David Morimoto said the first quarter “definitely benefited” from PPP activity and that as businesses fund their operations and pay their employees, they will draw down on their deposits.

“But we still project good loan and deposit growth for the full year,” he said. “As we mentioned in our January earnings call, we project mid- to high-single-digit loan growth and midsingle-digit deposit growth this year.”

Central Pacific’s mortgage banking income, which includes fees generated from refinancings and gains on sales of mortgages to Fannie Mae and Freddie Mac, jumped eightfold to just under $3 million in the quarter from $337,000 in the year-earlier period. But the mortgage banking income fell 45% from $5.4 million in what was a historically high fourth quarter.

“Later this year we’re involved in several condominium projects and are one of the lead takeout lenders,” Morimoto said. “That will generate a good amount of loan originations in the fourth quarter of this year.”

Central Pacific’s stock fell 27 cents, or 1%, to $26.62 Tuesday. The shares are up 40% year-to-date.

FIRST-QUARTER NET

$18 million

YEAR-EARLIER NET

$8.3 million