Central Pacific Bank boosts net 89%, restarts stock buyback

Central Pacific Bank, which has been focused on solidifying its imprint in the local community, boosted its second-quarter earnings nearly 89% and completed its first stock buyback in more than a year as it continued to ride the wave of the state’s improving economy.

To reach the millennial group on social media, the state’s fourth-largest bank earlier this month announced endorsement deals with University of Hawaii quarterback Chevan Cordeiro and Hawaii professional surfer Carissa Moore, who on Tuesday at the Tokyo Olympics won the first-ever gold medal for women’s surfing.

The endorsement deals come on the heels of the bank’s renovation of its downtown branch, improved digital products and a catchy advertising campaign.

“What a difference one year can make,” Central Pacific Financial Corp. President Catherine Ngo said Tuesday in an interview ahead of the company’s scheduled earnings release this morning. “As I think about where we were one year ago, with the lift in visitor arrivals, we are confident in the future of our Hawaii economy and, of course, related to that, optimistic about CPB’s future financial performance. We reported the highest quarterly pretax income in the second quarter ($24.6 million) since 2007.”

Central Pacific’s net income jumped 88.7% to $18.7 million, or 66 cents a share, to blow past analysts’ estimate of 55 cents a share. In the year-earlier quarter, Central Pacific earned $9.9 million, or 35 cents a share.

The bank also released $3.4 million from its reserve for potential credit losses and repurchased stock for the first time since suspending buybacks in the first quarter of 2020 due to the COVID-19 pandemic. Central Pacific repurchased 156,600 shares of common stock at a total cost of $4.3 million, or an average cost per share of $27.63.

“The current quarter release of reserves was a function of the improvement in the economic forecast, combined with improvement in our loan portfolio,” Central Pacific Chief Financial Officer David Morimoto said in an interview. “We have credit risk ratings on our loan portfolio, and when the risk ratings improved and got stronger, that also helped us reduce the required allowance for credit losses. Going forward, to the extent that the economy continues its recovery, additional reserve releases are likely. It will basically be directionally consistent with Hawaii’s economic outlook.”

In a sign of the improving economy, the bank’s loans on forbearance or deferral at the end of the second quarter totaled just $3.5 million, or less than 1% of total loans, and declined 91.2% from the first quarter.

Core loans, which exclude loans from the Paycheck Protection Program, rose $102.7 million, or 2.3%, from the first quarter for an annualized growth rate of 9.2%.

“We’re continuing to focus on our local community, so with completion of the RISE2020 project, including the completion of our downtown headquarters building, and even with the rebranding, our message to the local community in regard to serving their needs, bringing the aloha spirit to banking, we believe our spokespeople (Cordeiro and Moore) will be our advocates, and we feel lucky they’ll be helping us communicate that message to our local community, and especially our commitment to Hawaii. We’ll also continue to serve all our existing customers, who are very important to us.”

The company also announced it was maintaining its dividend at 24 cents a share. It will be payable Sept. 15 to shareholders of record at the close of business Aug. 31.

Central Pacific’s stock gained 8 cents to $24.95 Tuesday.

SECOND-QUARTER NET

$18.7 million

YEAR-EARLIER NET

$9.9 million