CPF

CENTRAL PACIFIC FINANCIAL CORP

NYSE · FINANCIALS · STATE COMMERCIAL BANKS

37.69

−0.08 −0.21%

USD · close Oct 23

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MKT CAP $970.4MP/E 12.1DIV YIELD 3.00%FCF YIELD 10.09%REV TTM $53.9M +36.6%NET INCOME $83M +36.8%NET CASH $22.2M52W 28.34 – 39.99SEC XBRL · TTM TO Invalid Date

How CPF rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

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We urge investors to consider all of these factors carefully in evaluating the forward-looking statements contained in this document.
Introduction We are a bank holding company that, through our banking subsidiary, Central Pacific Bank, offers full service commercial banking primarily in the State of Hawaii.
We strive to provide exceptional customer service and products that meet our customers' needs.
Our products and services consist primarily of the following: • Loans : The Company's loan portfolio includes commercial and industrial loans, commercial mortgages, and construction loans to small and medium-sized businesses, professionals, and real estate investors, and developers.
The Company also offers residential mortgages, home equity loans, and consumer loans to individuals and homeowners.
Lending activities represent a core source of interest income, which is a key driver of our overall revenue.
The Company aims to maintain a strong and diversified loan portfolio, primarily in Hawaii, with selective diversification into U.S.
Mainland markets. • Deposits : The Company offers a comprehensive suite of deposit products and services including checking, savings and time deposit accounts, as well as cash management solutions, and digital banking capabilities.
The Company's extensive branch and ATM network across the State of Hawaii supports convenient access for its customers.
The interest paid on deposits is a key component of interest expense, which significantly influences overall earnings.
In addition, fees and service charges on deposit accounts, along with card interchange income contribute meaningfully to non-interest revenue. • Wealth Management : The Company offers non-deposit investment products, annuities, investment management, trust custody, estate planning, and financial advisory services.
Executive Overview We believe we delivered solid financial performance while managing and mitigating risks that arose in 2025. • We recorded net income of $77.5 million, or $2.86 per diluted common share in 2025, compared to $53.4 million, or $1.97 per diluted common share in 2024. • Results in 2025 were impacted by $1.5 million in pre-tax expenses related to the consolidation of the Company's former operations center into its main headquarters ("Operations Center Consolidation") in the third quarter of 2025.
Results in 2024 were impacted by a pre-tax loss on sales of investment securities of $9.9 million related to an investment securities portfolio repositioning ("Repositioning Loss") and pre-tax expenses related to our evaluation and assessment of a strategic opportunity of $3.1 million ("Strategic Expense"). • Excluding the impact of the Operations Center Consolidation, non-GAAP adjusted net income was $78.6 million, or $2.91 per diluted common share in 2025.
(See Tables 1-6 for reconciliations of the adjusted non-GAAP financial measures.) Excluding the impact of the Repositioning Loss and Strategic Expense, non-GAAP adjusted net income was $63.4 million, or $2.34 per diluted common share in 2024.
(See Tables 1-6 for reconciliations of the adjusted non-GAAP financial measures.) • We recorded return on average assets ("ROA") and return on average shareholders' equity ("ROE") ratios of 1.06% and 13.62%, respectively, in 2025, compared to ROA and ROE ratios of 0.72% and 10.25%, respectively, in 2024.
Excluding the impact of the Operations Center Consolidation in 2025 and Repositioning Loss and Strategic Expense in 2024, adjusted ROA and ROE ratios (non-GAAP) was 1.07% and 13.81%, respectively, in 2025, compared to adjusted ROA and ROE ratios (non-GAAP) of 0.86% and 12.10%, respectively, in 2024.
(See Table 3 - Adjusted Return on Average Assets and Adjusted Return on Average Shareholders' Equity for a reconciliation of the non-GAAP adjusted ROA and ROE.) • Asset quality remains strong as our nonperforming assets totaled $14.4 million, or 0.19% of total assets at December 31, 2025, compared to $11.0 million, or 0.15% of total assets at December 31, 2024. • Our loan portfolio declined by $43.8 million, or 0.8% in 2025, primarily due to run-off of our home equity loan portfolio of $76.9 million, consumer loan portfolio of $62.9 million, and residential mortgage loan portfolio of $53.3 million, partially offset by increases in our commercial mortgage loan portfolio of $93.8 million and our construction loan portfolio of $68.0 million. • Total deposits declined by $34.2 million, or 0.5% in 2025, primarily due to the run-off of high-cost time deposits greater than $250,000 of $53.5 million.
Our core deposit portfolio grew by $19.3 million, or 0.3%. • Our capital position and consistent profitability allowed us to pay cash dividends of $1.09 per share in 2025.
In addition, in 2025 we repurchased an aggregate of 788,261 shares of common stock under our share repurchase program at an aggregate cost of $23.3 million, or an average of $29.60 per share.
Business Environment Our operations are primarily concentrated in the State of Hawaii, making our performance highly sensitive to local economic, environmental, and industry-specific conditions, particularly those affecting broader macroeconomic trends, real estate, and tourism.
A favorable business climate in Hawaii is generally characterized by expanding gross state product, low unemployment, and rising personal income; while an unfavorable business climate reflects the opposite.
Labor Market and Economic Indicators The Department of Labor and Industrial Relations reported that Hawaii's seasonally adjusted annual unemployment rate was 2.2% in the month of December 2025, a decline from 3.0% in December 2024 and well below the national seasonally adjusted unemployment rate of 4.4%.
The State of Hawaii's Department of Business, Economic Development and Tourism ("DBEDT") projects Hawaii's seasonally adjusted annual unemployment rate to average 3.0% in 2026.
DBEDT estimates that real personal income grew by approximately 1.7% in 2025, while real gross state product grew by approximately 1.6% for 2025.
DBEDT projects real personal income to grow by 1.6% and real gross state product to grow by 1.5% for 2026.
According to the University of Hawaii Economic Research Organization ("UHERO") December 2025 forecast, Hawaii is expected to be impacted by weakening U.S. and global conditions, declining tourism, particularly from international markets, and stalled job growth.
Inflation is anticipated to rise due to tariff impacts, while construction remains the primary source of economic strength.
Real personal income and real gross state product is forecast to remain flat in 2026.
These projections assume continued high tariffs, federal spending cuts, and no immediate U.S. recession, though downside risks remain elevated due to policy uncertainty and global economic fragility.
Real Estate Market Real estate lending, particularly residential mortgage and commercial mortgage loans, is a core focus of the Company.
Consequently, our performance is closely tied to the health of Hawaii's real estate market.
Despite mixed results, Hawaii's housing market remained resilient in 2025.
According to the Honolulu Board of Realtors, the median price for a single-family home on Oahu was $1,139,000 for the year ended December 31, 2025, representing an increase of 3.5% from the median resale price of $1,100,000 for the year ended December 31, 2024.
The median resale price for condominiums on Oahu was $507,250 for the year ended December 31, 2025, representing a decrease of 1.5% from the median resale price of $515,000 for the year ended December 31, 2024.
Oahu unit sales volume increased by 3.5% for single-family homes, and decreased by 1.1% for condominiums in 2025 from 2024.
If the residential and commercial real estate markets we have exposure to deteriorate, our results of operations could be negatively impacted.
See the "Overview of Results of Operations—Concentrations of Credit Risk" section for a further discussion on how a deteriorating real estate market, combined with the concentration risk within our portfolio, could have a significant negative impact on our asset quality and credit losses.
Tourism Trends In 2025, Hawaii’s tourism industry continued its post‑pandemic recalibration, with visitor volumes stabilizing while visitor spending increased.
According to the Hawaii Tourism Authority ("HTA"), total visitor arrivals declined modestly to approximately 9.6 million in 2025, down 0.6% from the 9.7 million visitors in 2024, reflecting softening demand in certain international markets and capacity constraints, particularly on Oahu.
Despite the modest decline in arrivals, overall visitor demand remained resilient, led primarily by the U.S.

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We urge investors to consider all of these factors carefully in evaluating the forward-looking statements contained in this Form 10-K.
BUSINESS General Central Pacific Financial Corp., a Hawaii corporation and bank holding company registered under the Bank Holding Company Act of 1956, as amended (the "BHC Act"), was organized on February 1, 1982.
Our principal business is to serve as a holding company for our bank subsidiary, Central Pacific Bank, which was incorporated in its present form in the State of Hawaii on March 16, 1982 in connection with the holding company reorganization.
Its predecessor entity was incorporated in the State of Hawaii on January 15, 1954.
We provide financial results based on a fiscal year ending December 31 as a single reportable segment.
As of December 31, 2024, we had total assets of $7.47 billion, total loans of $5.33 billion, total deposits of $6.64 billion and shareholders' equity of $538.4 million.
When we refer to "the Company," "we," "us" or "our," we mean Central Pacific Financial Corp. and its subsidiaries on a consolidated basis.
When we refer to "Central Pacific Financial Corp.," "CPF" or to the holding company, we are referring to the parent company on a standalone basis.
We refer to Central Pacific Bank herein as "our Bank" or "the Bank." Through our Bank and its subsidiaries, we offer full-service commercial banking with 27 bank branches and 55 ATMs located throughout the State of Hawaii.
Our administrative and main offices are located in Honolulu and we have 20 branches on the Table of C o ntents island of Oahu.
We operate four branches on the island of Maui, two branches on the island of Hawaii and one branch on the island of Kauai.
Central Pacific Bank is a full-service commercial bank offering traditional deposit and lending products and services to consumer and business customers, such as accepting demand, money market, savings and time deposits, originating loans, including commercial loans, construction loans, commercial real estate loans, residential mortgage loans, and consumer loans and fiduciary and investment management services.
Our Bank's deposits are insured by the Federal Deposit Insurance Corporation ("FDIC") up to applicable limits.
The Bank became a member of the Federal Reserve System in January 2025.
We derive our income primarily from interest and fees on loans, interest on investment securities and fees received in connection with deposit and other services.
Our major operating expenses are the interest paid by our Bank on deposits and borrowings, salaries and employee benefits and general operating expenses.
Our Bank relies substantially on a foundation of locally generated deposits.
Our operations, like those of other financial institutions that operate in our market, are significantly influenced by economic conditions in Hawaii, including the strength of the real estate market and the tourism industry, as well as the fiscal and regulatory policies of the federal and state government and the regulatory authorities that govern financial institutions.
See the "Supervision and Regulation" section below for other information about the regulation of our holding company and bank.
Our Services We offer a full range of banking services and products to businesses, professionals and individuals.
We provide our customers with an array of loan products, including residential mortgage loans, commercial and consumer loans and lines of credit, commercial real estate loans and construction loans.
Through our Bank, we concentrate our lending activities in five principal areas: (1) Residential Mortgage Lending.
Residential mortgage loans include fixed-rate and adjustable-rate loans primarily secured by single-family, owner-occupied residences in Hawaii and home equity lines of credit and loans.
We typically require loan-to-value ratios of not more than 80%, although higher levels are permitted with accompanying mortgage insurance.
First mortgage loans secured by residential properties have an average loan origination size of approximately $0.7 million and marketable collateral.
Changes in interest rates, the economic environment and other market factors have impacted, and future changes will likely continue to impact, the marketability and value of collateral and the financial condition of our borrowers and thus the level of credit risk inherent in the portfolio.
A portion of our first residential mortgage loan originations are sold in the secondary market and a portion is put into our loan portfolio.
Loans in this category consist primarily of term loans and lines of credit to small and middle-market businesses and professionals in the State of Hawaii.
The borrower's business is typically regarded as the principal source of repayment, although our underwriting policies and practices generally require additional sources of collateral, including real estate and other business assets, as well as personal guarantees where possible to mitigate risk and help to reduce credit losses.
Loans in this category consist of loans secured by commercial real estate, including but not limited to, structures and facilities to support activities designated as multi-family residential properties, industrial, warehouse, general office, retail, health care, hotels, and religious dwellings.
Our underwriting policies and practices generally requires net cash flow from the property to cover the debt service while maintaining an appropriate amount of reserves and permits consideration of liquidation of the collateral as a secondary source of repayment.
Loans in this category consist of construction, land development, and other land loans for residential and commercial construction projects.
Loans in this category are generally either unsecured or secured by personal assets, such as automobiles, and the average loan size is generally small.
Beyond the lending function described above, we also offer a full range of deposit products and services including checking, savings and time deposits, cash management and digital banking services, trust services and retail brokerage services.
Our Market Area and Competition Based on deposit market share among FDIC-insured financial institutions in Hawaii, Central Pacific Bank was the fourth-largest depository institution in the state as of December 31, 2024.
Table of C o ntents The banking and financial services industry in the State of Hawaii generally, and particularly in our target market areas, is highly competitive.
We compete for loans, deposits and customers with other commercial banks, savings banks, securities and brokerage companies, financial technology ("fintech") companies, mortgage companies, insurance companies, finance companies, credit unions and other non-bank financial service providers, including mortgage providers and brokers, operating via the internet and other technology platforms.
Some of these competitors are much larger by total assets and capitalization, and have greater access to capital markets.
In order to compete with the other financial services providers in the State of Hawaii, we principally rely upon personal relationships between customers and our officers, directors and employees, and specialized services tailored to meet the needs of our customers and the communities we serve.
We believe we remain competitive by offering flexibility and superior service levels to our customers, coupled with competitive interest rate pricing, strong digital technology and local promotional activities.

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