Central Pacific Financial Q3 Net Income Jumps 39.6% on Strong Loan Growth

TL;DR

**CPF is crushing it with net income up nearly 40% this quarter, signaling a strong buy for growth-focused investors.**

AI Summary

CENTRAL PACIFIC FINANCIAL CORP (CPF) reported a significant increase in net income for the three months ended September 30, 2025, reaching $18.574 million, up 39.6% from $13.305 million in the same period of 2024. For the nine months ended September 30, 2025, net income surged to $54.605 million, a 29.8% increase from $42.067 million in 2024. Total interest income rose to $79.959 million for the quarter, a 2.6% increase year-over-year, and to $235.285 million for the nine-month period, a 3.1% increase. This growth was primarily driven by a 2.7% increase in interest and fees on loans to $67.222 million for the quarter and a 2.2% increase to $197.009 million for the nine months. Net interest income after provision for credit losses increased by 11.9% to $57.144 million for the quarter and by 12.6% to $165.480 million for the nine months. The provision for credit losses increased to $4.157 million for the quarter, up from $2.833 million in 2024, and to $13.316 million for the nine months, up from $9.008 million. Total assets decreased slightly to $7.421 billion as of September 30, 2025, from $7.472 billion at December 31, 2024, while total equity increased by 9.2% to $588.066 million from $538.385 million over the same period.

Why It Matters

This strong performance by Central Pacific Financial Corp. signals robust financial health and effective management in a challenging economic environment, which is positive for investors. The increase in net income and earnings per share could lead to continued dividend growth and share buybacks, directly benefiting shareholders. For employees, a healthy company often means job security and potential for growth. Customers may see improved services and competitive offerings as the bank strengthens its position in the Hawaii market, potentially intensifying competition with other regional banks. The overall market benefits from a stable and growing regional banking sector, contributing to local economic vitality.

Risk Assessment

Risk Level: medium — The provision for credit losses increased significantly to $4.157 million for the three months ended September 30, 2025, from $2.833 million in the prior year, and to $13.316 million for the nine months, up from $9.008 million. This indicates a growing concern for potential loan defaults, despite overall positive financial results. Additionally, total assets slightly decreased from $7.472 billion to $7.421 billion, suggesting some balance sheet contraction.

Analyst Insight

Investors should consider CPF as a potential buy, given the substantial increase in net income and earnings per share. However, they should closely monitor future provisions for credit losses and the overall economic outlook for Hawaii, as these could impact loan portfolio quality and future profitability.

Financial Highlights

debt To Equity

0.22

revenue

$79.959M

operating Margin

N/A

total Assets

$7.421B

total Debt

$131.527M

net Income

$18.574M

eps

$0.69

gross Margin

N/A

cash Position

$102.859M

revenue Growth

+2.6%

Revenue Breakdown

Key Numbers

• $18.574M — Net Income (Q3 2025) (Increased 39.6% from Q3 2024)
• $54.605M — Net Income (YTD Sept 2025) (Increased 29.8% from YTD Sept 2024)
• $79.959M — Total Interest Income (Q3 2025) (Increased 2.6% from Q3 2024)
• $67.222M — Interest and Fees on Loans (Q3 2025) (Increased 2.7% from Q3 2024)
• $61.301M — Net Interest Income (Q3 2025) (Increased 13.8% from Q3 2024)
• $4.157M — Provision for Credit Losses (Q3 2025) (Increased from $2.833M in Q3 2024)
• $0.69 — Basic EPS (Q3 2025) (Increased from $0.49 in Q3 2024)
• $7.421B — Total Assets (Sept 30, 2025) (Slight decrease from $7.472B at Dec 31, 2024)
• $588.066M — Total Equity (Sept 30, 2025) (Increased 9.2% from $538.385M at Dec 31, 2024)
• 26,903,512 — Common Shares Outstanding (Sept 30, 2025) (Decreased from 27,065,570 at Dec 31, 2024 due to repurchases)

Key Players & Entities

• CENTRAL PACIFIC FINANCIAL CORP (company) — registrant
• $18.574 million (dollar_amount) — net income for Q3 2025
• $13.305 million (dollar_amount) — net income for Q3 2024
• $54.605 million (dollar_amount) — net income for nine months ended Sept 30, 2025
• $42.067 million (dollar_amount) — net income for nine months ended Sept 30, 2024
• $4.157 million (dollar_amount) — provision for credit losses for Q3 2025
• $2.833 million (dollar_amount) — provision for credit losses for Q3 2024
• $7.421 billion (dollar_amount) — total assets as of Sept 30, 2025
• $7.472 billion (dollar_amount) — total assets as of Dec 31, 2024
• $588.066 million (dollar_amount) — total equity as of Sept 30, 2025

FAQ

Risk Factors

• Credit Risk and Allowance for Credit Losses [medium — financial]: The company's allowance for credit losses (ACL) increased to $4.157 million for Q3 2025 from $2.833 million in Q3 2024. This increase reflects management's estimate of expected credit losses, considering historical experience, current conditions, and forecasts of future economic conditions. The ACL model incorporates a one-year forecast period and reverts to historical data.
• Interest Rate Sensitivity [medium — market]: Fluctuations in interest rates can impact net interest income. While interest income on loans increased by 2.6% year-over-year, interest income on deposits in other financial institutions decreased by 33.1% for the quarter. The company manages this risk through its investment and lending strategies.
• Operational and Cybersecurity Risks [medium — operational]: As a financial institution, CPF is exposed to operational risks, including potential disruptions from cyberattacks, data breaches, and system failures. While not detailed in this excerpt, these risks are inherent in the industry and require robust security measures and business continuity plans.
• Regulatory Compliance [high — regulatory]: Financial institutions operate under a complex and evolving regulatory environment. Compliance with banking regulations, capital requirements, and consumer protection laws is critical. Non-compliance can lead to significant fines, penalties, and reputational damage.
• Liquidity Risk [low — financial]: While total deposits decreased slightly to $6.578 billion from $6.644 billion, the company maintains a strong liquidity position. Cash and due from financial institutions increased to $102.859 million from $77.774 million. However, managing deposit flows and access to funding sources remains a key consideration.

Industry Context

Central Pacific Financial Corp. operates in the highly competitive U.S. banking industry, particularly within Hawaii. The industry is characterized by evolving interest rate environments, increasing regulatory scrutiny, and a growing demand for digital banking services. Banks are focused on managing credit risk, optimizing net interest margins, and investing in technology to enhance customer experience and operational efficiency.

Regulatory Implications

As a financial institution, CPF is subject to stringent regulations from bodies like the Federal Reserve and FDIC. Key areas of focus include capital adequacy ratios, liquidity requirements, and consumer protection laws. Changes in monetary policy and regulatory frameworks can significantly impact profitability and operational strategies.

What Investors Should Do

1. Monitor the trend in the allowance for credit losses.
2. Analyze the drivers of net interest income growth.
3. Evaluate the impact of rising interest rates on the investment portfolio.
4. Assess the company's capital adequacy and equity growth.

Key Dates

• 2025-09-30: End of Q3 2025 — Reported net income of $18.574 million, a 39.6% increase year-over-year, and total assets of $7.421 billion.
• 2024-09-30: End of Q3 2024 — Reported net income of $13.305 million and total assets of $7.472 billion (as of Dec 31, 2024).
• 2025-12-31: End of Fiscal Year 2024 — Total assets were $7.472 billion and total equity was $538.385 million.

Glossary

Allowance for Credit Losses (ACL)

A valuation account deducted from the amortized cost basis of loans to represent the amount expected to be collected, based on management's estimate of future credit losses. (An increase in ACL indicates management's expectation of higher future loan losses, impacting net income and loan portfolio valuation.)

Net Interest Income

The difference between interest income generated by a financial institution and the interest paid out on its liabilities. (A key profitability metric for banks, showing the effectiveness of their lending and borrowing activities. CPF saw a 11.9% increase in net interest income after provision for credit losses for Q3 2025.)

Basic EPS

Earnings per share calculated by dividing net income by the weighted average number of outstanding common shares. (Indicates the profitability attributable to each outstanding share of common stock. CPF's basic EPS increased from $0.49 in Q3 2024 to $0.69 in Q3 2025.)

Debt Securities Available-for-Sale

Investment securities that are not classified as held-to-maturity or trading securities, reported at fair value on the balance sheet. (Represents a significant portion of CPF's investment portfolio, with a fair value of $758.683 million as of September 30, 2025.)

Debt Securities Held-to-Maturity

Investment securities that the company has the intent and ability to hold until maturity, reported at amortized cost. (These securities are valued at $570.886 million as of September 30, 2025, providing a stable, though less liquid, component of the investment portfolio.)

Year-Over-Year Comparison

Compared to the prior year period, Central Pacific Financial Corp. has demonstrated robust net income growth, with Q3 2025 net income up 39.6% and year-to-date net income up 29.8%. This was supported by a modest increase in total interest income and a more significant rise in net interest income after provision for credit losses. However, the provision for credit losses itself saw a substantial increase, indicating a more cautious outlook on loan quality. Total assets experienced a slight decrease, while total equity showed healthy growth, suggesting effective capital management and retained earnings.

Filing Documents

• cpf-20250930.htm (10-Q) — 4249KB
• exhibit311-q32025093025.htm (EX-31.1) — 11KB
• exhibit312-q32025093025.htm (EX-31.2) — 11KB
• exhibit321-q32025093025.htm (EX-32.1) — 6KB
• exhibit322-q32025093025.htm (EX-32.2) — 6KB
• 0000701347-25-000049.txt ( ) — 18267KB
• cpf-20250930.xsd (EX-101.SCH) — 77KB
• cpf-20250930_cal.xml (EX-101.CAL) — 158KB
• cpf-20250930_def.xml (EX-101.DEF) — 507KB
• cpf-20250930_lab.xml (EX-101.LAB) — 1024KB
• cpf-20250930_pre.xml (EX-101.PRE) — 788KB
• cpf-20250930_htm.xml (XML) — 4122KB

Financial Statements (Unaudited)

Financial Statements (Unaudited) Consolidated Balance Sheets - September 30, 2025 and December 31, 2024 3 Consolidated Statements of Income - Three and nine months ended September 30, 2025 and 2024 4 Consolidated Statements of Comprehensive Income - Three and nine months ended September 30, 2025 and 2024 5 Consolidated Statements of Changes in Equity - Three and nine months ended September 30, 2025 and 2024 6 Consolidated Statements of Cash Flows - Nine months ended September 30, 2025 and 2024 8

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 9 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 46 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 75 Item 4.

Controls and Procedures

Controls and Procedures 75 Part II. Other Information 76 Item 1.

Legal Proceedings

Legal Proceedings 76 Item 1A.

Risk Factors

Risk Factors 76 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 76 Item 5. Other Information 77 Item 6. Exhibits 77

Signatures

Signatures 78 2 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) As of (dollars in thousands) September 30, 2025 December 31, 2024 Assets Cash and due from financial institutions $ 102,859 $ 77,774 Interest-bearing deposits in other financial institutions 207,034 303,167 Investment securities: Debt securities available-for-sale, at fair value 758,683 737,658 Debt securities held-to-maturity, at amortized cost; fair value of: $ 500,859 as of September 30, 2025 and $ 506,681 as of December 31, 2024 570,886 596,930 Total investment securities 1,329,569 1,334,588 Loans held for sale 1,557 5,662 Loans 5,367,202 5,332,852 Less: allowance for credit losses ( 60,393 ) ( 59,182 ) Loans, net of allowance for credit losses 5,306,809 5,273,670 Premises and equipment, net 100,992 104,342 Accrued interest receivable 25,232 23,378 Investment in unconsolidated entities 52,987 52,417 Mortgage servicing rights, net 8,459 8,473 Bank-owned life insurance 179,743 176,216 Federal Home Loan Bank of Des Moines ("FHLB") and Federal Reserve Bank ("FRB") stock 25,215 6,929 Right-of-use lease assets 25,570 30,824 Other assets 55,452 74,656 Total assets $ 7,421,478 $ 7,472,096 Liabilities and Equity Deposits: Noninterest-bearing demand $ 1,903,614 $ 1,888,937 Interest-bearing demand 1,340,725 1,338,719 Savings and money market 2,292,881 2,329,170 Time 1,040,464 1,087,185 Total deposits 6,577,684 6,644,011 Long-term debt, net of unamortized debt issuance costs 131,527 156,345 Lease liabilities 26,288 32,025 Accrued interest payable 8,604 10,051 Other liabilities 89,309 91,279 Total liabilities 6,833,412 6,933,711 Contingent liabilities and other commitments (see Note 17) Equity: Preferred stock, no par value, authorized 1,000,000 shares; issued and outstanding: none as of September 30, 2025 and December 31, 2024 — — Common stock, no par value, authorized 185,000,000 shares; issued and outst

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited consolidated financial statements of Central Pacific Financial Corp. and Subsidiaries (herein referred to as the "Company," "we," "us," or "our") have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These interim condensed consolidated financial statements and notes should be read in conjunction with the Company's consolidated financial statements and notes thereto filed on Form 10-K for the fiscal year ended December 31, 2024. In the opinion of management, all adjustments necessary for a fair presentation have been made and include all normal recurring adjustments. Interim results of operations are not necessarily indicative of results to be expected for the year. Allowance for Credit Losses on Loans The allowance for credit losses ("ACL") on loans is a valuation account deducted from the amortized cost basis of loans to present the net amount expected to be collected. The Company's policy is to charge off loans against the ACL in the period they are deemed uncollectible. Any previously accrued but uncollected interest, is reversed against current period interest income. Subsequent receipts, if any, are applied first to the remaining principal, then to the ACL on loans as recoveries, and finally to interest income. The ACL on loans represents management's estimate of expected credit losses over the life of the Company's loan portfolio as of a given balance sheet date. Management estimates the ACL balance using relevant internal and external information, including hist

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