Executive Summary

Q3 delivered steady core improvement: NIM expanded 5 bps QoQ to 3.49% and NII rose 2.5% QoQ; EPS was $0.69 GAAP ($0.73 adj.), with loans and deposits growing $77.4M and $32.7M, respectively .
Versus S&P Global consensus, adjusted EPS was a slight miss by ~$0.01 ($0.73 vs $0.74), and revenue missed ($70.65M vs $74.37M), noting S&P’s revenue taxonomy differs from the company’s “total revenue” of $74.81M* .
Expenses stepped up on incentive accruals and a one-time ops-center consolidation; efficiency ratio rose to 62.84% (60.81% ex-one-time) from 60.36% last quarter .
Capital actions are a near-term catalyst: quarterly dividend raised to $0.28 and notice to redeem $55M sub debt at par on Nov 1, expected to support Q4 NIM; management guided Q4 NII to $62–$63M and NIM +5–10 bps QoQ .

*Estimates from S&P Global Market Intelligence; see “Estimates Context.”

What Went Well and What Went Wrong

What Went Well
- Margin and NII acceleration: NIM +5 bps QoQ to 3.49% and NII +2.5% QoQ; YoY NIM +42 bps and NII +13.8% on better loan and securities yields .
- Balance sheet growth returned: Loans +$77.4M QoQ to $5.37B; deposits +$32.7M QoQ to $6.58B with core deposits +$24.6M QoQ .
- Capital returns and optimization: Dividend raised to $0.28; 78k shares repurchased; sub-debt redemption notice ($55M) to reduce funding cost; CEO: “another strong quarter… margin expansion, solid earnings, and growth” .
What Went Wrong
- Expenses elevated: Other operating expense rose $3.1M QoQ to $47.0M on incentive accruals (+$2.1M) and a $1.5M one-time consolidation cost; efficiency ratio worsened to 62.84% (60.81% ex-one-time) vs 60.36% in Q2 .
- Consensus optics: S&P Global shows revenue miss and ~1c EPS shortfall (adj. basis), despite company “total revenue” up QoQ* .
- Mixed credit optics, though within plan: criticized loans at 1.77% of loans (vs 1.80% in Q2) and NPAs 0.19% of assets; net charge-offs fell to 0.20% (annualized) from 0.35% in Q2 .

*Estimates from S&P Global Market Intelligence; see “Estimates Context.”

Financial Results

Headline P&L and Profitability

Metric	Q3 2024	Q2 2025	Q3 2025
Net Interest Income ($M)	53.851	59.796	61.301
Other Operating Income ($M)	12.734	13.013	13.507
Total Revenue ($M)	66.585	72.809	74.808
Diluted EPS ($)	0.49	0.67	0.69
NIM (%)	3.07	3.44	3.49
Efficiency Ratio (%)	70.12	60.36	62.84
ROA (%)	0.72	1.00	1.01
ROE (%)	10.02	13.04	12.89

Key Balance Sheet & Credit KPIs

KPI	Q3 2024	Q2 2025	Q3 2025
Loans (period end, $M)	5,342.609	5,289.809	5,367.202
Deposits (period end, $M)	6,583.013	6,544.989	6,577.684
Avg Loan Yield (%)	4.89	4.96	5.01
Avg Deposit Cost (%)	1.32	1.02	1.02
Net Charge-offs (ann.) %	0.27	0.35	0.20
NPAs / Assets (%)	0.16	0.20	0.19
ACL / Loans (%)	1.15	1.13	1.13

Estimate vs Actual (S&P Global definitions)

Metric	Estimate	Actual
EPS (Primary)	0.74*	0.73*
Revenue ($M)	74.37*	70.65*

*Values retrieved from S&P Global. Note: S&P’s “Revenue” methodology differs from CPF’s “total revenue” (NII + noninterest income = $74.81M) in company materials .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Interest Income	Q4 2025	—	$62–$63M (Q4)	New
NIM (QoQ delta)	Q4 2025	Q2 guide +4–7 bps for Q2 (from Q1 call)	+5–10 bps in Q4	Raised vs earlier cadence
Other Operating Income	Q4 2025	—	$12–$13M (normalized)	New
Other Operating Expense	Q4 2025	$43.5–$44.5M per qtr (near-term, Q2)	$45–$46M (incl. similar incentives)	Higher
Deposits Growth	FY 2025	Low single-digit (Q2)	Flattish for FY25; optimism for 2026	Lowered
Loans Growth	FY 2025	Low single-digit (Q2)	Low single-digit maintained	Maintained
Dividend	Ongoing	$0.27	$0.28 declared for Q4 payout	Raised
Subordinated Debt	Q4 2025	—	Redeem $55M notes at par on Nov 1	New
Capital Targets	Ongoing	—	CET1 11–12%; TCE 7.5–8.5%	Disclosed
Effective Tax Rate	Ongoing	22–24% range (Q2)	Q3 ETR 21.4% (drivers: donation, tax-exempt income)	Lower in Q3; range unchanged implied

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
NIM/ALM	Q1 NIM +14 bps QoQ to 3.31%; guide +4–7 bps next quarter . Q2 NIM 3.44% on higher loan yields and lower deposit costs .	NIM 3.49%; guide +5–10 bps in Q4; Q4 NII $62–$63M .	Improving; Q4 uplift aided by sub-debt redemption.
Deposit costs/mix	Q1 avg deposit cost 1.08% ; Q2 1.02% .	Q3 avg deposit cost 1.02%; spot rate 1.00% at 9/30 .	Stable-to-down; beta leverage into cuts.
Loan growth/pipeline	Q2: muted 1H; target low single-digit FY growth .	Q3: Loans +$77M; low single-digit FY growth maintained; Hawaii runoff expected to moderate with lower rates .	Reaccelerating 2H; more balanced Hawaii/Mainland ahead.
Mainland diversification/SNIC	Q2 reminded of mainland book and strategy .	SNIC exposure ~$526M; breakdown provided; balances trending down in corporate lending .	Disciplined participation; exposure managed lower.
Expenses/efficiency & tech	Q2 efficiency 60.36%; near-term opex guide $43.5–$44.5M; ongoing tech/data center investments .	Q3 opex +$3.1M on incentives + one-time; Q4 opex guide $45–$46M; targeting high-50s efficiency over time .	Near-term elevated; structural saves (~$1M/yr) to accrue.
Capital return	Q2: buybacks resumed; $0.27 dividend .	Q3: dividend to $0.28; 78k shares repurchased; sub-debt redemption announced; CET1/TCE targets disclosed .	More proactive within prudent capital bands.
Macro (Hawaii, tariffs)	Q1/Q2: resilient Hawaii; monitoring tariffs impact .	CEO: softness in tourism but construction/military support; market resilient .	Resilience narrative intact; monitoring policy risk.
Japan strategy	Alliances in Japan highlighted historically .	New Kyoto Shinkin partnership to deepen Hawaii–Japan ties .	Incremental international relationship bank growth.
Credit quality	Q2 NCOs 0.35% on one C&I; NPAs 0.20% .	Q3 NCOs 0.20%; NPAs 0.19%; special mention $34.3M, classified $62.1M, stable .	Stable/in-range; consumer losses trending down.

Management Commentary

CEO: “Central Pacific delivered another strong quarter, highlighted by continued margin expansion, solid earnings, and growth in both loans and deposits.”
CFO: “For the fourth quarter, we are guiding to $62 to $63 million in net interest income and a net interest margin increase of 5 to 10 basis points.”
CFO on expenses: “We recorded a net $1.5 million one-time expense related to the consolidation of our operations center… We expect total annual savings of approximately $1 million.”
COO on deposits: “The fourth quarter is going to be a little more challenging… striving to probably keep deposit growth relatively flat year over year… optimistic on 2026.”

Q&A Highlights

Growth mix and Hawaii runoff: Management expects Hawaii residential/home equity runoff to moderate with rate declines; healthy Hawaii pipeline with closings between Q4 and Q1 .
Deposit cost leverage and NIM: Spot total deposit rate ~1.00% at 9/30; September margin 3.51%; NIM expansion guided for Q4 .
Capital structure: Sub-debt redemption ($55M) on Nov 1; remaining long-term debt minimal ($1.25M FHLB advance due Feb 2028) .
Credit exposures: SNIC ~$526M; special mention $34.3M and classified $62.1M, both secured and performing; no expected loss .
Capital targets & returns: CET1 11–12% and TCE 7.5–8.5% targets; continue dividends (~40% payout), fund loan growth, and opportunistic buybacks .

Estimates Context

EPS: S&P Global consensus $0.74 vs actual (S&P) $0.73 (≈$0.01 miss); CPF reported GAAP EPS $0.69 and adjusted EPS $0.73 .
Revenue: S&P Global consensus $74.37M vs actual (S&P) $70.65M; note S&P revenue definition differs from CPF’s “total revenue” ($74.81M) calculated as NII + noninterest income .
Analyst coverage depth was modest (3 estimates). Expect upward bias to Q4 NIM/NII assumptions given explicit guidance and sub-debt redemption.

All starred values are from S&P Global Market Intelligence estimates/actuals.*

Key Takeaways for Investors

Core spread momentum intact: sequential NIM expansion and explicit Q4 guide (+5–10 bps) should support earnings, with sub-debt redemption adding tailwind .
Expense cadence higher near-term (incentives, one-time), but structural savings (~$1M/yr) and scale benefits from tech investments aim to re-drive efficiency toward high-50s over time .
Deposit growth optics conservative into Q4 (flattish FY), but stable low-cost franchise (29% NIB, 1.02% avg cost) still differentiates margins vs peers .
Credit normalizing within plan: lower NCOs (0.20%), NPAs contained (0.19% of assets), special mention/classified stable and well-secured .
Capital returns and flexibility: dividend raise to $0.28, buybacks active, CET1/TCE targets provide guardrails for continued deployment amid prudent risk posture .
Watch list: expense trajectory vs guidance, deposit flows in Q4, mainland SNC runoff pace, and how S&P definitions impact “headline” revenue/EPS beats. Near-term trading likely leans on Q4 NIM/NII delivery and capital actions execution.

CENTRAL PACIFIC FINANCIAL CORP (CPF)·Q3 2025 Earnings Summary