Central Pacific Financial Corp. (the parent company of Central Pacific Bank) announced its financial results for the first quarter in a Wednesday morning conference call.
The financial institution posted a first-quarter net profit of $16.2m, compared to $20.2m in the prior quarter and $19.4m in Q1 2022. According to CPB Executive vice president and chief financial officer David Morimoto, the decreases are due in part to the bank reporting a provision for losses on credit of $1.9m in Q1 2023. This compares to a provision of 600k in the previous quarter.
Morimoto, Pacific Business News. "That $1.9m goes into this allowance to cover future credit loss. It's almost like we are setting money aside to cover future credit losses."
CPB President and Chief Executive Officer Arnold Martines said that another reason for the decline in net income was the pressure on the net interest margins of the banking industry as a whole, wherein deposit costs are increasing faster than loan yields.
Martines stated that "there's a bit of pressure, but we don't worry about it in the long term."
CPB reported net income of $54.2m for the first three months, down 3.7% compared to the previous quarter and up 6.4% compared to the quarter before. According to CPB, the decrease from the previous quarter was due primarily to an increase in the average rates and balances paid on interest bearing deposits and borrowings. These increased rates and balances outpaced increases in the average loan balances or asset yields.
The net interest margin was 3.08% in Q1, a decrease by 9 basis points compared to the previous quarter and an increase by 11 basis points compared to the quarter before. According to the bank, the sequential quarter decline was due primarily to higher rates on borrowings and deposits, which exceeded the increase in asset returns.
In Q1, other operating income totaled 11 million dollars, compared with $11.6 million the quarter before and $9.6 millions the quarter prior. The first quarter's other operating expenses totaled 42.1 million dollars, compared with $40.4 million the previous quarter and 38.2 million for the same period of 2022.
The total assets at the end the first quarter totaled $7.52 Billion, up $88.5 Million from the previous quarter and $222.4 Million from Q1 2022.
The U.S. Small Business Administration Hawaii Pacific-Islands District Office named the bank 'Lender of the Year Category 2' for 2022 in the first quarter.
Martines, speaking to PBN, said: "For us moving forward is basically the same as business as usual." We're not going to change anything that we planned. We're actually trying to do more to support small business and some of our ongoing programs like the Women Entrepreneurs by Rising Tide Program."
PBN reported that CPB's Women Entrepreneurs by Rising Tide Program, an 11 session program designed to help Hawaii's female entrepreneurs achieve success in business, is currently seeking participants for the next cohort.