Central Pacific Financial Corp New · NYSE:CPF
Central Pacific Financial Corp New — Central Pacific Financial — Investor Presentation (September 2023)
30 slides from Central Pacific Financial Corp New's investor presentation, Sep 5, 2023
Slide 1: Investor Presentation September 2023
Investor Presentation September 2023
Slide 2: Forward-Looking Statements
2Central Pacific Financial Corp. Forward-Looking Statements This document may contain forward-looking statements (“FLS”) concerning: projections of revenues, expenses, income or loss, earnings or loss per share, capital expenditures, the payment or nonpayment of dividends, capital position, credit l
Slide 3: Market Information and Corporate Profile
3Central Pacific Financial Corp. MARKET INFORMATION NYSE TICKER CPF SUBSIDIARY CENTRAL PACIFIC BANK (CPB) TOTAL ASSETS $7.6 BILLION MARKET CAP $469 MILLION SHARE PRICE $17.35 DIVIDEND YIELD 6.0% Central Pacific Financial Corp. is a Hawaii-based bank holding company. Central Pacific Bank (CPB) was fo
Slide 4: CPB Impact and Support for Maui
4Central Pacific Financial Corp. CPB IMPACT ▪ No damage to CPB's 4 Maui branches. Lahaina branch was temporarily closed; reopened 8/28/23 LOAN PROGRAMS ▪ Natural Disaster Loan Program for loans up to $10,000 at special rates with flexible terms ▪ Loan Payment Deferral Programs being offered for all
Slide 5: Lahaina, Maui Loan Exposure
5Central Pacific Financial Corp. Lahaina, Maui Loan Exposure Exposure is manageable and with mitigating factors, losses are not anticipated to be material ▪ Status updates from borrowers continue to be collected ▪ State Farm Insurance (largest insurer on Maui) setup on-site to process claims, with 1
Slide 6: Majority of Maui Open for Tourism
6Central Pacific Financial Corp. Majority of Maui Open for Tourism 1 Source: County of Maui 2 Source: Department of Land and Natural Resources Source: British Broadcasting Corporation (BBC). Lahaina fire impacted area makes up about ~2,200 acres1 of overall Maui Island which totals ~465,000 acres2
Slide 7: 2nd Quarter 2023 Financial Highlights
7Central Pacific Financial Corp. 2nd Quarter 2023 Financial Highlights • Improved liquidity position with greater cash position, deposit growth and modest loan decline • Pre-Provision Net Revenue (PPNR) stable • Strong capital and asset quality • Quarterly cash dividend maintained at $0.26 • Fitch a
Slide 8: CPF Value Drivers
8Central Pacific Financial Corp. CPF Value Drivers Strong Hawaii Economic Position Diversified Loan Portfolio Valuable Deposit Franchise Focus on Driving Efficiency Solid Credit & Capital Profile Digital Initiatives to Expand Future Growth 1 2 3 4 5 6
Slide 9: Strong Hawaii Economic Position
9Central Pacific Financial Corp. Tourism Visitor arrivals compared to pre-pandemic 94% 1 Employment Unemployment Rate July 2023 2.8% 1 FACTORS FOR A FAVORABLE HAWAII OUTLOOK ▪ Tourism back up to pre-pandemic levels; some impact from Maui wildfires expected but mitigated by visitors coming to other p
Slide 10: Diversified Loan Portfolio
10Central Pacific Financial Corp. Continued focus on near-term moderating loan portfolio Strong and diverse loan portfolio, with over 75% secured by real estate Diversified Loan Portfolio C&I 10% Construction 4% Residential Mortgage 35% Home Equity 13% Coml Mortgage 25% Consumer 13% Loan Portfolio C
Slide 11: Residential Mortgage Strength
11Central Pacific Financial Corp. Residential Mortgage Strength CPB RESIDENTIAL MORTGAGE LEADER • Instrumental in driving passage of Hawaii bill in 2023 that expands low-income housing tax credit investments • Market strength in purchased mortgages; less reliance on refinance market • Lead lender on
Slide 12: Small Business Leader
121Central Pacific Financial Corp. Small Business Leader 2022 SBA HAWAII LENDER OF THE YEAR FOR THE 13TH CONSECUTIVE YEAR Originated more 7a SBA loans based on count and dollar amount than the 3 other large Hawaii banks combined1 Niche Markets • CPB has strong market share in the dental and physicia
Slide 13: Valuable Deposit Franchise
13Central Pacific Financial Corp. • 58% of deposits FDIC insured; 65% including collateralized deposits • 55% Commercial / 45% Consumer • Long-tenured: 51% with CPB 10 years or longer • Average consumer account balance $19,000 • Average commercial account balance $112,000 • No brokered deposits Valu
Slide 14: CPF Deposit Cost Advantage
14Central Pacific Financial Corp. 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 1Q23 2Q23 Total Deposit Cost CPF Peer average* Fed Funds CPF Deposit Cost Advantage * Public banks $3-10 billion in total assets. Sour
Slide 15: Japan Competitive Advantage
15Central Pacific Financial Corp. Leadership Connections Strategic Alliances Best Service Level Captive Insurance Deposits CPF Chairman Emeritus, Paul Yonamine A distinguished leader in the Japanese business market. He serves on the Board of Directors of SMBC and Seven & i Holdings CPB and Tokyo Sta
Slide 16: Focus on Driving Efficiency
16Central Pacific Financial Corp. Focus on Driving Efficiency4 27 branches down 8 (-23%) since 2020 Branch Consolidation 753 FTE down 57 (-7%) since 2020 FTE Initiatives 50+ processes being standardized and automated Process Automation $600K 2023 savings + additional in progress Vendor Contract Savi
Slide 17: Solid Credit & Capital Profile
17Central Pacific Financial Corp. Solid Credit & Capital Profile 0.08% 0.12% 0.12% 0.16% 0.24% 2Q22 3Q22 4Q22 1Q23 2Q23 Annualized NCO/Avg Loans 1.75% 1.39% 1.39% 1.28% 1.34% 2Q22 3Q22 4Q22 1Q23 2Q23 Criticized/Total Loans 0.09% 0.08% 0.09% 0.10% 0.20% 2Q22 3Q22 4Q22 1Q23 2Q23 NPAs/Total Loans * NPA
Slide 18: Strong Credit Profile to Weather a Recession
18Central Pacific Financial Corp. Strong Credit Profile to Weather a Recession Key Strength Factors: Data as of June 30, 2023 Majority of Loans in Hawaii • 83% of total loan portfolio is in Hawaii • Hawaii real estate values are exceptionally strong and have a track record of outperforming the natio
Slide 19: Solid Capital Position
191Central Pacific Financial Corp. Solid Capital Position 8.7% STRONG CAPITAL AND SHAREHOLDER RETURN • TCE ratio of 6.3% and CET1 ratio of 10.9% • Maintained quarterly cash dividend at $0.26 per share which will be payable on September 15, 2023 • Repurchased 23,750 shares in the 2Q23 at a total cost
Slide 20: Digital Initiatives to Expand Future Growth
202Central Pacific Financial Corp. Mobile App – Best in Market1 • CPB’s mobile app is rated 4.9 (out of 5) in the Apple store • Mobile app includes value added tools, including budgeting and cash flow to help manage money • CreditSense enables customers to monitor their credit scores and explore CPB
Slide 21: Appendix
21Central Pacific Financial Corp. Appendix
Slide 22: Recognized by Newsweek and Forbes – Best Bank in Hawaii
22Central Pacific Financial Corp. Central Pacific Bank recognized by Newsweek and Forbes – Best Bank in Hawaii* * Newsweek ranked CPB best small bank in Hawaii for 2023. Forbes named CPB best bank in Hawaii for 2022.
Slide 23: Historical Financial Highlights
23Central Pacific Financial Corp. (*) Certain amounts in prior years were reclassified to conform to current year's presentation. These reclassifications had an immaterial impact to our previously reported efficiency ratios. Note: Totals may not sum due to rounding. Historical Financial Highlights
Slide 24: Commercial Real Estate Portfolio
24Central Pacific Financial Corp. • Diversified CRE portfolio, primarily Hawaii and Investor • Office exposure: $194MM outstanding (14% of total CRE, 4% of total loans), WA LTV 55%, 73 WA months to maturity • Investor: $146MM / Owner-Occupied: $48MM • Retail exposure: $251MM outstanding (18% of tota
Slide 25: Consumer Loan Portfolio
25Central Pacific Financial Corp. • Total Hawaii Consumer $328MM / Total Mainland Consumer $386MM • Weighted average origination FICO: • 742 for Hawaii Consumer • 739 for Mainland Consumer • YTD Annualized NCO %: • HI- Auto 0.3% • HI Other 0.7% • Mainland Auto 0.9% • Mainland Home Improvement 2.5% •
Slide 26: Allowance for Credit Losses
26Central Pacific Financial Corp. • $4.1MM provision for credit loss on loans in 2Q23 driven by net charge-offs, plus a $0.2MM reserve for unfunded commitments, for a total provision for credit loss of $4.3MM • ACL coverage ratio increased to 1.16% for 2Q23 Note: Totals may not sum due to rounding.
Slide 27: High Quality Securities Portfolio
27Central Pacific Financial Corp. High Quality Securities Portfolio • $1.3B or ~17% of total assets • 81% government agency bonds • 92% AAA rated • No securities sales YTD • HTM/AFS portfolio unrealized loss $68.7MM / $122.5MM • Total portfolio unrealized loss of $191MM vs $476MM book equity Data as
Slide 28: Available Sources of Liquidity
28Central Pacific Financial Corp. • Ample alternative sources of liquidity available • Available sources of liquidity total 128% of uninsured/uncollateralized deposits Available Sources of Liquidity * BTFP eligible securities at par, other unpledged securities at market value $ Millions June 30, 202
Slide 29: Environmental, Social & Governance (ESG) Focus
29Central Pacific Financial Corp. Environmental, Social & Governance (ESG) Focus * Amounts for 2022Y. Source: 2022 ESG Report can be found here: https://www.cpb.bank/esg. *
Slide 30: Mahalo
30Central Pacific Financial Corp. Mahalo
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