Central Pacific Financial Corp. (NYSE:CPF) Q2 2018 Earnings Conference Call - Final Transcript

Jul 25, 2018 • 01:00 pm ET


Central Pacific Financial Corp. (NYSE:CPF) Q2 2018 Earnings Conference Call - Final Transcript


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Good afternoon ladies and gentlemen. Thank you for standing by and welcome to the Central Pacific Financial Corp Second Quarter 2018 Earnings Conference Call. During today's presentation, all parties will be in a listen only mode. Following the presentation, the conference will be open for questions. This call is being recorded and will be available for replay, shortly after its completion on the Company's website at www.centralpacificbank.com.

I would now like to turn the call over to Mr. David Morimoto, Executive Vice President, Chief Financial Officer. Please go ahead.

David Morimoto

Thank you, Phil, and thank you all for joining us as we review our financial results for the second quarter of 2018. With me this morning are, Catherine Ngo, President and Chief Executive Officer; and Anna Hu, Executive Vice President and Chief Credit Officer.

(Forward-Looking Cautionary Statements)

And now, I will turn the call over to Catherine.

Catherine Ngo

Thank you, David, and good morning, everyone. I'm pleased to report another solid financial performance for the second quarter of this year. On a year-over-year basis, net income improved by 18.3% and earnings per share by 23.1%, which included a positive impact of the tax reform legislation. David will provide more details of our net income component. Loan growth remain stable during the quarter as well as in the first half for the year. Total loans increased by $65 million or by 1.7% over the previous quarter-end and by $290 million or 8.1% from the same period a year-ago. Loan growth was distributed across all loan sites and led by regi mortgages and commercial mortgages.

Asset quality remained strong with non-performing assets at 0.06% of total assets. Total deposits growth remains flat on a sequential quarter basis and increased by 1.9% year-over-year. Competitive pricing for deposit for our local market has been elevating and has contributed to a compression in our net interest margin. The consistency of our profitability and strong capital positions have allowed us to continue with our capital plan and returning shareholder value for our stock repurchase activity and cash dividends, a latter of which increased by 10.5% in the previous quarter.

Turning to the economic outlook to the Hawaii, the forecast remains positive for the remainder of 2018 and 2019 based on the performance of the key leading indicators that includes tourism industry, favorable market conditions and growth of personal income and tax revenue. In the first five months of this year, visitor arrivals outpaced the number of visitors in the same period a year ago by 9.1%. Visitor expenditures increased by 10.9% over the same period last year. The projected increases in visitor arrivals and expenditures for 2018 over the previous year are 6.0% and 8.6%, respectively.

The unemployment rate in Hawaii for the month of June was 2.1% compared to 4.0% nationwide. The forecast of Hawaii unemployment rate for the year 2018 is 2.2%. Job growth is projected to increase by 1.2% and real personal income by 1.7% year-over-year. The Honolulu Consumer Price Index is expected to increase in