CENTRAL PACIFIC FINANCIAL CORP

Previous wording

Net income for the three months ended March 31, 2024 was $12.9 million, or $0.48 per diluted share, compared to net income of $16.2 million, or $0.60 per diluted share for the three months ended March 31, 2023.

Current wording

Net income for the three months ended June 30, 2024 was $15.8 million, or $0.58 per diluted share, compared to net income of $14.5 million, or $0.53 per diluted share for the three months ended June 30, 2023.

Previous wording

During the three months ended March 31, 2024, the Company recorded a provision for credit losses of $3.9 million, compared to a provision of $1.9 million during the three months ended March 31, 2023. The increase was primarily due to higher charge-offs of our U.S. Mainland unsecured consumer loan portfolio, and the outlook for continued pressure on the national consumer segment.

Current wording

During the three months ended June 30, 2024, the Company recorded a provision for credit losses of $2.2 million, compared to a provision of $4.3 million during the three months ended June 30, 2023. The decrease was primarily due to a decrease in loan balances outstanding and improvements in the Hawaii economic forecast assumptions used in the Company's estimate of the ACL in the current quarter.

Previous wording

The Company's pre-provision net revenue ("PPNR"), a non-GAAP financial measure which excludes the provision for credit losses and income tax expense, for the three months ended March 31, 2024 was $20.9 million, compared to $23.1 million for the three months ended March 31, 2023. See the following section titled "Non-GAAP Financial Measures" for reconciliation of PPNR.

Current wording

The Company's pre-provision net revenue ("PPNR"), a non-GAAP financial measure which excludes the provision for credit losses and income tax expense, for the three months ended June 30, 2024 was $22.9 million, compared to $23.3 million for the three months ended June 30, 2023.

Previous wording

The lower PPNR in first quarter of 2024 was primarily due to lower net interest income of $4.0 million compared to the year-ago period. The lower net interest income was primarily due to higher average balances and rates paid on interest-bearing deposits.

Current wording

The lower PPNR in the three and six months ended June 30, 2024 was primarily due to lower net interest income of $0.8 million and $4.8 million, respectively, compared to the year-ago periods. The lower net interest income was primarily due to higher average balances and rates paid on interest-bearing deposits, which outpaced the higher average yields earned on loans and investment securities.

Previous wording

The higher efficiency ratio in the first quarter of 2024 was primarily due to lower net interest income, partially offset by lower other operating expense combined with higher other operating income, compared to the year-ago period.

Current wording

The higher efficiency ratio in the second quarter of 2024, compared to the same year-ago period, was due to lower net interest income and higher other operating expense, partially offset by higher other operating income.

Previous wording

Visitors to Maui decreased by approximately 57% in September 2023 compared to September 2022 but has started to recover as West Maui officially reopened to visitors in early October 2023 and government officials are encouraging travelers to return to Maui, while avoiding the affected area, to support its economic recovery. In February 2024, average daily visitors to Maui were down by approximately 22% compared to February 2023. The unemployment rate for the Island of Maui was 8.4% in September 2023 and has since improved to 5.8% in February 2024.

Current wording

Visitors to Maui decreased by approximately 57% in September 2023 compared to September 2022 but has started to recover at a slow but steady pace as West Maui officially reopened to visitors in early October 2023 and government officials are encouraging travelers to return to Maui, while avoiding the affected area, to support its economic recovery. In June 2024, average daily visitors to Maui were down by approximately 22% compared to June 2023. The unemployment rate for the Island of Maui was 8.4% in September 2023 and has since improved to 3.1% in June 2024.

Previous wording

In response to the Maui wildfires, the Company provided three to six months interest and/or principal loan payment deferrals to customers who were directly impacted by the wildfires on a case-by-case basis. As of March 31, 2024, nearly all of the loan deferrals the Company provided to customers who were impacted by the wildfires have returned to current payment status with just two loans with a total principal balance of $1.3 million remaining on deferral.

Current wording

In response to the Maui wildfires, the Company provided three to six months interest and/or principal loan payment deferrals to customers who were directly impacted by the wildfires on a case-by-case basis, which have all ended and returned to current payment status as of June 30, 2024.

Previous wording

Despite the Maui wildfires, Hawaii’s economy continued its recovery from the COVID-19 pandemic. According to the latest available statistics from the Hawaii Tourism Authority ("HTA"), a total of 1.5 million visitors arrived to the Hawaiian Islands during the two months ended February 29, 2024, mainly from the U.S. Mainland. For better comparability due to the leap day, statewide average daily visitors were down approximately 5% during the first two months of 2024 compared to the same prior year period and down approximately 6% from the pre-pandemic and record year in 2019. Japanese visitor arrivals continue to increase modestly, as average daily visitors were up approximately 77% during the two months ended February 29, 2024 compared to the same prior year period, but remained approximately 48% of pre-pandemic levels.

Current wording

Despite the Maui wildfires, Hawaii’s economy continued its recovery from the COVID-19 pandemic. According to preliminary statistics from the Hawaii Tourism Authority ("HTA"), a total of 4.8 million visitors arrived to the Hawaiian Islands during the six months ended June 30, 2024, mainly from the U.S. Mainland, compared to 5.0 million in the same prior year period and 5.2 million from the same period in the pre-pandemic and record year in 2019. Average daily visitors from Japan were up approximately 59% during the five months ended May 31, 2024 compared to the same prior year period, but were down by approximately 56% from the same period in 2019.

Previous wording

Total spending for visitors arriving in the two months ended February 29, 2024 was $3.47 billion, down 1.9% from $3.53 billion in the same period last year, and up by 15.3% from $3.00 billion in the two months ended February 28, 2019.

Current wording

Total spending for visitors arriving in the six months ended June 30, 2024 was $10.26 billion, down 4.8% from $10.78 billion in the same period last year, and up by 15.9% from $8.86 billion in the six months ended June 30, 2019.

Previous wording

According to a February 2024 report by the University of Hawaii Economic Research Organization ("UHERO"), total visitor arrivals by air are expected to be approximately 9.8 million in 2024, which was an increase of approximately 2.0% from 9.6 million last year. Visitor spending is expected to decline approximately 1.9% to $20.31 billion in 2024 from last year's record year for visitor spending of $20.71 billion.

Current wording

According to a May 2024 report by the University of Hawaii Economic Research Organization ("UHERO"), total visitor arrivals by air are expected to be approximately 9.8 million in 2024, which is an increase of approximately 1.9% from 9.6 million last year. Visitor spending is expected to decline approximately 4.2% to $19.84 billion in 2024 from last year's record year for visitor spending of $20.71 billion.

Previous wording

The Department of Labor and Industrial Relations reported that Hawaii's seasonally adjusted annual unemployment rate was 3.1% in the month of March 2024, compared to 2.9% in the month of March 2023 and the national seasonally adjusted unemployment rate of 3.8% in the month of March 2024. UHERO projects Hawaii's seasonally adjusted annual unemployment rate to remain low at approximately 2.7% in 2024.

Current wording

The Department of Labor and Industrial Relations reported that Hawaii's seasonally adjusted annual unemployment rate was 2.9% in the month of June 2024, compared to 2.8% in the month of June 2023 and the national seasonally adjusted unemployment rate of 4.1% in the month of June 2024. UHERO projects Hawaii's seasonally adjusted annual unemployment rate to remain low at approximately 3.1% in 2024.

Previous wording

Real estate lending remains one of the primary focuses for the Company, including residential mortgage and commercial mortgage loans. As a result, the Company is dependent on the strength of Hawaii's real estate market. While the Hawaii housing market continues to experience some moderation in sales activity and prices, there continues to be strong demand and low inventory. According to the Honolulu Board of Realtors, sales of Oahu single-family homes in the three months ended March 31, 2024 were up 6.1%, while sales of Oahu condominiums were down 7.1% from the same prior year period. The Oahu single-family home median price in the three months ended March 31, 2024 rose by 4.4% to $1.07 million from $1.03 million in the same prior year period. The Oahu condominium median price in the three months ended March 31, 2024 rose by 1.0% to $505,000 from $500,000 in the same prior year period.

Current wording

Real estate lending is one of the primary focuses for the Company, including residential mortgage and commercial mortgage loans. As a result, the Company is dependent on the strength of Hawaii's real estate market. While the Hawaii housing market continues to experience some moderation in sales activity and prices, there continues to be strong demand and low inventory. According to the Honolulu Board of Realtors, sales of Oahu single-family homes in the six months ended June 30, 2024 were up 6.7%, while sales of Oahu condominiums were down 5.8% from the same prior year period. The Oahu single-family home median price in the six months ended June 30, 2024 rose by 3.3% to $1.09 million from $1.05 million in the same prior year period. The Oahu condominium median price in the six months ended June 30, 2024 rose by 2.0% to $510,000 from $500,000 in the same prior year period.

Previous wording

Hawaii's economy is measured by the growth of real personal income and real gross state product. UHERO projects real personal income to grow by 1.6% and real gross state product to grow by 1.5% in 2024.

Current wording

Hawaii's economy is measured by the growth of real personal income and real gross state product. UHERO projects real personal income to grow by 0.9% and real gross state product to grow by 1.5% in 2024.

Previous wording

Net interest income, when annualized and expressed as a percentage of average interest earning assets, is referred to as "net interest margin." Interest income, which includes loan fees and resultant yield information, is expressed on a taxable-equivalent basis using a federal statutory tax rate of 21% for the three months ended March 31, 2024 and 2023. A comparison of net interest income on a taxable-equivalent basis for the three months ended March 31, 2024 and 2023 is presented below.

Current wording

Net interest margin is defined as annualized net interest income, on a taxable-equivalent basis using a federal statutory tax rate of 21%, as a percentage of average interest earning assets. A comparison of net interest income on a taxable-equivalent basis for the three and six months ended June 30, 2024 and 2023 is presented below.

Previous wording

Net interest income (expressed on a taxable-equivalent basis) was $50.4 million for the first quarter of 2024, representing a decrease of $4.0 million, or 7.4% from $54.4 million in the year-ago quarter. The decrease from the year-ago quarter was primarily due to an increase in interest expense of $11.6 million, which was attributable to increases in average balances and average rates paid on interest-bearing deposits, combined with decreases in average investment securities and loans balances. These negative variances were partially offset by increases in average balances and yields earned on interest-bearing deposits in other financial institutions, combined with increases in average yields earned on investment securities and loans. The increases in average balances and average rates paid on interest-bearing deposits reflected the continued shift in the deposit portfolio composition from demand to higher cost savings and money market and time deposits.

Current wording

Net interest income (expressed on a taxable-equivalent basis) was $52.1 million for the second quarter of 2024, representing a decrease of $0.8 million, or 1.6% from $52.9 million in the year-ago quarter. The decrease in net interest income from the year-ago quarter was primarily due to an increase in interest expense of $7.3 million, which was attributable to increases in average balances and average rates paid on interest-bearing deposits, combined with decreases in average investment securities and loans balances. The increases in average balances and average rates paid on interest-bearing deposits reflected the shift in the deposit portfolio composition from demand to higher cost savings and money market and time deposits. These negative variances were partially offset by increases in average balances and yields earned on interest-bearing deposits in other financial institutions, combined with increases in average yields earned on investment securities and loans.

Previous wording

Taxable-equivalent interest income was $74.6 million for the first quarter of 2024, representing an increase of $7.6 million, or 11.3%, from $67.0 million in the year-ago quarter. The increase during the first quarter of 2024, compared to the year-ago quarter was primarily attributable to an increase in average yield earned on loans of 41 basis points ("bps"), resulting in an increase in interest income of approximately $5.8 million, combined with increases in the average balance and average yield earned on interest-bearing deposits in other financial institutions resulting in an increase in interest income of approximately $3.3 million. These were partially offset by decreases in average loan and investment securities balances of $125.4 million and $81.6 million, resulting in decreases in interest income of approximately $1.3 million and $0.5 million, respectively.

Current wording

Taxable-equivalent interest income was $76.0 million for the second quarter of 2024, representing an increase of $6.5 million, or 9.3%, from $69.5 million in the year-ago quarter. The increase during the second quarter of 2024, compared to the year-ago quarter was primarily attributable to an increase in average yield earned on loans of 43 basis points ("bp" or "bps"), resulting in an increase in interest income of approximately $5.7 million and an increase in average yield earned on investment securities of 39 bps, resulting in an increase in interest income of approximately $1.4 million, combined with increases in the average balance and average yield earned on interest-bearing deposits in other financial institutions resulting in an increase in interest income of approximately $1.3 million. These increases were partially offset by decreases in average loans and investment securities balances of $157.6 million and $53.9 million, respectively, resulting in decreases in interest income of approximately $1.7 million and $0.3 million, respectively.

Previous wording

Interest expense was $24.2 million for the first quarter of 2024, representing an increase of $11.6 million, or 92.0%, from $12.6 million in the year-ago quarter. Due to the high interest rate environment, average rates paid on interest-bearing deposits of 1.82% increased by 94 bps from the year-ago quarter, resulting in an increase in interest expense of approximately $10.4 million. Average interest-bearing deposit balances increased by $224.5 million from the year-ago quarter, resulting in an increase in interest expense of approximately $1.5 million.

Current wording

Interest expense was $23.9 million for the second quarter of 2024, representing an increase of $7.3 million, or 44.2%, from $16.6 million in the year-ago quarter. Due to the high interest rate environment, average rates paid on interest-bearing deposits of 1.83% increased by 64 bps from the year-ago quarter, resulting in an increase in interest expense of approximately $7.6 million.

Previous wording

Our net interest margin of 2.83% for the first quarter of 2024 decreased by 25 bps from 3.08% in the year-ago quarter. The decrease in net interest margin for the first quarter of 2024 was primarily attributable to an increase in average rates paid on interest-bearing deposits, which outpaced the increases in average yields earned on interest-bearing deposits in other financial institutions, investment securities and loans.

Current wording

Our net interest margin of 2.97% for the second quarter of 2024 increased by 1 bp from 2.96% in the year-ago quarter. The increase in net interest margin for the second quarter of 2024 was primarily attributable to increases in average yields earned on interest-bearing deposits in other financial institutions, investment securities and loans, which outpaced the increase in average rates paid on interest-bearing deposits.

Previous wording

In an effort to rein in inflation, the FRB aggressively increased interest rates since the first quarter of 2022 when the Federal Funds Rate target was 0.00% to 0.25%. Since then, the FRB has raised the Federal Funds Rate by more than five percentage points, to the current 5.25% to 5.50%, a 22-year high. In January and March 2024, the FRB kept the Federal Funds Rate target steady for the fourth and fifth consecutive meetings. Policymakers still indicate that there may be three rate cuts of quarter percentage point increments in 2024, however it likely will not occur until they are confident that inflation is moving sustainably towards 2%.

Current wording

In an effort to rein in inflation, the FRB aggressively increased interest rates since the first quarter of 2022 when the Federal Funds Rate target was 0.00% to 0.25%. Since then, the FRB has raised the Federal Funds Rate by more than five percentage points, to the current 5.25% to 5.50%, a 22-year high. The FRB kept the Federal Funds Rate target steady during the most recent meeting in June 2024, as well as the prior meetings in 2024. Policymakers signaled that rates could begin to decline in the future, however it likely will not occur until they are confident that inflation is moving sustainably towards 2%.

Previous wording

For the first quarter of 2024, total other operating income was $11.2 million, which increased by $0.2 million, or 2.1%, from $11.0 million in the year-ago quarter. The increase was primarily due to higher other service charges and fees of $0.3 million and higher income from bank-owned life insurance ("BOLI") of $0.2 million, compared to the year-ago quarter, partially offset by lower income recovered on previously charged-off loans of $0.2 million.

Current wording

For the second quarter of 2024, total other operating income was $12.1 million, which increased by $1.7 million, or 16.2%, from $10.4 million in the year-ago quarter. The increase was primarily due to higher other service charges and fees of $0.9 million, mortgage banking income of $0.4 million and income from fiduciary activities of $0.4 million.

Previous wording

For the first quarter of 2024, total other operating expense was $40.6 million, which decreased by $1.5 million, or 3.6%, from $42.1 million in the year-ago quarter. The decrease was primarily due to lower salaries and employee benefits of $1.3 million, lower legal and professional services of $0.6 million, and lower computer software of $0.3 million compared to the year-ago quarter, partially offset by higher directors' deferred compensation plan expense of $0.4 million. The decline in salaries and employee benefits was primarily due to lower incentive accruals, as well as tighter management of personnel count.

Current wording

For the six months ended June 30, 2024, total other operating expense was $81.7 million and decreased by $0.3 million, or 0.3%, from $82.0 million in the same year-ago period. The decrease was primarily due to lower salaries and employee benefits of $0.9 million, computer software expense of $0.6 million and legal and professional services of $0.5 million, partially offset by higher directors' deferred compensation plan expense of $0.7 million compared to the same year-ago period. The lower salaries and employee benefits was primarily attributable to tighter management of personnel count.

Previous wording

The Company recorded income tax expense of $4.0 million for the first quarter of 2024, compared to $5.1 million in the same year-ago period. The effective tax rate for the first quarter of 2024 was 23.49%, compared to 23.81% in the same year-ago period.

Current wording

The Company recorded income tax expense of $4.8 million for the second quarter of 2024, compared to $4.5 million in the same year-ago period. The effective tax rate for the second quarter of 2024 was 23.41%, compared to 23.60% in the same year-ago period.

Previous wording

The decrease in the effective tax rate for the three months ended March 31, 2024 was primarily attributable to higher tax-exempt BOLI income compared to the same year-ago period, combined with lower pre-tax income compared to the same year-ago period.

Current wording

The decrease in the effective tax rate for the three and six months ended June 30, 2024 was primarily attributable to higher tax-exempt BOLI income compared to the same year-ago period, and lower pre-tax income compared to the same year-ago period.

Previous wording

The Company's net deferred tax assets ("DTA"), net of valuation allowance, totaled $26.9 million and $29.5 million at March 31, 2024 and December 31, 2023, respectively, and was included in other assets on our consolidated balance sheets. The decrease in DTA was primarily due to projected utilization of net operating loss carryforwards, which arose in 2022 due to unrealized losses on investment securities.

Current wording

The Company's net deferred tax assets ("DTA"), net of valuation allowance, totaled $28.2 million and $29.5 million at June 30, 2024 and December 31, 2023, respectively, and was included in other assets on our consolidated balance sheets. The decrease in DTA was primarily due to projected utilization of net operating loss carryforwards, which rose in 2022 due to unrealized losses on investment securities.

Previous wording

The valuation allowance on our net deferred tax assets ("DTA") at March 31, 2024 and December 31, 2023 totaled $5.6 million and $4.4 million, respectively, which related entirely to our DTA from net apportioned net operating loss ("NOL") carryforwards for California state income tax purposes, as the Company does not expect to generate sufficient income in California to utilize the DTA.

Current wording

The valuation allowance on our net deferred tax assets ("DTA") at June 30, 2024 and December 31, 2023 totaled $4.4 million, which related entirely to our DTA from net apportioned net operating loss ("NOL") carryforwards for California state income tax purposes, as the Company does not expect to generate sufficient income in California to utilize the DTA.

Previous wording

Total assets were $7.41 billion at March 31, 2024 and decreased by $232.8 million, or 3.0%, from $7.64 billion at December 31, 2023, as excess liquidity was used to pay off high-cost government time deposits that matured during the quarter.

Current wording

Total assets were $7.39 billion at June 30, 2024 and decreased by $255.8 million, or 3.3%, from $7.64 billion at December 31, 2023, as excess liquidity was used to pay off high-cost government time deposits that matured during the six months ended June 30, 2024.

Previous wording

Investment securities totaled $1.29 billion at March 31, 2024, which increased by $6.2 million, or 0.5%, from $1.28 billion at December 31, 2023. The increase in the investment securities portfolio reflected purchases of $32.6 million, partially offset by principal runoff of $21.0 million and a market valuation reduction on the AFS portfolio of $5.4 million. The decline in the market valuation was primarily driven by the high interest rate environment.

Current wording

Investment securities totaled $1.29 billion at June 30, 2024, which increased by $13.0 million, or 1.0%, from $1.28 billion at December 31, 2023. The increase in the investment securities portfolio reflected purchases of $62.3 million, partially offset by principal runoff of $46.1 million and a market valuation reduction on the AFS portfolio of $3.2 million.

Previous wording

Loans, net of deferred costs, totaled $5.40 billion at March 31, 2024, which decreased by $37.6 million, or 0.69%, from $5.44 billion at December 31, 2023. The decrease was primarily due to decreases in consumer of $50.2 million, construction of $17.0 million, home equity of $7.3 million and residential mortgage loans of $2.9 million. These decreases were partially offset by an increase in commercial mortgage of $39.4 million.

Current wording

Loans, net of deferred costs, totaled $5.38 billion at June 30, 2024, which decreased by $55.3 million, or 1.02%, from $5.44 billion at December 31, 2023. The decrease was primarily due to decreases in consumer of $88.6 million, home equity of

Previous wording

The Hawaii loan portfolio decreased by $6.6 million, or 0.1%, from December 31, 2023. The decrease reflected decreases in construction of $18.1 million, consumer of $15.8 million, home equity of $7.3 million, residential mortgage of $2.9 million and commercial and industrial of $1.7 million. These decreases were partially offset by an increase in commercial mortgage of $39.2 million.

Current wording

The Hawaii loan portfolio decreased by $14.5 million, or 0.3%, from December 31, 2023. The decrease reflected decreases in consumer of $35.1 million, home equity of $29.7 million, construction of $15.7 million, residential mortgage of $14.6 million and commercial and industrial of $6.2 million. These decreases were partially offset by an increase in commercial mortgage of $86.7 million.

Previous wording

The U.S. Mainland loan portfolio decreased by $30.9 million, or 3.8% from December 31, 2023. The decrease was primarily attributable to a decrease in consumer loans of $34.4 million, as the Company continued its strategy to let the US. Mainland unsecured consumer loan portfolio to runoff without new purchases in the current quarter. The decrease was partially offset by net increases in commercial and industrial of $2.1 million and construction loans of $1.2 million.

Current wording

The U.S. Mainland loan portfolio decreased by $40.8 million, or 5.1% from December 31, 2023. The decrease was primarily attributable to a decrease in consumer loans of $53.6 million, as the Company continued its strategy to let the US. Mainland consumer loan portfolio to runoff with minimal purchases in the current quarter. The decrease was partially offset by an increase in commercial and industrial loans of $15.3 million.

Previous wording

December 31, 2023. The increase in nonperforming assets from December 31, 2023 was primarily attributable to additions to nonaccrual loans totaling $4.8 million, partially offset by $0.3 million in repayments of nonaccrual loans, $0.2 million in loans returned to accrual status and $1.2 million in net charge-offs, valuation and other adjustments. The additions to nonaccrual loans were primarily in the residential mortgage category which are well-collateralized.

Current wording

Nonperforming assets totaled $10.3 million, or 0.14% of total assets at June 30, 2024, compared to $7.0 million, or 0.09% of total assets at December 31, 2023. The increase in nonperforming assets from December 31, 2023 was primarily attributable to additions to nonaccrual loans totaling $6.7 million, partially offset by $0.6 million in repayments of nonaccrual loans, $0.2 million in loans returned to accrual status and $2.6 million in net charge-offs, valuation and other adjustments. The additional nonaccrual loans in the residential mortgage category are well-collateralized.

Previous wording

Since the adoption of ASU 2022-02 on January 1, 2023 and during the three months ended March 31, 2024, the Company has not had any material modifications to loans either individually or in the aggregate for borrowers experiencing financial difficulty.

Current wording

Since the adoption of ASU 2022-02 on January 1, 2023 and during the three and six months ended June 30, 2024, the Company has not had any material modifications to loans either individually or in the aggregate for borrowers experiencing financial difficulty.

Previous wording

In response to the Maui wildfires, the Company provided three to six months interest and/or principal loan payment deferrals to customers who were directly impacted by the wildfires on a case-by-case basis. The loan payment deferrals were not considered more than minor and thus were not reportable as loan modifications to borrowers facing financial difficulty. As of March 31, 2024, nearly all of the loan deferrals have returned to payment status with just two loans with a total principal balance of $1.3 million remaining on deferral.

Current wording

In response to the Maui wildfires in August 2023, the Company provided three to six months interest and/or principal loan payment deferrals to customers who were directly impacted by the wildfires on a case-by-case basis. The loan payment deferrals were not considered more than minor and thus were not reportable as loan modifications to borrowers facing financial difficulty. As of June 30, 2024, all of the loan deferrals have returned to payment status.

Previous wording

Loans identified as TDRs prior to our adoption of ASU 2022-02 included in nonperforming assets at March 31, 2024 consisted of five Hawaii loans with a combined principal balance of $0.9 million. There were $2.1 million of loans identified as TDRs prior to our adoption of ASU 2022-02 still accruing interest at March 31, 2024, none of which were more than 90 days delinquent. At December 31, 2023, there were $2.1 million of loans identified as TDRs prior to our adoption of ASU 2022-02 still accruing interest, none of which were more than 90 days delinquent.

Current wording

Loans identified as TDRs prior to our adoption of ASU 2022-02 included in nonperforming assets at June 30, 2024 and December 31, 2023 consisted of five Hawaii loans with a combined principal balance of $0.8 million and $0.9 million, respectively. There were $2.0 million of loans identified as TDRs prior to our adoption of ASU 2022-02 still accruing interest at June 30, 2024, none of which were more than 90 days delinquent. At December 31, 2023, there were $2.1 million of loans identified as TDRs prior to our adoption of ASU 2022-02 still accruing interest, none of which were more than 90 days delinquent.

Previous wording

Criticized loans at March 31, 2024 declined by $19.6 million from December 31, 2023 to $30.5 million, or 0.6% of the total loan portfolio. Special mention loans declined by $18.8 million to $6.0 million, or 0.1% of the total loan portfolio. Classified loans declined by $0.8 million to $24.4 million, or 0.5% of the total loan portfolio.

Current wording

Criticized loans at June 30, 2024 declined by $14.8 million from December 31, 2023 to $35.3 million, or 0.7% of the total loan portfolio. Special mention loans declined by $10.5 million to $14.3 million, or 0.3% of the total loan portfolio. Classified loans declined by $4.3 million to $21.0 million, or 0.4% of the total loan portfolio.

Previous wording

The Company's ratio of classified assets and other real estate owned to tier 1 capital and the ACL was 3.28% at March 31, 2024, which decreased from 3.41% at December 31, 2023.

Current wording

The Company's ratio of classified assets and other real estate owned to tier 1 capital and the ACL was 2.78% at June 30, 2024, which decreased from 3.41% at December 31, 2023.

Previous wording

Our ACL totaled $63.5 million at March 31, 2024, compared to $63.9 million at December 31, 2023 and $63.1 million at March 31, 2023.

Current wording

Our ACL totaled $62.2 million at June 30, 2024, compared to $63.9 million at December 31, 2023 and $63.8 million at June 30, 2023.

Previous wording

During the first quarter of 2024, we recorded a provision for credit losses on loans of $4.1 million and net charge-offs of $4.5 million.

Current wording

During the second quarter of 2024, we recorded a provision for credit losses on loans of $2.4 million and net charge-offs of $3.8 million. During the six months ended June 30, 2024, we recorded a provision for credit losses on loans of $6.6 million and net charge-offs of $8.3 million.

Previous wording

The increase in the provision for credit losses on loans during the three months ended March 31, 2024, compared to the same year-ago period, was primarily due to higher charge-offs of our U.S. Mainland unsecured consumer loan portfolio, and the outlook for continued pressure on the national consumer segment.

Current wording

The decrease in the provision for credit losses on loans during the second quarter of 2024, compared to the same year-ago period, was primarily due to a decrease in loan balances outstanding and improvements in the Hawaii economic forecast assumptions used in the Company's estimate of the ACL in the current quarter. The increase in the provision for credit losses on loans during the six months ended June 30, 2024, compared to the same year-ago period, was primarily due to higher charge-offs of our U.S. Mainland unsecured consumer loan portfolio.

Previous wording

Our ratio of ACL to total loans was 1.18% at March 31, 2024, compared to 1.18% at December 31, 2023 and 1.14% at March 31, 2023.

Current wording

Our ratio of ACL to total loans was 1.16% at June 30, 2024, compared to 1.18% at December 31, 2023 and 1.16% at June 30, 2023.