CENTRAL PACIFIC FINANCIAL CORP
For the period ended Jun 30, 2026. Filed Aug 6, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 6, 2026
CPF$38.30-0.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-04-29.
0000701347-26-000028
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-06.
0000701347-26-000068
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 174 previous paragraphs and 172 current paragraphs.
110 unchanged; 51 reworded; 11 added; 12 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 18 previous and 21 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
During the three months ended June 30, 2026, the Company recorded a provision for credit losses of $4.4 million, compared to a provision of $5.0 million during the same period in 2025. During the six months ended June 30, 2026, the Company recorded a provision for credit losses of $6.7 million, compared to a provision of $9.2 million during the same period in 2025. The decreases in the provision were primarily driven by lower net charge-offs in the three and six months ended June 30, 2026, compared to the same periods in 2025.
Current report
The U.S. conflict with Iran impacted oil prices contributing to an increase in inflation which is projected to reach 4.8% mid-year and remain at higher levels through 2028. According to UHERO, Hawaii's Real GDP is expected to grow 1% this year but could soften depending on the impact of oil prices.
Current report
Construction remains strong with job growth ranging from 2% on Oahu to 6% on Maui County due to large federal contracts, the development of the $4 billion New Aloha Stadium Entertainment District ("NASED"), and rebuilding after the Maui wildfires.
Current report
In July 2026, the FOMC maintained the target range for the federal funds rate at 3.50% - 3.75%, unchanged from the meetings earlier in the year. While economic activity continued to expand at a solid pace, inflation remained above the Federal Reserve's target and uncertainty surrounding the economic outlook, including the potential effects of developments in the Middle East conflict and global energy markets, supported the Committee's decision to keep rates unchanged.
Current report
Net interest margin was 3.57% for the second quarter of 2026, an increase of 13 bps from 3.44% for the same quarter in 2025. Net interest margin was 3.55% for the six months ended June 30, 2026, an increase of 18 bps from 3.37% in the same period in 2025. The increase in net interest margin for the three and six months ended June 30, 2026 was primarily attributable to decreases in the average rates paid on interest-bearing deposits and long-term debt, partially offset by a decline in the average yield earned on interest-bearing deposits in other financial institutions and investment securities.
Current report
Total other operating income for the second quarter of 2026 was $14.6 million, which increased by $1.6 million, or 12.3%, from $13.0 million in same quarter in 2025. The increase was primarily due to increases of $0.7 million in income from bank-owned life insurance ("BOLI"), and $0.3 million in fee income generated from investment services (included in other service charges and fees). The Company has certain company-owned life insurance policies used to hedge market risks associated with its deferred compensation plans, which are tied to the equity markets, therefore, the Company has also recognized offsetting increases in deferred compensation expense in other operating expenses.
Current report
Total other operating income for the six months ended June 30, 2026 was $26.2 million, which increased by $2.1 million, or 8.6%, from $24.1 million for the same period in 2025. The increase was primarily due to increases of $0.7 million in debit card program extension consideration (included in other operating income-other), $0.6 million in income from BOLI due to favorable equity market performance, and $0.4 million in fee income generated from investment services.
Current report
Total other operating expense for the six months ended June 30, 2026 was $89.8 million, which increased by $3.8 million, or 4.5%, from $86.0 million for the same period in 2025. The increase was primarily driven by higher salaries and employee benefits of $3.9 million and higher directors deferred compensation plan expenses of $1.1 million. The increases were partially offset by decreases in legal and professional services of $0.7 million and equipment expenses of $0.4 million.
Current report
For the six months ended June 30, 2026, the ETR was 22.78%, compared to 22.39% for the same period in 2025.
Current report
The average taxable-equivalent yield earned on investment securities was 2.83% in the second quarter of 2026, compared to 2.84% in the same quarter in 2025. For the six months ended June 30, 2026, the average taxable-equivalent yield earned on investment securities was 2.80%, compared to 2.83% in the same period in 2025. The decreases in average yields earned on investment securities was primarily due to lower income recorded from the Company’s interest rate swap.
Current report
The average yield earned on loans was 4.96% in the second quarter of 2026, relatively consistent from the same quarter in 2025. For the six months ended June 30, 2026, the average yield earned on loans was 4.94%, compared to 4.92% in the same period in 2025. The increase in the average yield earned in the six months ended June 30, 2026 was primarily due to higher new production loan yields compared to run-off yields.
Removed paragraphs (12)
Previous report
During the three months ended March 31, 2026, the Company recorded a provision for credit losses of $2.4 million, compared to a provision of $4.2 million during the same period in 2025. The decrease in the provision was primarily driven by a decrease in loan balances and changes in the economic forecast used in our current expected credit losses model.
Previous report
Pre-Provision Net Revenue
Previous report
The Pre-Provision Net Revenue ("PPNR") is a non-GAAP financial measure that excludes the provision for credit losses and income tax expense from net income. The Company believes PPNR is a useful tool for evaluating its ability to generate earnings from operations before accounting for credit costs. The following table presents the Company's non-GAAP PPNR for the periods presented:
Previous report
The increase in PPNR in the three months ended March 31, 2026 was primarily driven by higher net interest income of $3.7 million, compared to the same prior-year period. The higher net interest income was largely attributable to higher average yields earned on loans, combined with lower average rates paid on interest-bearing deposits.
Previous report
UHERO's February 2026 forecast projects a gradual recovery from last year's mild recession, with growth constrained by weak international tourism offset by modest improvements in consumer spending and the local labor market. Inflation is anticipated to remain uncertain while mortgage rates will remain near 6%. Real personal income is expected to grow by about 1% annually, while real gross domestic product will expand by 1.6%. These projections contemplate greater forecast risks with uncertain trade policy, potential additional federal workforce reductions, and ongoing weakness in international tourism.
Previous report
Visitor spending totaled $4.2 billion in the two months ended February 28, 2026, up 15% from $3.6 billion in the same period in 2025.
Previous report
The February 2026 UHERO report was published prior to the onset of the U.S. conflict with Iran. Any potential impacts from this conflict could have broad-based implications for Hawaii depending on its duration, scope, and intensity, all of which remain uncertain as the situation continues to evolve. Tourism levels may be adversely affected by higher travel costs, as energy prices have increased amid heightened geopolitical tensions in the Middle East, contributing to higher airline fares. Elevated airfare has the potential to raise the overall cost of travel to Hawaii and, if these conditions persist, could moderate growth in visitor demand.
Previous report
In March 2026, the FOMC decided to maintain the target range for the federal funds rate at 3.50% to 3.75% due to the uncertainty about the economic outlook and implications of the developments across the Middle East.
Previous report
Net interest margin was 3.53% for the first quarter of 2026, an increase of 22 bps from 3.31% for the same quarter in 2025. The increase in net interest margin was primarily due to increases in average yields earned on loans combined with the decrease in the average rate paid on interest-bearing deposits. These positive variances were partially offset by a decline in the average yields earned on investments.
Previous report
Total other operating income for the first quarter of 2026 was $11.6 million, which increased by $0.5 million, or 4.3%, from $11.1 million in same quarter in 2025. The increase was primarily driven by income related to a debit card program contract extension consideration of $0.7 million, included in other income.
Previous report
The Company's ACL on loans totaled $59.9 million as of March 31, 2026, compared to $59.6 million as of December 31, 2025 and $60.5 million as of March 31, 2025.
Previous report
During the three months ended March 31, 2026, the Company recorded a provision for credit losses on loans of $2.7 million and net charge-offs of $2.4 million. During the same period in 2025, the Company recorded a provision of $3.9 million and net charge-offs of $2.6 million.
Reworded paragraphs (51)
Previous wording
•the impact of legislative and regulatory developments, including the Dodd-Frank Act, changing capital and consumer protection rules, and new regulations affecting our operations and competitiveness
Current wording
•the impact of legislative and regulatory developments, changing capital and consumer protection rules, and new regulations affecting our operations and competitiveness
Previous wording
•the costs and effects of legal and regulatory proceedings, including actual or threatened litigation and the efforts of governmental and regulatory exams and orders, as well as the costs of ongoing or potential compliance efforts;
Current wording
•the costs and effects of legal and regulatory proceedings, including actual or threatened litigation and the results of governmental and regulatory exams and orders, as well as the costs of ongoing or potential compliance efforts;
Previous wording
As of March 31, 2026, Central Pacific Bank operated 27 branches and 55 ATMs across the State of Hawaii, offering full-service community banking.
Current wording
As of June 30, 2026, Central Pacific Bank operated 27 branches and 56 ATMs across the State of Hawaii, offering full-service community banking.
Previous wording
Central Pacific Bank was founded by World War II veterans who, despite returning home as war heroes, faced limited banking opportunities in Hawaii. In response, they established the Bank to serve individuals and small businesses that lacked access to financial services at the time. This commitment to creating opportunity and serving our community continues in the present day as we strive to deliver exceptional customer service and tailored financial products to meet the unique needs of our customers and the communities we serve. This legacy continues to shape our mission to deliver exceptional customer service and tailored financial products that meet our customers' needs, including:
Current wording
Central Pacific Bank was founded by World War II veterans who, despite returning home as war heroes, faced limited banking opportunities in Hawaii. In response, they established the Bank to serve individuals and small businesses that lacked access to financial services at the time. This legacy continues to guide our commitment to creating opportunities and servicing our community through exceptional customer service and tailored financial products that meet the evolving needs of our customers, including:
Previous wording
•Loans: The Company's loan portfolio includes commercial and industrial loans, commercial mortgages, and construction loans to small and medium-sized businesses, professionals, and real estate investors and developers. The Company also offers residential mortgages, home equity loans, and consumer loans to individuals and homeowners. Lending activities represent a core source of interest income, which is a key driver of our overall revenue. The Company aims to maintain a strong and diversified loan portfolio, primarily in Hawaii, with selective expansion into mainland markets.
Current wording
•Loans: The Company's loan portfolio includes commercial and industrial loans, commercial mortgages, and construction loans to small and medium-sized businesses, professionals, and real estate investors and developers. The Company also offers residential mortgages, home equity loans, and consumer loans to individuals. Lending activities represent a core source of interest income, which is a key driver of our overall revenue. The Company aims to maintain a strong and diversified loan portfolio, primarily in Hawaii, with selective expansion into mainland markets.
Previous wording
•Deposits: The Company offers a comprehensive suite of deposit products and services including checking, savings, and time deposit accounts, as well as cash management solutions and digital banking capabilities. The Company's extensive branch and ATM network across the State of Hawaii supports convenient access for its customers. The interest paid on deposits is a key component of interest expense, which significantly influences overall earnings. In addition, fees and service charges on deposit accounts, along with card interchange contribute meaningfully to non-interest revenue.
Current wording
•Deposits: The Company offers a comprehensive suite of deposit products and services including checking, savings, and time deposit accounts, as well as cash management solutions and digital banking capabilities. The Company's extensive branch and ATM network across the State of Hawaii supports convenient access for its customers. The interest paid on deposits is a key component of interest expense, which significantly influences overall earnings. In addition, fees and service charges on deposit accounts, along with card interchange contribute meaningfully to other operating revenue.
Previous wording
Accounting estimates are deemed critical when a different estimate could reasonably have been used or where changes in the estimate are reasonably likely to occur from period-to-period and would materially impact the consolidated financial statements as of or for the periods presented.
Current wording
Accounting estimates are deemed critical when a different estimate could reasonably have been used, or where changes in the estimate are reasonably likely to occur from period-to-period and would materially impact the consolidated financial statements as of or for the periods presented. Management has reviewed the development and selection of the critical accounting estimates and disclosures noted below with the Audit Committee of the Board of Directors.
Previous wording
For the three months ended March 31, 2026, the Company reported net income of $20.7 million, or $0.78 per diluted share, compared to net income of $17.8 million, or $0.65 per diluted share for the same period in 2025.
Current wording
The Company reported net income of $20.8 million, or $0.80 per diluted share for the three months ended June 30, 2026, compared to net income of $18.3 million, or $0.67 per diluted share for the same period in 2025. Net income for the six months ended June 30, 2026 was $41.5 million, or $1.58 per diluted share, compared to net income of $36.0 million, or $1.33 per diluted share for the six months ended June 30, 2025.
Previous wording
A key measure of operating efficiency monitored by the Company is the efficiency ratio, which is derived from GAAP-based amounts. It is calculated by dividing total other operating expenses by total pre-provision revenue (defined as net interest income plus total other operating income). The Company believes that the efficiency ratio, a non-GAAP financial measure, provides a useful supplemental metric that enhances understanding of its business performance and operating efficiency. However, this ratio should not be viewed as a substitute for GAAP results and may not be comparable to similarly titled measures reported by other companies. The following table presents the Company's efficiency ratio and adjusted efficiency ratio for the periods presented:
Current wording
A key measure of operating efficiency monitored by the Company is the efficiency ratio, which is derived from GAAP-based amounts. It is calculated by dividing total other operating expenses by total pre-provision revenue (defined as net interest income plus total other operating income). The Company believes that the efficiency ratio, a non-GAAP financial measure, provides a useful supplemental metric that enhances understanding of its business performance and operating efficiency. However, this ratio should not be viewed as a substitute for GAAP results and may not be comparable to similarly titled measures reported by other companies. The following table presents the Company's efficiency ratio for the periods presented:
Previous wording
The improvements in the efficiency ratio in the three months ended March 31, 2026, compared to the same periods in 2025, was primarily driven by higher net interest income and other operating income, which more than offset the increase in other operating expense.
Current wording
The improvements in the efficiency ratio in the three and six months ended June 30, 2026, compared to the same periods in 2025, were primarily driven by higher net interest income and other operating income, which more than offset the increases in other operating expense.
Previous wording
The Hawaii State Department of Business, Economic Development and Tourism ("DBEDT") reported that Hawaii's seasonally adjusted unemployment rate was 2.3% in February 2026, slightly lower than 2.6% in January 2025 and well below the national seasonally adjusted unemployment rate of 4.3%. University of Hawaii Economic Research Organization ("UHERO") forecasts Hawaii's seasonally adjusted unemployment rate to remain steady at 2.2%.
Current wording
The Hawaii State Department of Business, Economic Development and Tourism ("DBEDT") reported that Hawaii's seasonally adjusted unemployment rate was 2.6% in June 2026, slightly higher than 2.4% in March 2026 and well below the national seasonally adjusted unemployment rate of 4.2%. University of Hawaii Economic Research Organization ("UHERO") forecasts Hawaii's seasonally adjusted unemployment rate to remain relatively steady at 2.4% for the full year 2026.
Previous wording
Real estate lending, particularly residential and commercial mortgage loans, is a core focus of the Company. Consequently, our performance is closely tied to the health of Hawaii's real estate market. Despite mixed results, Hawaii's housing market remained resilient in the three months ended March 31, 2026. According to the Honolulu Board of Realtors, sales of Oahu single-family homes rose 10.9%, while Oahu condominium sales fell 3.6% for the three months ended March 31, 2026, compared to the same period in 2025. The median sale price of Oahu single-family homes increased 3.4% to $1.2 million in the three months ended March 31, 2026, compared to $1.15 million in the same period in 2025. The median sale price of Oahu condominiums increased by 2.0% to $510,000 in the three months ended March 31, 2026, compared to $500,000 in the same period in 2025.
Current wording
Real estate lending, particularly residential and commercial mortgage loans, is a core focus of the Company. Consequently, our performance is closely tied to the health of Hawaii's real estate market. Despite mixed results, Hawaii's housing market remained resilient in the six months ended June 30, 2026. According to the Honolulu Board of Realtors, sales of Oahu single-family homes rose 8.5%, while Oahu condominium sales fell 9.4% for the six months ended June 30, 2026, compared to the same period in 2025. The median sale price of Oahu single-family homes stayed relatively flat at $1.2 million in the six months ended June 30, 2026, compared to the same period in 2025. The median sale price of Oahu condominiums increased by 4.0% to $520,000 in the six months ended June 30, 2026, compared to $500,000 in the same period in 2025.
Previous wording
According to preliminary data from the Hawaii Tourism Authority ("HTA"), 1.66 million visitors arrived in the Hawaiian Islands during the two months ended February 28, 2026, an increase of 7.2% from 1.55 million visitors during the same period in 2025. Visitor arrivals from Japan are improving with a 6.6% increase year-over-year.
Current wording
According to preliminary data from the DBEDT, 4.18 million visitors arrived in the Hawaiian Islands during the five months ended May 31, 2026, an increase of 2.9% from 4.06 million visitors during the same period in 2025. Visitor arrivals from Japan are improving with a 8.6% increase year-over-year. Visitor spending totaled $9.67 billion in the five months ended May 31, 2026, up 6.2% from $9.11 billion in the same period in 2025.
Previous wording
According to a February 2026 forecast report by UHERO, Hawaii's tourism sector will stabilize. Total visitor arrivals by air are expected to decline by approximately 0.6% to 9.58 million in 2026, down from 9.65 million in 2025. Visitor spending is expected to increase by approximately 0.7% to $21.3 billion in 2026, up from $21.2 billion in 2025. Stagnant tourism volume from Japan is beginning to improve, but faces headwinds with the depreciation of the yen. Tourism from international markets other than Japan face challenges with the deterioration in foreign attitudes toward U.S. domestic and foreign policy. Growth from the U.S. market is expected to bring modest gains.
Current wording
While tourism has performed reasonably well through the start of the year, UHERO's May 2026 report anticipates tourism levels to soften through the rest of the year as jet fuel prices have roughly doubled, coupled with stagnant tourism from international markets, particularly in Japan with the depreciation of the yen. Tourism from international markets other than Japan face challenges with the deterioration in foreign attitudes toward U.S. domestic and foreign policy.
Previous wording
In September 2025, the Federal Open Market Committee ("FOMC") implemented its first rate cut of 2025, reducing the target range by 25 basis points ("bps") to 4.00% to 4.25%. This decision was driven by signs of a weakening labor market and moderated economic growth, despite inflation remaining above the Fed’s 2% target. During the fourth quarter of 2025, the FOMC cut rates twice by 25 bps to a target rate of 3.50% to 3.75% at the end of 2025. The FOMC also signaled the possibility of one more cut in 2026 as they aim to balance employment and inflation goals.
Current wording
In September 2025, the Federal Open Market Committee ("FOMC") implemented its first rate cut of 2025, reducing the target range by 25 basis points ("bps") to 4.00% to 4.25%. This decision was driven by signs of a weakening labor market and moderated economic growth, despite inflation remaining above the Fed’s 2% target. During the fourth quarter of 2025, the FOMC cut rates twice by 25 bps to a target rate of 3.50% to 3.75% at the end of 2025.
Previous wording
A comparison of net interest income and net interest margin on a taxable-equivalent basis for the three months ended March 31, 2026 and 2025 is presented below. Net interest margin is calculated as annualized net interest income, adjusted to a taxable-equivalent basis using a federal statutory tax rate of 21%, expressed as a percentage of average interest-earning assets.
Current wording
A comparison of net interest income and net interest margin on a taxable-equivalent basis for the three and six months ended June 30, 2026 and 2025 is presented below. Net interest margin is calculated as annualized net interest income, adjusted to a taxable-equivalent basis using a federal statutory tax rate of 21%, expressed as a percentage of average interest-earning assets.
Previous wording
For each category of interest-earning assets and interest-bearing liabilities, changes in interest income or expense are analyzed based on two factors: (i) changes in average balances (volume) and (ii) changes in weighted average interest rates (rate). The change in volume is calculated by multiplying the change in average balance by the prior period's average yield or rate. The change in rate is calculated by multiplying the change in average yield or rate by current period's average balance. Any residual change in interest income or expense not solely attributable to volume or rate is allocated proportionately between the two.
Current wording
For each category of interest-earning assets and interest-bearing liabilities, changes in interest income or expense are analyzed based on two factors: (i) changes in average balances (volume) and (ii) changes in weighted average interest rates (rate). The change in volume is calculated by multiplying the change in average balance by the prior period's average yield or rate. The change in rate is calculated by multiplying the change in average yield or rate by current period's average balance. Any residual change in interest income or expense not solely attributable to volume or rate is allocated proportionately between the two factors.
Previous wording
Net interest income (expressed on a taxable-equivalent basis) was $61.5 million for the first quarter of 2026, an increase of $3.7 million, or 6.3% from $57.9 million for the same quarter of 2025. The increase was primarily driven by higher average balances on interest-bearing deposits in other institutions and higher average yields earned on loans, combined with lower average rates paid on interest-bearing deposits and lower average balances on long-term debt due to the repayment of subordinated notes in the fourth quarter of 2025. These positive variances were partially offset by a decline in the average balance and average yields earned on investments.
Current wording
Net interest income (expressed on a taxable-equivalent basis) was $63.0 million for the second quarter of 2026, an increase of $3.0 million, or 5.1% from $60.0 million for the same quarter of 2025. Net interest income (expressed on a taxable-equivalent basis) was $124.6 million for the six months ended June 30, 2026, an increase of $6.7 million or 5.7% from $117.9 million for the same period in 2025. The increases for the three and six month period ending June 30, 2026 were primarily driven by higher average balances on interest-bearing deposits in other institutions, combined with lower average rates paid on interest-bearing deposits which significantly reduced interest expense. These positive variances were partially offset by a decline in the average yield earned on interest-bearing deposits in other financial institutions and the average balance on investment securities which reduced interest income.
Previous wording
Total other operating expense for the first quarter of 2026 was $43.7 million, which increased by $1.6 million, or 3.8%, from $42.1 million for the same quarter in 2025, primarily driven by higher salaries and employee benefits of $1.3 million.
Current wording
Total other operating expense for the second quarter of 2026 was $46.2 million, which increased by $2.2 million, or 5.1%, from $43.9 million for the same quarter in 2025, primarily driven by higher salaries and employee benefits of $2.7 million due to higher deferred compensation expense and incentive accruals, and higher directors' deferred compensation plan expense.
Previous wording
The Company recorded income tax expense of $6.2 million for the first quarter of 2026, compared to $4.8 million for the same quarter in 2025. The increase in income tax expense for the three months ended March 31, 2026 compared to the same period in 2025 is primarily attributable to higher pre-tax income.
Current wording
The Company recorded income tax expense of $6.1 million for the second quarter of 2026, compared to $5.6 million for the same quarter in 2025. For the six months ended June 30, 2026, the Company recorded income tax expense of $12.3 million, compared to $10.4 million for the same period in 2025. The increases in income tax expense were primarily attributable to higher pre-tax income.
Previous wording
The effective tax rate ("ETR") for the first quarter of 2026 was 22.99%, compared to 21.25% for the same quarter in 2025. The increase in the ETR is primarily attributable to lower tax-exempt BOLI income compared to the same period in 2025.
Current wording
The effective tax rate ("ETR") for the second quarter of 2026 was 22.57%, compared to 23.48% for the same quarter in 2025. The decrease in the Company's effective tax rate was primarily attributable to an increase in tax-exempt income.
Previous wording
The Company's net deferred tax assets ("DTAs"), net of valuation allowance, totaled $26.8 million as of March 31, 2026, compared to $23.6 million as of December 31, 2025. These amounts were included in other assets on the Company's consolidated balance sheets.
Current wording
The Company's net deferred tax asset ("DTA"), net of valuation allowance, totaled $24.8 million as of June 30, 2026, compared to $23.6 million as of December 31, 2025. These amounts were included in other assets on the Company's consolidated balance sheets.
Previous wording
Total assets were $7.50 billion as of March 31, 2026, an increase of $86.1 million, or 1.2%, from $7.41 billion as of December 31, 2025. The increase was primarily driven by increases in loans, interest-bearing deposits in other financial institutions, and investment securities.
Current wording
Total assets were $7.50 billion as of June 30, 2026, an increase of $91.8 million, or 1.2%, from $7.41 billion as of December 31, 2025. The increase was primarily driven by increases in investment securities and loans.
Previous wording
Investment securities totaled $1.33 billion as of March 31, 2026, an increase of $23.1 million, or 1.8%, from $1.31 billion as of December 31, 2025. The increase in the investment securities portfolio reflected net purchases of $48.9 million, and amortization of unrecognized losses on investment securities transferred to HTM of $1.5 million, partially offset by principal runoff and net accretion of discount totaling $24.7 million, and a $2.6 million decrease in the market valuation of the AFS portfolio.
Current wording
Investment securities totaled $1.38 billion as of June 30, 2026, an increase of $70.0 million, or 5.3%, from $1.31 billion as of December 31, 2025. The increase in the investment securities portfolio reflected purchases of $125.1 million, and amortization of unrecognized losses on investment securities transferred to HTM of $3.2 million, partially offset by principal runoff and net accretion of discount totaling $52.4 million, and a $5.9 million decrease in the market valuation of the AFS portfolio.
Previous wording
The Company strategically supplements its Hawaii loan portfolio by selectively pursuing commercial, commercial real estate, and consumer loan opportunities on the U.S. Mainland. This approach supports growth, enhances geographic, asset class and rate type diversification, generally provides higher yields, while maintaining the Company's disciplined credit standards and underwriting practices.
Current wording
The Company strategically supplements its Hawaii loan portfolio by selectively pursuing commercial, construction, commercial real estate, and consumer loan opportunities on the U.S. Mainland. This approach supports growth, enhances geographic, asset class and rate type diversification, generally provides higher yields, while maintaining the Company's disciplined credit standards and underwriting practices.
Previous wording
Loans, net of deferred costs, totaled $5.32 billion as of March 31, 2026, an increase of $31.3 million, or 0.6%, from $5.29 billion as of December 31, 2025. The increase was primarily driven by an increase in commercial mortgage loans of $109.3 million, partially offset by decreases in residential mortgage loans of $32.2 million, home equity loans of $17.7 million, consumer loans of $15.5 million, and construction loans of $8.8 million.
Current wording
Loans, net of deferred costs, totaled $5.31 billion as of June 30, 2026, an increase of $19.2 million, or 0.4%, from $5.29 billion as of December 31, 2025. The increase was primarily driven by an increase in commercial mortgage loans of $91.9 million, partially offset by decreases in residential mortgage loans of $23.8 million, home equity loans of $22.8 million, consumer loans of $19.7 million, commercial and industrial loans of $4.2 million, and construction loans of $2.2 million.
Previous wording
The Hawaii loan portfolio decreased by $58.7 million, or 1.3%, from December 31, 2025. The decrease was primarily due to decreases in residential mortgage loans of $32.2 million, construction loans of $25.4, and home equity loans of $17.7 million. These decreases were partially offset by an increase in commercial mortgage loans of $26.0 million.
Current wording
The Hawaii loan portfolio decreased by $78.2 million, or 1.8%, from December 31, 2025. The decrease was primarily due to decreases in construction loans of $37.9 million, residential mortgage loans of $23.8 million, home equity loans of $22.8 million, consumer of $10.9 million. These decreases were partially offset by increases in commercial and industrial loans of $8.8 million, and commercial mortgage loans of $8.5 million.
Previous wording
The U.S. Mainland loan portfolio increased by $89.9 million, or 11.0%, from December 31, 2025. The increase was primarily driven by increases in commercial mortgage loans of $83.3 million and construction loans of $16.6 million, partially offset by a decrease in consumer loans of $8.3 million. During the three months ended March 31, 2026, the Company purchased $15.8 million in U.S. Mainland consumer automobile loans, which were largely offset by portfolio runoff.
Current wording
The U.S. Mainland loan portfolio increased by $97.5 million, or 11.9%, from December 31, 2025. The increase was primarily driven by increases in commercial mortgage loans of $83.4 million and construction loans of $35.7 million, partially offset by decreases in commercial and industrial loans of $13.0 million and consumer loans of $8.7 million. During the six months ended June 30, 2026, the Company purchased $39.3 million in U.S. Mainland consumer automobile loans, which were largely offset by portfolio runoff.
Previous wording
Nonperforming Assets and Accruing Loans 90+ Days Past Due
Current wording
Nonperforming Assets and Accruing Loans 90 Days or More Past Due
Previous wording
The following table presents nonperforming assets and accruing loans 90+ days past due as of the dates presented:
Current wording
The following table presents nonperforming assets ("NPAs") and accruing loans 90 days or more past due as of the dates presented:
Previous wording
Nonperforming assets totaled $14.5 million, or 0.19% of total assets as of March 31, 2026, compared to $14.4 million, or 0.19% of total assets as of December 31, 2025.
Current wording
Nonperforming assets totaled $16.5 million, or 0.22% of total assets as of June 30, 2026, compared to $14.4 million, or 0.19% of total assets as of December 31, 2025.
Previous wording
Criticized loans increased by $27.6 million from December 31, 2025 to $98.7 million, or 1.9% of total loans, as of March 31, 2026 . Within criticized loans, special mention loans increased by $1.6 million to $5.2 million, or 0.1% of total loans and classified loans increased by $26.0 million to $93.6 million, or 1.8% of total loans.
Current wording
Criticized loans increased by $52.8 million from December 31, 2025 to $124.0 million, or 2.3% of total loans, as of June 30, 2026. Within criticized loans, special mention loans increased by $5.5 million to $9.1 million, or 0.2% of total loans and classified loans increased by $47.3 million to $114.9 million, or 2.2% of total loans. The increase in criticized loans during the six months ended June 30, 2026 was primarily driven by the downgrades of two commercial lending relationships due to borrower-specific factors. The relationships consisted of loans with aggregate outstanding balances of $24.6 million and $23.4 million, respectively. The increase was attributable to the unique circumstances of these borrowers and we believe was not reflective of broad-based deterioration in overall portfolio credit quality. The loans within these relationships remain well-collateralized, and management continues to closely monitor the credits and related collateral values.
Previous wording
The Company's ratio of classified assets and other real estate owned to Tier 1 capital plus the ACL was 11.82% as of March 31, 2026, which increased from 8.56% as of December 31, 2025.
Current wording
The Company's ratio of classified assets and other real estate owned to Tier 1 capital plus the ACL was 14.57% as of June 30, 2026, which increased from 8.56% as of December 31, 2025.
Previous wording
The ACL as a percentage of total loans was 1.13% as of March 31, 2026, compared to 1.13% as of December 31, 2025 and 1.13% as of March 31, 2025.
Current wording
The ACL as a percentage of total loans was 1.14% as of June 30, 2026, compared to 1.13% as of December 31, 2025 and 1.13% as of June 30, 2025.
Previous wording
The following table presents the ratio of annualized net charge-offs (recoveries) to average loans by loan class for the periods presented:
Current wording
The following table presents the ratio of annualized net charge-offs (recoveries) by loan class to average loans for the periods presented:
Previous wording
The Company's deposit portfolio is well-diversified and reflects a long-standing commitment to relationship-based banking. As of March 31, 2026, approximately 53% of deposit customers have maintained accounts with the Bank for over 10 years, underscoring the stability and loyalty of the customer base.
Current wording
The Company's deposit portfolio is well-diversified and reflects a long-standing commitment to relationship-based banking. As of June 30, 2026, approximately 54% of deposit customers have maintained accounts with the Bank for over 10 years, underscoring the stability and loyalty of the customer base.
Previous wording
Total deposits were $6.70 billion as of March 31, 2026, an increase of $89.6 million, or 1.4%, from $6.61 billion as of December 31, 2025. The Company did not hold any wholesale, brokered, or listing service deposits as of March 31, 2026.
Current wording
Total deposits were $6.70 billion as of June 30, 2026, an increase of $86.0 million, or 1.3%, from $6.61 billion as of December 31, 2025. The Company did not hold any wholesale, brokered, or listing service deposits as of June 30, 2026.
Previous wording
Core deposits, which we define as demand deposits, savings and money market deposits, and time deposits up to $250,000, totaled $6.13 billion as of March 31, 2026, an increase of $74.9 million, from $6.06 billion as of December 31, 2025. Core deposits represented 91.6% of total deposits as of March 31, 2026, compared to 91.7% as of December 31, 2025.
Current wording
Core deposits, which we define as demand deposits, savings and money market deposits, and time deposits up to $250,000, totaled $6.12 billion as of June 30, 2026, an increase of $64.3 million, from $6.06 billion as of December 31, 2025. Core deposits represented 91.5% of total deposits as of June 30, 2026, compared to 91.7% as of December 31, 2025.
Previous wording
The average cost of total deposits was 90 bps in the first quarter of 2026, compared to 108 bps in the same quarter in 2025.
Current wording
The average cost of total deposits was 90 bps in the second quarter of 2026, compared to 102 bps in the same quarter in 2025. For the six months ended June 30, 2026, the average cost of total deposits was 90 bps, compared to 105 bps in the same period in 2025.
Previous wording
All deposits are insured up to applicable limits by the Deposit Insurance Fund of the FDIC. Estimated uninsured deposits totaled $2.81 billion, or 42% of total deposits, as reported in the Company's FDIC Call Report as of March 31, 2026, compared to $2.78 billion, or 42% of total deposits as of December 31, 2025.
Current wording
All deposits are insured up to applicable limits by the Deposit Insurance Fund of the FDIC. Estimated uninsured deposits totaled $2.83 billion, or 42% of total deposits, as reported in the Company's Federal Financial Institutions Examination Council ("FFIEC") Call Report as of June 30, 2026, compared to $2.78 billion, or 42% of total deposits as of December 31, 2025.
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Previous report — wording carried elsewhere
Management has reviewed the development and selection of the critical accounting estimates and disclosures noted below with the Audit Committee of the Board of Directors.