CENTRAL PACIFIC FINANCIAL CORP
For the period ended Sep 30, 2026. Filed Oct 28, 2026.
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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.
Sep 30, 2026 · Filed Oct 28, 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 2026-06-30; filed 2026-08-06.
0000701347-26-000068
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-10-28.
0000701347-26-000077
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 172 previous paragraphs and 180 current paragraphs.
110 unchanged; 50 reworded; 20 added; 11 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 21 previous and 25 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 (20)
Current report
•our ability to successfully manage the risks associated with any of the foregoing items.
Current report
During the three months ended September 30, 2026, the Company recorded a provision for credit losses of $1.9 million, compared to a provision of $4.2 million during the same period of 2025. The provision for credit losses for the three months ended September 30, 2026 included a provision for credit losses on loans of $1.9 million, offset by a credit to the reserve for off-balance sheet credit exposures of $37 thousand. The provision for credit losses for the same period of 2025 included a provision for credit losses on loans of $3.4 million, and an increase to the reserve for off-balance sheet credit exposures of $0.7 million.
Current report
The decrease in the provision for credit losses in the three months ended September 30, 2026, compared to the same period of 2025 was primarily driven by lower reserve requirements resulting from changes in portfolio composition and loan-level credit characteristics. The decrease was also consistent with improved credit quality indicators, including lower nonaccrual loan balances. These favorable factors were partially offset by qualitative reserve requirements related to problem loan trends, and other portfolio-specific risks.
Current report
During the nine months ended September 30, 2026, the Company recorded a provision for credit losses of $8.6 million, compared to a provision of $13.3 million during the same period of 2025. The provision for credit losses for the nine months ended September 30, 2026 included a provision for credit losses on loans of $8.0 million, and an increase to the reserve for off-balance sheet credit exposures of $0.7 million. The provision for credit losses for the same period of 2025 included a provision for credit losses on loans of $11.2 million, and an increase to the reserve for off-balance sheet credit exposures of $2.2 million.
Current report
The decrease in the provision for credit losses in the nine months ended September 30, 2026, compared to the same period of 2025 was primarily driven by decreases in loans and net charge-offs. These decreases were partially offset by the continued application of qualitative reserves to address forecast uncertainty and certain portfolio-specific credit risks.
Current report
The following reconciling adjustment from GAAP to non-GAAP adjusted financial measures include a net pre-tax expenses of $1.5 million related to the consolidation of the Company's former operations center into its main office during the three months ended September 30, 2025.
Current report
Management does not consider this transaction to be representative of the Company's core operating performance. The related income tax effect was calculated using an assumed effective tax rate of 23%.
Current report
Adjusted Net Income and Diluted Earnings per Share
Current report
The following table presents a reconciliation of the Company's non-GAAP adjusted net income and adjusted diluted EPS for the periods presented, excluding the reconciling adjustments discussed above:
Current report
Adjusted Return on Average Assets and Adjusted Return on Average Shareholders' Equity
Current report
The following table presents a calculation of the Company's non-GAAP adjusted ROA and adjusted ROE for the periods presented, excluding the reconciling adjustments discussed above:
Current report
According to UHERO, inflation is expected to average 4.8% in 2026 before falling to 3.3% in 2027, driven by the impact of high oil prices due to the U.S. conflict with Iran. UHERO expects, Hawaii's Real GDP to grow 0.5% this year which has slowed due to the impact of oil prices and an unusually active storm season.
Current report
Construction remains a significant contributor to the economy through large federal military projects, the Honolulu Skyline rail project, and private condominium development.
Current report
Net interest margin was 3.62% for the third quarter of 2026, an increase of 13 bps from 3.49% for the same quarter of 2025. Net interest margin was 3.57% for the nine months ended September 30, 2026, an increase of 16 bps from 3.41% in the same period of 2025.
Current report
The increase in net interest margin ("NIM") for the three months ended September 30, 2026 was primarily attributable to lower funding costs of 23 bps, reflecting declines in rates paid on interest-bearing deposits of 19 bps and lower interest expense on long-term debt. Deposit costs benefited from the repricing of interest-bearing deposit accounts and maturing time deposits at lower rates compared to the prior year period. In addition, the payoff of long-term debt and lower rates on the remaining balances reduced borrowing costs. While earning-asset yields remained relatively stable compared to the prior year, the reduction in funding costs more than offset the modest decline in asset yields, resulting in an expansion of net interest margin.
Current report
The increase in NIM for the nine months ended September 30, 2026 was also primarily driven by lower funding costs of 25 bps, reflecting declines in rates paid on interest-bearing deposits of 20 bps and reduced interest expense on long-term debt. Deposit repricing throughout 2026 allowed the Company to lower rates on certain deposit products as higher-cost balances matured or repriced, while the payoff of long-term debt further reduced interest expense. Earning-asset yields were generally stable compared to the prior year period as the increases in average yields earned on investment securities of 1 bp and loans of 2 bp was partially offset by the 72 bp decline in average yields earned on interest-bearing deposits in other financial institutions. Therefore the improvement in NIM was driven predominantly by the reduction in the overall cost of funds.
Current report
$179.4 million for the same period of 2025. The increase for the third quarter of 2026 was primarily driven by the higher average balance on interest-bearing deposits in other financial institutions, and the higher average balance and yield earned on investment securities, combined with the lower average rate paid on interest-bearing deposits and the lower average balance and rate paid on long-term debt. These positive variances were partially offset by the decrease in the average rate earned on interest-bearing deposits in other financial institutions, combined with the decline in the average loan balance.
Current report
The increase for the nine months ended September 30, 2026 was primarily driven by the increase in average interest-bearing deposits in other financial institutions, combined with the lower average rate paid on interest-bearing deposits and lower average balance and rate paid on long-term debt. These positive variances were partially offset by the decrease in the average yield earned on interest-bearing deposits in other financial institutions, combined with the lower average investment securities and loan balances.
Current report
Total other operating income for the nine months ended September 30, 2026 was $38.6 million, which increased by $0.9 million, or 2.5%, from $37.6 million for the same period of 2025. The increase was primarily due to increases in debit card program extension consideration (included in other operating income-other) of $1.2 million, service charges on deposits accounts of $0.4 million, and other service charges and fees of $0.4 million, partially offset by decreases in BOLI income of $0.7 million, and mortgage banking income of $0.4 million.
Current report
Total other operating expense for the third quarter of 2026 was $44.8 million, which decreased by $2.2 million, or 4.8%, from $47.0 million for the same quarter of 2025, primarily driven by a one-time expense of $1.5 million related to the operations center consolidation in the third quarter of 2025, combined with lower directors' deferred compensation plan expense of $0.7 million and lower salaries and employee benefits of $0.6 million. The lower salaries and employee benefits and directors' deferred compensation plan expense was primarily due to lower deferred compensation expense related to equity market performance.
Removed paragraphs (11)
Previous report
•changes in our personnel, organization, compensation, and benefit plans;
Previous report
•our success at managing the risks involved in the foregoing items.
Previous 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.
Previous report
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 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.
Previous 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.
Previous report
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 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.
Previous 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.
Previous report
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 report
For the six months ended June 30, 2026, the ETR was 22.78%, compared to 22.39% for the same period in 2025.
Reworded paragraphs (50)
Previous wording
Certain statements contained in this quarterly report on Form 10-Q that are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"), notwithstanding that such statements are not specifically identified. In addition, certain statements may be contained in our future filings with the U.S. Securities and Exchange Commission ("SEC"), in press releases and in oral and written statements made by us or with our approval that are not statements of historical fact and constitute forward-looking statements within the meaning of the Act.
Current wording
Certain statements contained in this quarterly report on Form 10-Q that are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"), notwithstanding that such statements are not specifically identified. In addition, certain statements may be contained in our future filings with the U.S. Securities and Exchange Commission ("SEC"), in press releases and in oral and written statements made by us or with our approval that are not statements of historical fact constitute forward-looking statements within the meaning of the Act.
Previous wording
Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, capital expenditures, payment or nonpayment of dividends, net interest income, capital position, credit losses, net interest margin or other financial items; (ii) statements of plans, objectives, and expectations of Central Pacific Financial Corp. (the "Company") or its management or Board of Directors, including those relating to business plans, use of capital resources, products or services, and regulatory developments or actions; (iii) statements of future economic performance including anticipated performance results from our business initiatives; and (iv) any statements of the assumptions underlying or relating to any of the foregoing.
Current wording
Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, capital expenditures, payment or nonpayment of dividends, net interest income, capital levels, credit losses, net interest margin, liquidity, and other financial items; (ii) statements of plans, objectives, and expectations of Central Pacific Financial Corp. (the "Company") or its management or Board of Directors, including those relating to business strategies, use of capital, products or services, technology initiatives, acquisitions, and regulatory developments or actions; (iii) statements concerning future economic performance and anticipated results from our business initiatives and strategic objectives; and (iv) statements regarding assumptions underlying or relating to any of the foregoing.
Previous wording
Words such as "believe," "plan," "anticipate," "aim," "seek," "expect," "intend," "forecast," "hope," "target," "continue," "remain," "estimate," "will," "should," "may," and other similar expressions are intended to identify forward-looking statements, although such terminology is not the exclusive means of doing so.
Current wording
Words such as "believe," "plan," "anticipate," "aim," "seek," "expect," "intend," "forecast," "hope," "target," "continue," "remain," "estimate," "will," "should," "may," "could," "would," and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words.
Previous wording
While we believe that our forward-looking statements and their underlying assumptions are reasonably based, such statements are inherently subject to risks and uncertainties that may cause actual results to differ materially from expectations. Factors that may lead to such differences include, but are not limited to:
Current wording
While we believe that our forward-looking statements and the assumptions underlying them are reasonable, such statements are inherently subject to significant risks and uncertainties that are difficult to predict and are beyond our control. Actual results may differ materially from those expressed or implied by such forward-looking statements as a result of numerous factors, including, but are not limited to:
Previous wording
•the impact of the current U.S. administration's economic policies, including potential international tariffs, geopolitical instability, trade tensions, and other cost-cutting or fiscal initiatives;
Current wording
•the impact of the current U.S. administration's economic policies, including potential international tariffs, geopolitical instability, trade tensions, fiscal policy changes, cost-cutting, and other governmental initiatives;
Previous 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;
Current wording
•the costs and effects of legal and regulatory proceedings, including actual or threatened litigation and the results of governmental and regulatory examinations and orders, as well as the costs of ongoing or potential compliance efforts;
Previous wording
•the effect of accounting standard changes adopted by regulatory agencies, the Public Company Accounting Oversight Board ("PCAOB"), or the Financial Accounting Standards Board ("FASB"), and the cost and resources associated with implementation;
Current wording
•the effect of accounting standard changes adopted by regulatory agencies, the Securities and Exchange Commission ("SEC"), the Public Company Accounting Oversight Board ("PCAOB"), or the Financial Accounting Standards Board ("FASB"), and the cost and resources associated with implementation;
Previous wording
•increased competition among financial institutions, and other financial service providers;
Current wording
•increased competition from banks, credit unions, fintech companies, nonbank lenders, and other financial service providers;
Previous wording
•the effects and cost of acquisitions, dispositions, or strategic transactions we may make or evaluate;
Current wording
•the effects and cost of acquisitions, dispositions, strategic investments, business combinations, restructurings, or other strategic transactions we may pursue or evaluate;
Previous wording
•shifts in consumer spending, borrowings and savings behaviors;
Current wording
•shifts in consumer spending, borrowing and savings behaviors;
Previous wording
•deficiencies in our internal controls over financial reporting or disclosure controls and procedures, and our ability to remediate them;
Current wording
•deficiencies in our internal control over financial reporting or disclosure controls and procedures, and our ability to remediate them;
Previous wording
•our ability to attract and retain key personnel;
Current wording
•changes in management, directors, key personnel, organizational structure, compensation programs, employee benefit plans, or our ability to attract and retain qualified personnel;
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 other operating 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 income contribute meaningfully to other operating revenue.
Previous 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.
Current wording
The Company reported net income of $22.8 million, or $0.88 per diluted share for the three months ended September 30, 2026, compared to net income of $18.6 million, or $0.69 per diluted share for the same period of 2025. Net income for the nine months ended September 30, 2026 was $64.3 million, or $2.46 per diluted share, compared to net income of $54.6 million, or $2.01 per diluted share for the nine months ended September 30, 2025.
Previous wording
To supplement its consolidated financial information, the Company utilizes certain non-GAAP financial measures. These measures are not intended to be considered in isolation or as a substitute for comparable GAAP results. The Company believes these non‑GAAP financial measures provide meaningful insight into its financial performance and position by excluding transactions that may be non‑recurring, non‑operational, or not indicative of ongoing results. These measures are used by management and investors to evaluate performance trends over time, support period‑to‑period comparisons, and assess historical results and future performance.
Current wording
To supplement its consolidated financial information, the Company utilizes certain non-GAAP financial measures. These measures are not intended to be considered in isolation or as a substitute for comparable GAAP results. The Company believes these non‑GAAP financial measures provide meaningful insight to investors and other stakeholders in understanding its financial performance and position, by excluding certain transactions that may be non-recurring, non-operational, or not indicative of ongoing results. The Company also believes that these non-GAAP measures offer a useful perspective for evaluating performance trends over time and are intended to support period-to-period comparisons. In addition, the Company believes they are valuable tools for both investors and management in assessing historical results and forecasting future performance. Non-GAAP financial measures may not be comparable to similarly titled measures reported by other companies. The results for the three and nine months ended September 30, 2026 were not materially impacted by items outside of the normal course of business.
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 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. The following table presents the Company's efficiency ratio for the periods presented:
Previous 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.
Current wording
The Hawaii State Department of Business, Economic Development and Tourism ("DBEDT") reported that Hawaii's seasonally adjusted unemployment rate was 2.8% in September 2026, higher than 2.2% in December 2025, but 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 2.5% 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 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.
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 nine months ended September 30, 2026. According to the Honolulu Board of Realtors, sales of Oahu single-family homes rose 6.2%, while Oahu condominium sales fell 8.1 % for the nine months ended September 30, 2026, compared to the same period of 2025. The median sale price of Oahu single-family homes stayed relatively flat at $1.2 million in the nine months ended September 30, 2026, compared to $1.1 million in the same period of 2025. The median sale price of Oahu condominiums increased by 2.0% to $515,000 in the nine months ended September 30, 2026, compared to $505,000 in the same period of 2025.
Previous 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.
Current wording
According to preliminary data from the DBEDT, 6.69 million visitors arrived in the Hawaiian Islands during the eight months ended August 31, 2026, an increase of 1.8% from 6.57 million visitors during the same period of 2025. Visitor arrivals from Japan are modestly improving with a 0.8% increase year-over-year. Visitor spending totaled $15.21 billion in the eight months ended August 31, 2026, up 4.1% from $14.62 billion in the same period of 2025.
Previous 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.
Current wording
While tourism has performed reasonably well through the start of the year, UHERO's September 2026 report anticipates tourism levels to face headwinds with surging fuel costs and the impact of multiple storms. Tourism from international markets continues to face challenges due to tariff disputes, exchange rate movements, and cross-border tensions.
Previous wording
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 wording
Throughout the first eight months of 2026, the FOMC maintained the target range for the federal funds rate at 3.50% to 3.75%. While economic activity continued to expand at a solid pace, inflation remained above the Federal Reserve's target and uncertainty surrounding the economic outlook persisted. At its September 16, 2026 meeting, the FOMC increased the target range for the federal funds rate by 25 bps to 3.75% to 4.00%, citing elevated inflation, resilient domestic spending, strong productivity growth, robust capital investment, and a stable labor market. The Committee also indicated that additional rate increases may be warranted depending on future economic conditions and inflation trends.
Previous 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.
Current wording
A comparison of net interest income and net interest margin on a taxable-equivalent basis for the three and nine months ended September 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
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.
Current wording
Net interest income (expressed on a taxable-equivalent basis) was $64.7 million for the third quarter of 2026, an increase of $3.2 million, or 5.1% from $61.5 million for the same quarter of 2025. Net interest income (expressed on a taxable-equivalent basis) was $189.2 million for the nine months ended September 30, 2026, an increase of $9.8 million or 5.5% from
Previous wording
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 wording
Total other operating income for the third quarter of 2026 was $12.4 million, which decreased by $1.2 million, or 8.5%, from $13.5 million in same quarter of 2025. The decrease was primarily due to a decrease in income from bank-owned life insurance ("BOLI") of $1.3 million. 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 decreases in deferred compensation expense in other operating expenses.
Previous wording
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 wording
Total other operating expense for the nine months ended September 30, 2026 was $134.6 million, which increased by $1.6 million, or 1.2%, from $133.0 million for the same period of 2025. The increase was primarily driven by higher salaries and employee benefits of $3.3 million, partially offset by a one-time expense of $1.5 million related to the operations center consolidation in the third quarter of 2025, and decreases in legal and professional services of $0.5 million, equipment expenses of $0.4 million, and directors' fees and expense of $0.3 million. The higher salaries and employee benefits were primarily due to merit increases and higher commissions.
Previous 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.
Current wording
The Company recorded income tax expense of $7.4 million for the third quarter of 2026, compared to $5.1 million for the same quarter of 2025. For the nine months ended September 30, 2026, the Company recorded income tax expense of $19.7 million, compared to $15.5 million for the same period of 2025. The increases in income tax expense were primarily attributable to higher pre-tax income.
Previous 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.
Current wording
The effective tax rate ("ETR") for the third quarter of 2026 was 24.50%, compared to 21.44% for the same quarter of 2025. For the nine months ended September 30, 2026, the ETR was 23.40%, compared to 22.07% for the same period of 2025. The increases in the Company's effective tax rate were primarily attributable to higher pre-tax income and lower tax-exempt income.
Previous 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.
Current wording
The Company's net deferred tax asset ("DTA"), net of valuation allowance, totaled $31.9 million as of September 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. The increase in net DTA was primarily driven by the decrease in the fair value of the available-for-sale ("AFS") investment portfolio due to the rise in market interest rates.
Previous 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.
Current wording
Total assets were $7.45 billion as of September 30, 2026, an increase of $40.4 million, or 0.5%, from $7.41 billion as of December 31, 2025. The increase was primarily driven by increases in investment securities of $30.8 million, loans of $24.0 million, and net DTA (included in other assets) of $8.3 million.
Previous 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.
Current wording
Investment securities totaled $1.34 billion as of September 30, 2026, an increase of $30.8 million, or 2.4%, from $1.31 billion as of December 31, 2025. The increase in the investment securities portfolio reflected purchases of $162.6 million and amortization of unrecognized losses on investment securities transferred to held-to-maturity ("HTM") of $5.0 million, partially offset by principal runoff and net accretion of discount totaling $101.0 million, and a $35.8 million decrease in the market valuation of the AFS portfolio.
Previous wording
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 wording
The average taxable-equivalent yield earned on investment securities was 2.94% in the third quarter of 2026, compared to 2.87% in the same quarter of 2025. For the nine months ended September 30, 2026, the average taxable-equivalent yield earned on investment securities was 2.85%, compared to 2.84% in the same period of 2025. The increase in the average yield earned on investment securities was primarily due to higher yields earned on new investment purchases, partially offset by lower income recognized from the Company’s interest rate swap.
Previous 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.
Current wording
Loans, net of deferred costs, totaled $5.31 billion as of September 30, 2026, an increase of $24.0 million, or 0.5%, from $5.29 billion as of December 31, 2025. The increase was primarily driven by an increase in commercial mortgage loans of $118.6 million, partially offset by decreases in residential mortgage loans of $36.8 million, home equity loans of $32.0 million, commercial and industrial loans of $16.0 million, and consumer loans of $13.7 million.
Previous 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.
Current wording
The Hawaii loan portfolio decreased by $123.0 million, or 2.8%, from December 31, 2025. The decrease was primarily due to decreases in construction loans of $55.5 million, residential mortgage loans of $36.8 million, home equity loans of $32.0 million, and consumer loans of $11.8 million. These decreases were partially offset by increases in commercial mortgage loans of $11.8 million and commercial and industrial loans of $1.4 million.
Previous 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.
Current wording
The U.S. Mainland loan portfolio increased by $146.9 million, or 17.9%, from December 31, 2025. The increase was primarily driven by increases in commercial mortgage loans of $106.8 million and construction loans of $59.4 million, partially offset by decreases in commercial and industrial loans of $17.4 million and consumer loans of $1.9 million. During the nine months ended September 30, 2026, the Company purchased $70.5 million in U.S. Mainland consumer automobile loans, which were largely offset by portfolio runoff.
Previous wording
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.
Current wording
The average yield earned on loans was 5.01% in the third quarter of 2026, relatively consistent from the same quarter of 2025. For the nine months ended September 30, 2026, the average yield earned on loans was 4.97%, compared to 4.95% in the same period of 2025. The increase in the average yield earned in the nine months ended September 30, 2026 was primarily due to higher new production loan yields compared to runoff yields.
Previous 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.
Current wording
Nonperforming assets totaled $14.0 million, or 0.19% of total assets as of September 30, 2026, compared to $14.4 million, or 0.19% of total assets as of December 31, 2025.
Previous 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.
Current wording
Criticized loans increased by $25.4 million from December 31, 2025 to $96.6 million, or 1.8% of total loans, as of September 30, 2026. Within criticized loans, special mention loans increased by $2.1 million to $5.7 million, or 0.1% of total loans and classified loans increased by $23.3 million to $90.8 million, or 1.7% of total loans. The increase in classified and criticized loans during the nine months ended September 30, 2026 was primarily driven by the downgrade of a commercial lending relationship due to borrower-specific factors. The relationship consisted of loans with an aggregate outstanding balance of $20.7 million. The increase was attributable to the unique circumstances of the borrower and we believe was not reflective of broad-based deterioration in overall portfolio credit quality. The loans continue to perform and 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 14.57% as of June 30, 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 11.49% as of September 30, 2026, which increased from 8.56% as of December 31, 2025.
Previous 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.
Current wording
The ACL as a percentage of total loans was 1.13% as of September 30, 2026, compared to 1.13% as of December 31, 2025 and 1.13% as of September 30, 2025.
Previous 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.
Current wording
Total deposits were $6.66 billion as of September 30, 2026, an increase of $54.1 million, or 0.8%, from $6.61 billion as of December 31, 2025. The Company did not hold any wholesale, brokered, or listing service deposits as of September 30, 2026.
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Previous report — wording carried elsewhere
Non-GAAP financial measures may not be comparable to similarly entitled measures reported by other companies. The results for the three months ended June 30, 2026 were not materially impacted by items outside of the normal course of business.