Central Pacific Financial Corp. CPB (NYSE:CPF) reported improved profitability in the fourth quarter of 2025, driven by higher net interest income, continued net interest margin expansion, and lower operating expenses compared to the prior quarter. Management also highlighted stable credit quality indicators, ongoing balance sheet repositioning toward commercial lending, and additional capital return actions heading into 2026.
Fourth-quarter results and full-year performance
For the fourth quarter, the company reported net income of $22.9 million, or $0.85 per diluted share, compared with $18.6 million, or $0.69 per diluted share, in the prior quarter. Return on average assets was 1.25% and return on average equity was 15.41%.
CEO Arnold Martines said the company ended the year with “strong momentum” in the fourth quarter and “solid overall performance in 2025,” pointing to revenue growth, margin expansion, and proactive expense management. He also cited a three-year total shareholder return of 77%, reflecting share price appreciation and dividends.
Net interest income and margin trends
Net interest income rose 1.3% from the prior quarter to $62.1 million, while net interest margin expanded 7 basis points to 3.56%. CFO Dayna Matsumoto attributed the quarterly improvement to a reduction in deposit costs and relatively stable loan yields. Deposit costs declined 8 basis points to 0.94%, while total loan yields declined 2 basis points to 4.99%.
Matsumoto said the company experienced approximately $250 million of loan portfolio runoff in the fourth quarter, but noted that the weighted average new loan yield during the quarter was 6.8%, compared with the weighted average portfolio yield of 4.99%.
Looking ahead, management guided to a 4% to 6% increase in net interest income for full-year 2026 and said it expects net interest margin to expand, though at a slower pace than in 2025. For the first quarter of 2026, the company expects margin expansion of approximately 2 to 5 basis points.
In the Q&A, Matsumoto said the deposit spot rate at Dec. 31 was 89 basis points. She also discussed deposit betas, saying the company’s cycle-to-date interest-bearing deposit beta is about 30% and that, with an outlook for two rate cuts during the year, management anticipates the cycle-to-date beta will remain roughly in the 25% to 30% range. She added the company believes it has room to lower deposit costs further to offset floating-rate assets.
Loan and deposit trends, plus 2026 growth outlook
On the balance sheet, Vice Chairman and COO David Morimoto said total core deposits grew $78 million during the quarter, with “meaningful gains” in interest-bearing demand, savings, and money market balances. He added that non-interest-bearing demand deposits remained 29% of total deposits.
Loans declined in the quarter, with Morimoto saying the total loan portfolio fell $78 million from the prior quarter, driven by several large construction and commercial mortgage payoffs as well as delays in certain new loan fundings into the first half of 2026. For full-year 2025, total loans declined $44 million. Morimoto said the annual decline reflected a $190 million decrease in residential mortgage, home equity, and consumer portfolios, partially offset by growth in commercial mortgage and construction.
During the Q&A, Morimoto said delayed loan closings were likely weighted more toward the second quarter than the first, and would include a mix of funded deals and construction. He also described a typical seasonal slowdown in the first quarter, saying the company expects loan growth to start slower and then accelerate through the year.
Morimoto said fourth-quarter loan originations were “in the $300 million range,” adding that originations at that level would keep the portfolio “relatively flat to slightly down,” implying a need for higher originations to produce net growth. He attributed elevated payoffs and paydowns primarily to the size of the construction portfolio, noting that payoffs can have an outsized impact when the portfolio is smaller. He said the bank is focused on building “critical mass” in construction to help offset paydowns with new draws.
For 2026, management guided to low single-digit percentage net loan and deposit growth. Morimoto said the loan pipeline remained consistent with past levels and reiterated the bank’s focus on its core Hawaii market, supplemented by select mainland markets for diversification. He also said deposit growth will be driven by deepening relationships in Hawaii and strategic partnerships in Japan and Korea.
Fees, expenses, capital return, and credit quality
Other operating income was $14.2 million, up $0.7 million from the prior quarter, primarily due to a $0.9 million increase in bank-owned life insurance income. The company recognized $1.4 million of full death benefit income during the quarter. Management expects other operating income to rise 1% to 2% in 2026 versus 2025 normalized levels.
Other operating expenses were $45.7 million, down $1.3 million from the previous quarter, which had included one-time operations center consolidation expenses. For 2026, the company guided to a 2.5% to 3.5% increase in other operating expenses from 2025 normalized levels. In the Q&A, Matsumoto said the company plans to continue investing in technology, including sales management systems and data platform enhancements, while citing offsets from automation, process improvements, and resource optimization.
The effective tax rate was 18.9% in the fourth quarter, benefiting from greater tax-exempt income and additional tax credits. Management said its normalized effective tax rate is expected to be in the 21% to 22% range.
On shareholder returns, the company repurchased about 530,000 shares in the fourth quarter for $16.3 million. For full-year 2025, it repurchased 788,000 shares for $23.3 million. The board declared a first-quarter cash dividend of $0.29 per share, up 3.6% from the prior quarter, and approved a new share repurchase authorization of up to $55 million in 2026. In response to analyst questions, management said the authorization provides flexibility and that buyback activity would be “dynamic” by quarter.
Credit quality remained stable, according to Chief Risk Officer Ralph Mesick. Net charge-offs were $2.5 million, or 18 basis points annualized on average loans. Non-performing assets were $14.4 million, or 19 basis points of total assets. Past due loans over 90 days totaled $1.6 million, or 3 basis points of total loans, and criticized loans declined to 135 basis points of total loans. Provision expense for the quarter was $2.4 million, including $1.7 million added to the allowance and $0.7 million to the reserve for unfunded commitments. Mesick said the lower provision expense was driven primarily by a decline in loan balances and improvements in asset quality and the macroeconomic forecast.
At quarter end, total risk-based capital was 14.8%. Matsumoto said capital priorities remain centered on supporting organic loan growth, dividends, and share repurchases, with an ongoing goal of moving toward a CET1 target of 11% to 12%.
Strategic updates and outlook
Martines said the bank was named to Newsweek’s list of America’s Best Regional Banks for 2026 and described the company as “ultra-focused” on disciplined organic growth, diversification, and operational excellence. He also discussed Hawaii’s economic backdrop, saying the state remains resilient despite macroeconomic uncertainty, lower visitor counts, and softer job growth, with strength from construction activity and the military sector.
Martines also noted the signing of a strategic partnership with Korea Investment & Securities, describing it as a step to expand the bank’s international strategy and create new deposit opportunities by offering banking services to Korean customers seeking investment and business opportunities in Hawaii.
About CPB (NYSE:CPF)
Charoen Pokphand Foods Public Company Limited (NYSE: CPF) is a Thailand‐based integrated agro‐industrial and food conglomerate. Headquartered in Bangkok, the company is a subsidiary of the Charoen Pokphand Group and has grown into one of the world’s leading producers of livestock feed, meat and seafood products. CPF’s businesses span animal feed milling, animal breeding and hatchery operations, meat and seafood processing, and the distribution of fresh, frozen and value‐added food products.
CPF’s product portfolio includes poultry, swine and aquaculture feed; fresh and frozen chicken and pork; shrimp and other seafood; as well as ready‐to‐eat and ready‐to‐cook food items.
