Central Pacific Margin Expansion Continues

The Tip Desk · November 9, 2026 · 3 min read

Net interest income reached $64.5 million as the net interest margin widened 5 bps to 3.62% and net income rose to $22.8 million.

Central Pacific Financial Corp. (CPF), a Hawaii-based bank holding company with about $7.45 billion in assets, reported net income of $22.8 million, or $0.88 a share, for the third quarter of 2026, up from $20.8 million, or $0.80 a share, in the second quarter.

Net interest income was $64.5 million, up $1.6 million, or 2.6%, from the prior quarter. The net interest margin widened 5 bps sequentially to 3.62%, after a 4 bps sequential expansion to 3.57% in the second quarter. The company said the sequential increase in net interest income and margin was primarily driven by higher loan yields and higher average balances and yields on investment securities.

The average yield on loans rose 5 bps sequentially to 5.01%, reversing a 6 bps sequential decline in the second quarter. The average rate paid on total deposits held at 0.90%.

The provision for credit losses fell to $1.9 million from $4.4 million in the second quarter. The third-quarter charge was entirely a provision for loan losses; the reserve for off-balance-sheet credit exposures was unchanged, after a $1.1 million off-balance-sheet reserve build in the second quarter.

Other operating income declined $2.2 million sequentially to $12.4 million, reversing a $3.0 million sequential increase to $14.6 million in the second quarter. The company attributed the sequential decrease primarily to a $2.4 million drop in income from bank-owned life insurance due to equity-market volatility and its effect on corporate-owned life insurance policies.

Other operating expense fell $1.4 million sequentially to $44.8 million, reversing a $2.5 million sequential increase to $46.2 million in the second quarter. The company said the decrease was primarily attributable to $1.2 million lower salaries and employee benefits and $1.0 million lower other expense from deferred compensation tied to equity-market performance. The efficiency ratio improved to 58.27% from 59.62%.

Total loans, net of deferred fees and costs, were $5.31 billion at September 30, 2026, relatively stable from June 30. Total deposits were $6.66 billion, down 0.5% from $6.70 billion at June 30. Core deposits totaled $6.11 billion. Total assets were $7.45 billion.

Nonperforming assets declined to $14.0 million, or 0.19% of total assets, from $16.5 million, or 0.22%, at June 30. Net charge-offs were $2.7 million, or 0.20% of average loans on an annualized basis, consistent with the prior quarter. The allowance for credit losses on loans was 1.13% of total loans.

Shareholders’ equity was $581.4 million at September 30. The company said the $14.9 million, or 2.5%, decrease from June 30 was primarily attributed to a decline in accumulated other comprehensive income from a lower fair value of the available-for-sale portfolio as market interest rates rose. Regulatory capital ratios were a 9.7% leverage ratio, 12.7% common equity tier 1, 13.6% tier 1 risk-based, and 14.8% total risk-based.

The company repurchased 294,110 shares for $11.2 million, or an average $38.18 a share. $22.0 million remained available under the repurchase authorization. On October 27, the board raised the quarterly cash dividend 3.3% to $0.31 a share, payable December 15 to shareholders of record November 30.