Central Pacific Financial: 3 Key Takeaways for Long-Term Investors

On its third-quarter 2026 earnings call, held on Oct. 28, 2026, Central Pacific Financial (NYSE:CPF) announced a 21% year-over-year increase in adjusted diluted earnings per share. The bank's expanding net interest margin, the difference between what it earns on loans and pays on deposits, shows its ability to reprice assets quickly in a high-rate environment. Three takeaways from the call stand out for long-term investors.

1. Asset Repricing Drives Expansion in Interest Returns

Management is actively shifting the bank's loan mix from lower-yielding fixed-rate residential mortgages into higher-yielding variable-rate commercial loans. Replacing lower-yielding assets with new loans at average rates above 6% helps boost earnings.

As we have seen in previous quarters, growth in variable rate commercial mortgage and construction lending is replacing lower yielding fixed rate residential mortgage consumer and home equity loans.
-- Ralph Mesick, Vice Chair

2. Granular Deposit Base Controls Funding Costs

Core deposit stability gives the bank flexibility to manage funding costs without overpaying to retain capital. Management expects its deposit repricing beta, the percentage of central bank rate changes that are passed on to customers, to remain manageable at around 24%.

Our depositors are relationship based, sticky, and generally less rate sensitive overall, so I feel good that we can manage the beta in a reasonable range.
-- Dayna Matsumoto, Executive Vice President and Chief Financial Officer

3. Real Estate Collateral Backs Higher-Risk Loans

Credit quality metrics improved as nonperforming assets declined, and criticized loans, borrowing flagged for potential weakness, remained heavily backed by property. With 91% of criticized loans secured by real estate, the bank keeps potential loan losses well shielded.

Criticized loan ratio improved to 181 basis points of total loans from 234 basis points in the prior quarter. 91% of criticized loans are real estate secured with strong loan to value ratios.
-- Anna Hu, Executive Vice President and Chief Credit Officer

Looking Ahead

Loan growth is building momentum in both Hawaii and mainland markets, and management is positioning the balance sheet for disciplined expansion. The bank relies on deep local customer relationships, zero brokered deposits, and strict credit underwriting to protect profitability. Executive focus centers on maintaining pricing discipline and managing deposit costs as loan volume expands.

Finally, we are well aware of the uncertainty and headwinds impacting the local and national economy. But continue to be biased toward business development and growth. We will be intentional and disciplined in this pursuit.
-- Ralph Mesick, Vice Chair

By balancing mainland expansion with Hawaii market leadership, executive leadership expects to navigate economic uncertainties while growing returns for shareholders.

These results position us to serve our customers well support prudent growth, and navigate the ongoing market uncertainties with discipline.
-- Arnold D. Martines, Chairman, President, and Chief Executive Officer

The Motley Fool has positions in and recommends Central Pacific Financial. The Motley Fool has a disclosure policy.