cpf-20250331

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-31567

CENTRAL PACIFIC FINANCIAL CORP.

(Exact name of registrant as specified in its charter)


Hawaii						99-0212597
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

220 South King Street, Honolulu, Hawaii 96813

(Address of principal executive offices) (Zip code)

(808) 544-0500

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, No Par Value

CPF

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer", "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of registrant's common stock, no par value, on April 18, 2025 was 26,975,928 shares.

Table of Contents

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Form 10-Q

Table of Contents


		Page

Part I.	Financial Information	3

Item 1.	Financial Statements (Unaudited)

	Consolidated Balance Sheets - March 31, 2025 and December 31, 2024	3

	Consolidated Statements of Income - Three months ended March 31, 2025 and 2024	4

	Consolidated Statements of Comprehensive Income - Three months ended March 31, 2025 and 2024	5

	Consolidated Statements of Changes in Equity - Three months ended March 31, 2025 and 2024	6

	Consolidated Statements of Cash Flows - Three months ended March 31, 2025 and 2024	7

	Notes to Consolidated Financial Statements	8

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	41

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	61

Item 4.	Controls and Procedures	61

Part II.	Other Information	62

Item 1.	Legal Proceedings	62

Item 1A.	Risk Factors	62

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	62

Item 5.	Other Information	63

Item 6.	Exhibits	63

Signatures		64

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	As of
(dollars in thousands)	March 31, 2025		December 31, 2024
Assets
Cash and due from financial institutions	$	106,670	$	77,774
Interest-bearing deposits in other financial institutions	170,226		303,167
Investment securities:
Debt securities available-for-sale, at fair value	780,379		737,658
Debt securities held-to-maturity, at amortized cost; fair value of: $511,717 as of March 31, 2025 and $506,681 as of December 31, 2024	589,688		596,930

Total investment securities	1,370,067		1,334,588
Loans held for sale	2,788		5,662
Loans	5,334,547		5,332,852
Less: allowance for credit losses	(60,469)		(59,182)
Loans, net of allowance for credit losses	5,274,078		5,273,670
Premises and equipment, net	103,490		104,342
Accrued interest receivable	24,743		23,378
Investment in unconsolidated entities	50,885		52,417

Mortgage servicing rights, net	8,418		8,473

Bank-owned life insurance	176,846		176,216
Federal Home Loan Bank of Des Moines ("FHLB") and Federal Reserve Bank ("FRB") stock	24,163		6,929
Right-of-use lease assets	29,829		30,824
Other assets	63,036		74,656
Total assets	$	7,405,239	$	7,472,096
Liabilities and Equity
Deposits:
Noninterest-bearing demand	$	1,854,241	$	1,888,937
Interest-bearing demand	1,368,519		1,338,719
Savings and money market	2,316,416		2,329,170
Time	1,056,872		1,087,185
Total deposits	6,596,048		6,644,011

Long-term debt, net of unamortized debt issuance costs of $142 as of March 31, 2025 and $202 as of December 31, 2024	131,405		156,345
Lease liabilities	31,057		32,025

Accrued interest payable	8,757		10,051
Other liabilities	80,596		91,279
Total liabilities	6,847,863		6,933,711
Contingent liabilities and other commitments (see Note 16)
Equity:

Preferred stock, no par value, authorized 1,000,000 shares; issued and outstanding: none as of March 31, 2025 and December 31, 2024	—		—
Common stock, no par value, authorized 185,000,000 shares; issued and outstanding: 27,061,589 as of March 31, 2025 and 27,065,570 as of December 31, 2024	402,400		404,494
Additional paid-in capital	104,849		105,054
Retained earnings	153,692		143,259
Accumulated other comprehensive loss	(103,565)		(114,422)


Total equity	557,376		538,385
Total liabilities and equity	$	7,405,239	$	7,472,096

See accompanying notes to consolidated financial statements.

Table of Contents

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three Months Ended March 31,
(dollars in thousands, except per share data)		2025		2024
Interest income:
Interest and fees on loans		$	64,119	$	62,819
Interest and dividends on investment securities:
Taxable investment securities		9,801		7,211
Tax-exempt investment securities		708		655

Interest on deposits in other financial institutions		2,254		3,611
Dividend income on FHLB and FRB stock		324		106
Total interest income		77,206		74,402
Interest expense:
Interest on deposits:
Demand		452		499
Savings and money market		8,862		8,443
Time		8,107		12,990

Interest on long-term debt		2,086		2,283
Total interest expense		19,507		24,215
Net interest income		57,699		50,187
Provision for credit losses		4,172		3,936
Net interest income after provision for credit losses		53,527		46,251
Other operating income:
Mortgage banking income		597		613
Service charges on deposit accounts		2,147		2,103
Other service charges and fees		5,766		5,261
Income from fiduciary activities		1,624		1,435
Income from bank-owned life insurance		497		1,522




Other		465		310
Total other operating income		11,096		11,244
Other operating expense:
Salaries and employee benefits		21,819		20,735
Net occupancy		4,392		4,600
Computer software		4,714		4,287
Legal and professional services		2,798		2,320
Equipment		1,082		1,010
Advertising		887		914
Communication		1,033		837



Other		5,347		5,873
Total other operating expense		42,072		40,576
Income before income taxes		22,551		16,919
Income tax expense		4,791		3,974
Net income		$	17,760	$	12,945
Per common share data:
Basic earnings per share		$	0.66	$	0.48
Diluted earnings per share		$	0.65	$	0.48

Basic weighted average shares outstanding		27,087,154		27,046,525
Diluted weighted average shares outstanding		27,213,406		27,099,101

See accompanying notes to consolidated financial statements.

Table of Contents

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended March 31,
(dollars in thousands)		2025		2024
Net income		$	17,760	$	12,945
Other comprehensive income (loss), net of tax:
Net change in fair value of available-for-sale investment securities		11,255		(5,180)
Amortization of unrealized losses on investment securities transferred to held-to-maturity		1,143		1,206
Net change in fair value of derivatives		(1,541)		2,247

Total other comprehensive income (loss), net of tax		10,857		(1,727)
Comprehensive income		$	28,617	$	11,218

See accompanying notes to consolidated financial statements.

Table of Contents

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)


	Common Shares Outstanding	Preferred Stock		Common Stock		Additional Paid-In Capital		Retained Earnings		Accum. Other Comp. Loss		Total
	(dollars in thousands, except per share data)
Balance at December 31, 2024	27,065,570	$	—	$	404,494	$	105,054	$	143,259	$	(114,422)	$	538,385


Net income	—	—		—		—		17,760		—		17,760
Other comprehensive income	—	—		—		—		—		10,857		10,857
Cash dividends declared ($0.27 per share)	—	—		—		—		(7,327)		—		(7,327)

Common stock repurchased and retired and other related costs	(77,316)	—		(2,094)		—		—		—		(2,094)
Share-based compensation	73,335	—		—		(205)		—		—		(205)

Balance at March 31, 2025	27,061,589	—		402,400		104,849		153,692		(103,565)		557,376


	Common Shares Outstanding	Preferred Stock		Common Stock		Additional Paid-In Capital		Retained Earnings		Accum. Other Comp. Loss		Total
	(dollars in thousands, except per share data)
Balance at December 31, 2023	27,045,033	$	—	$	405,439	$	102,982	$	117,990	$	(122,596)	$	503,815



Net income	—	—		—		—		12,945		—		12,945
Other comprehensive loss	—	—		—		—		—		(1,727)		(1,727)
Cash dividends declared ($0.26 per share)	—	—		—		—		(7,033)		—		(7,033)

Common stock repurchased and retired and other related costs	(49,960)	—		(945)		—		—		—		(945)
Share-based compensation	47,253	—		—		148		—		—		148

Balance at March 31, 2024	27,042,326	—		404,494		103,130		123,902		(124,323)		507,203

See accompanying notes to consolidated financial statements.

Table of Contents

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
(dollars in thousands)	2025		2024
Cash flows from operating activities:
Net income	$	17,760	$	12,945
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	4,172		3,936
Depreciation and amortization of premises and equipment	1,741		1,746
Loss on disposal of premises and equipment	—		3
Non-cash lease expense	28		—
Cash flows for operating leases	(1,280)		(1,257)

Amortization of mortgage servicing rights	192		178
Net (accretion of discount) amortization of premium on investment securities	(324)		561
Share-based compensation	(205)		148

Net gain on sales of residential mortgage loans	(187)		(217)
Proceeds from sales of loans held for sale	14,454		10,759
Originations of loans held for sale	(11,393)		(9,736)
Equity in (losses) earnings of unconsolidated entities	(2)		80

Net increase in cash surrender value of bank-owned life insurance	(497)		(1,522)
Deferred income tax expense	5,330		2,652
Net tax expense from share-based compensation	69		60
Net change in other assets and liabilities	(9,418)		(3,340)
Net cash provided by operating activities	20,440		16,996
Cash flows from investing activities:
Purchases of investment securities available-for-sale	(40,823)		(32,624)
Proceeds from maturities, prepayments and calls of investment securities available-for-sale	13,902		11,606


Proceeds from maturities, prepayments and calls of investment securities held-to-maturity	8,606		8,827

Net loan payments received	26,860		33,444
Purchases of loan portfolios	(31,440)		—


Purchases of bank-owned life insurance	(133)		—


Net purchases of premises and equipment	(889)		(3,253)

Contributions to unconsolidated entities	(950)		(7,707)
Net purchases of FHLB and FRB stock	(17,234)		(128)
Net cash (used in) provided by investing activities	(42,101)		10,165
Cash flows from financing activities:
Net decrease in deposits	(47,963)		(228,738)


Repayments of long-term debt	(25,000)		—
Cash dividends paid on common stock	(7,327)		(7,033)
Repurchases of common stock and other related costs	(2,094)		(945)

Net cash used in financing activities	(82,384)		(236,716)
Net decrease in cash and cash equivalents	(104,045)		(209,555)
Cash and cash equivalents at beginning of period	380,941		522,437
Cash and cash equivalents at end of period	$	276,896	$	312,882

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(Unaudited)


	Three Months Ended March 31,
(dollars in thousands)	2025		2024
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest expense paid	$	20,801	$	26,509



Supplemental disclosure of non-cash information:





Lease liabilities arising from obtaining right-of-use lease assets	—		3,333
Amortization of unrealized losses on investment securities transferred to held-to-maturity at fair value	1,552		1,638

See accompanying notes to consolidated financial statements.

Table of Contents

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements of Central Pacific Financial Corp. and Subsidiaries (herein referred to as the "Company," "we," "us," or "our") have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.

These interim condensed consolidated financial statements and notes should be read in conjunction with the Company's consolidated financial statements and notes thereto filed on Form 10-K for the fiscal year ended December 31, 2024. In the opinion of management, all adjustments necessary for a fair presentation have been made and include all normal recurring adjustments. Interim results of operations are not necessarily indicative of results to be expected for the year.

Allowance for Credit Losses on Loans

The allowance for credit losses ("ACL") on loans is a valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected on loans. The Company’s policy is to charge off a loan against the ACL during the period in which the loan is deemed to be uncollectible and all interest previously accrued but uncollected, is reversed against current period interest income. Subsequent receipts, if any, are credited first to the remaining principal, then to the ACL on loans as recoveries, and finally to interest income.

The ACL on loans represents management's estimate of all expected credit losses over the expected life of the Company’s loan portfolio as of a given balance sheet date. Management estimates the ACL balance using relevant information available from both internal and external sources, regarding the collectability of cash flows impacted by past events, current conditions, and reasonable and supportable forecasts of future economic conditions. When the Company is unable to forecast future economic events, management may revert to historical information.

The Company's ACL model incorporates a reasonable and supportable forecast period of one year and reverts to historical loss information on a straight-line basis over one year when its forecast is no longer deemed reasonable and supportable. Historical loss experience provides the basis for the Company’s expected credit loss estimate. Adjustments to historical loss information may be made for differences in current loan-specific risk characteristics, such as differences in underwriting standards, portfolio mix, or when historical asset terms do not reflect the contractual terms of the financial assets being evaluated.

The Company's ACL model may also consider other adjustments to address changes in conditions, trends, and circumstances such as local industry changes that could have a significant impact on the risk profile of the loan portfolio and provide for adjustments that may not be reflected or captured in the historical loss data. These factors include: lending policies, imprecision in forecasting future economic conditions, loan profile, lending staff, problem loan trends, loan review, collateral, credit concentration, or other internal and external factors.

The Company uses Moody’s Analytics ("Moody's"), a firm widely recognized and used for its research, analysis, and economic forecasts, for its economic forecast assumptions. The Company generally uses Moody’s most recent Baseline forecast, which is updated at least monthly with a variety of upside and downside economic scenarios and considers both national and Hawaii-specific economic indicators. In addition, the Company uses a qualitative factor for forecast imprecision to account for economic and market volatility or instability.

Table of Contents

The ACL on loans is measured on a collective or pool basis when similar risk characteristics exist. The following is a description and the risk characteristics of each segment:

Commercial and industrial loans - SBA Paycheck Protection Program loans

Paycheck Protection Program (“PPP”) loans are considered lower risk as they are guaranteed by the Small Business Administration (“SBA”) and may be forgivable in whole or in part in accordance with the requirements of the PPP.

Commercial and industrial loans - Others

Commercial and industrial loans consist primarily of term loans and lines of credit to small- and middle-market businesses and professionals. The predominant risk characteristics of this segment are the cash flows of the business we lend to, global cash flows including guarantor liquidity, as well as economic and market conditions. Although our underwriting policy and practice generally requires secondary sources of support or collateral to mitigate risk, cash flow generated from the borrower’s business is typically regarded as the principal source of repayment.

Construction loans

Construction loans include both residential and commercial development projects. Each construction project is evaluated for economic viability and construction loans pose higher credit risks than typical secured loans. Financial strength of the borrower, completion risk (the risk that the project will not be completed on time and within budget) and geographic location are the predominant risk characteristics of this segment.

Commercial real estate loans - Multi-family

Multi-family mortgage loans can comprise multi-building properties with extensive amenities or a single building with no amenities. The predominant risk characteristic of this segment is operating risk or the ability to generate sufficient rental income from the operation of the property.

Commercial real estate loans - Others

Commercial real estate loans are secured by commercial properties. The predominant risk characteristic of this segment is operating risk, which is the risk that the borrower will be unable to generate sufficient cash flows from the operation of the property. Interest rate conditions and the commercial real estate market through economic cycles also impact risk levels.

Residential mortgage loans

Residential mortgage loans primarily includes fixed-rate or adjustable-rate loans secured by single-family owner-occupied primary residences in Hawaii. Economic conditions such as unemployment levels, future changes in interest rates, Hawaii home prices and other market factors impact the level of credit risk inherent in the portfolio.

Home equity lines of credit

Home equity lines of credit include fixed or floating interest rate loans and are also primarily secured by single-family owner-occupied primary residences in Hawaii. They are underwritten based on a minimum FICO score, maximum debt-to-income ratio, and maximum combined loan-to-value ratio. Home equity lines of credit are monitored based on credit score, delinquency, end of draw period and maturity.

Consumer loans - Other revolving

Other revolving consumer loans consist of unsecured consumer lines of credit. The predominant risk characteristics of this segment relate to current and projected economic conditions, as well as employment and income levels attributed to the borrower.

Table of Contents

Consumer loans - Non-revolving

Non-revolving consumer loans consist of non-revolving (term) consumer loans, including automobile dealer loans. The predominant risk characteristics of this segment relate to current and projected economic conditions, as well as employment and income levels attributed to the borrower.

Purchased consumer loans

Purchased consumer loans consist of automobile and unsecured consumer loans. Credit risk for purchased consumer loans is managed on a pooled basis. The predominant risk characteristics of this segment include current and projected economic conditions, employment and income levels, and the quality of purchased consumer loans.

The following table presents the Company's loan portfolio segments and the methodology used to measure expected credit losses. The historical look-back period is 2008 to present, economic forecast length is one year and the reversion method is one year (on a straight-line basis) for all segments.

Expected Credit Loss Methodology

Historical Look-Back Period

Economic Forecast Length

Reversion Method

Loan Segment

After

June 30, 2023

June 30, 2023
and Prior

Commercial and industrial - SBA PPP

Zero Loss

2008 to present

One year

One year
(straight-line
basis)

Commercial and industrial - All others

DCF

PD/LGD

Construction

DCF

PD/LGD

Commercial real estate - Multi-family

DCF

PD/LGD

Commercial real estate - All others

DCF

PD/LGD

Residential mortgage

DCF

Loss-Rate Migration

Home equity

DCF

Loss-Rate Migration

Consumer - Other revolving

DCF

Loss-Rate Migration

Consumer - Non-revolving

DCF

Loss-Rate Migration

Consumer - Purchased portfolios

WARM

During the third quarter of 2023, the Company updated its methodology to measure expected credit losses from the Probability of Default/Loss Given Default ("PD/LGD") or Loss-Rate Migration methods to the Discounted Cash Flow ("DCF") method for all segments except the SBA PPP and purchased consumer loan segments. The Company believes that the DCF methodology has better alignment with the Current Expected Credit Losses ("CECL") standard for forward looking forecasting, while also factoring in more detailed assumptions. At the time of the methodology update, the Company ran the ACL model under both the current and previous methodologies and noted that the changes to the ACL model and the differences in methodologies did not result in a material impact to the Company's financial statements and as a percentage of the ACL. The Company is utilizing an industry leading software platform to perform the DCF analysis using a historical look back period of 2008 to present.

The Company continues to use the Moody's baseline forecast with an economic forecast length of one year and a one-year, straight-line reversion method. We revert to the historical average of the macroeconomic variables being used. Forecast models exclude the post-2019 COVID-19 pandemic period due to abnormal and volatile behavior.

The ACL on the purchased consumer loan portfolios continues to be calculated using the Remaining Life methodology (also known as the Weighted Average Remaining Maturity or "WARM" methodology) as this portfolio is evaluated on a pooled basis. Because SBA PPP loans are guaranteed by the SBA and may be forgivable in whole or in part in accordance with the requirements of the PPP we anticipate zero losses on these loans and accordingly apply a Zero Loss methodology.

Table of Contents

The following is a description of the methodologies utilized to measure expected credit losses from the third quarter of 2023 to present:

Discounted Cash Flow

The DCF methodology calculates CECL reserves as the difference between the amortized cost of a loan and the discounted expected value of future cash flows. Expected future cash flows are calculated based on assumptions of PD/LGD, prepayments and recovery rates, and are discounted using the loan’s effective interest rate.

Remaining Life or Weighted Average Remaining Maturity

Under the remaining life or WARM methodology, lifetime losses are calculated by determining the remaining life of the loan pool, and then applying a loss rate over this remaining life. The methodology considers historical loss experience to estimate credit losses for the remaining balance of the loan pool. The calculated loss rate is applied to the contractual term (adjusted for prepayments) to determine the loan pool’s current expected credit losses.

The following is a description of the methodologies utilized to measure expected credit losses as of June 30, 2023 and prior:

Probability of Default/Loss Given Default

The PD/LGD calculation is based on a cohort methodology whereby loans in the same cohort are tracked over time to identify defaults and corresponding losses. PD/LGD analysis requires a portfolio segmented into pools, and we elected to then further sub-segment by risk characteristics such as Risk Rating, loans modified for borrowers experiencing financial difficulty, TDRs prior to the adoption of ASU 2022-02 and nonaccrual status to measure losses accurately. PD measures the count or dollar amount of loans that defaulted in a given cohort. LGD measures the losses related to the loans that defaulted. Total loss rate is calculated using the formula 'PD times LGD'.

Loss-Rate Migration

Loss-rate migration analysis is a cohort-based approach that measures cumulative net charge-offs over a defined time-horizon to calculate a loss rate that will be applied to the loan pool. Loss-rate migration analysis requires the portfolio to be segmented into pools then further sub-segmented by risk characteristics such as days past due, delinquency counters, loans modified for borrowers experiencing financial difficulty, TDRs prior to the adoption of ASU 2022-02 and nonaccrual status to measure loss rates accurately. The key inputs to run a loss-rate migration analysis are the length and frequency of the migration period, the dates for the migration periods to start and the number of migration periods used for the analysis. For each migration period, the analysis will determine the outstanding balance in each segment and/or sub-segment at the start of each period. These loans will then be followed for the length of the migration period to identify the amount of associated charge-offs and recoveries. A loss rate for each migration period is calculated using the formula: net charge-offs over the period divided by beginning loan balance.

Other

Under both the previous and current methodologies utilized to measure expected credit losses, if a loan ceases to share similar risk characteristics with other loans in its segment, it will be moved to a different pool sharing similar risk characteristics. Loans that do not share risk characteristics are evaluated on an individual basis based on the fair value of the collateral or other approaches such as the discounted cash flows methodology. Individually evaluated loans are not included in the collective evaluation.

Impact of Recently Issued Accounting Pronouncements on Future Filings

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures". ASU 2023-09 expands existing income tax disclosures for rate reconciliations by requiring disclosure of certain specific categories in the rate reconciliation, as well as additional qualitative information about the reconciliation, and additional disaggregated information about income taxes paid. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and is to be applied on a prospective basis. The Company adopted the amendments of ASU 2023-09 effective January 1, 2025, which did not have a material impact on its consolidated financial statements. The Company will include the required disclosures in its Annual Report on Form 10-K for the year ending December 31, 2025.

Table of Contents

In November 2024, the FASB issued ASU 2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses". ASU 2024-03 requires public entities to provide disaggregated disclosures, in the notes to the financial statements, of certain categories of expenses that are included in expense line items on the face of the income statement. The amendments in ASU 2024-03 are effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company does not expect the adoption of this standard to have a material impact on the Company’s financial position or results of operations.

2. INVESTMENT SECURITIES

The amortized cost, gross unrecognized/unrealized gains and losses, fair value and related ACL on available-for-sale ("AFS") and held-to-maturity ("HTM") debt securities as of March 31, 2025 and December 31, 2024 are as follows:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		ACL
(dollars in thousands)
March 31, 2025
Available-for-sale:
Debt securities:
States and political subdivisions	$	146,693	$	3	$	(28,067)	$	118,629	$	—

U.S. Treasury and other government-sponsored entities and agencies	104,874		625		(1,712)		103,787		—
Collateralized loan obligations	31,237		—		(248)		30,989		—
Mortgage-backed securities:
Residential - U.S. government-sponsored entities and agencies	480,238		1,138		(49,325)		432,051		—
Residential - Non-government agencies	17,324		172		(894)		16,602		—
Commercial - U.S. government-sponsored entities and agencies	80,883		207		(12,726)		68,364		—
Commercial - Non-government agencies	9,958		—		(1)		9,957		—
Total available-for-sale investment securities	$	871,207	$	2,145	$	(92,973)	$	780,379	$	—


	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Fair Value		ACL
(dollars in thousands)
March 31, 2025
Held-to-maturity:
Debt securities:
States and political subdivisions	$	42,011	$	—	$	(9,042)	$	32,969	$	—



Mortgage-backed securities:
Residential - U.S. government-sponsored entities and agencies	547,677		79		(69,008)		478,748		—



Total held-to-maturity investment securities	$	589,688	$	79	$	(78,050)	$	511,717	$	—

Table of Contents


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		ACL
(dollars in thousands)
December 31, 2024
Available-for-sale:
Debt securities:
States and political subdivisions	$	147,014	$	2	$	(30,183)	$	116,833	$	—

U.S. Treasury and other government-sponsored entities and agencies	83,861		81		(2,742)		81,200		—
Collateralized loan obligations	31,254		—		(114)		31,140		—
Mortgage-backed securities:
Residential - U.S. government-sponsored entities and agencies	472,476		42		(58,047)		414,471		—
Residential - Non-government agencies	17,836		151		(1,061)		16,926		—
Commercial - U.S. government-sponsored entities and agencies	81,400		76		(14,315)		67,161		—
Commercial - Non-government agencies	9,933		—		(6)		9,927		—
Total available-for-sale investment securities	$	843,774	$	352	$	(106,468)	$	737,658	$	—


	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Fair Value		ACL
(dollars in thousands)
December 31, 2024
Held-to-maturity:
Debt securities:
States and political subdivisions	$	42,016	$	—	$	(8,884)	$	33,132	$	—



Mortgage-backed securities:
Residential - U.S. government-sponsored entities and agencies	554,914		—		(81,365)		473,549		—



Total held-to-maturity investment securities	$	596,930	$	—	$	(90,249)	$	506,681	$	—

The Company did not transfer any investment securities that were classified as AFS to HTM during the three months ended March 31, 2025. During the three months ended March 31, 2025, the Company recorded a total of $1.6 million in amortization of unrecognized losses on investment securities previously transferred from AFS to HTM. During the three months ended March 31, 2024, the Company recorded a total of $1.6 million in amortization of unrecognized losses on investment securities previously transferred from AFS to HTM.

The Company elected to not measure an estimate of credit losses on accrued interest receivable as the Company writes off any uncollectible accrued interest receivable in a timely manner. Accrued interest receivable on investment securities is reported together with accrued interest receivable on loans and other assets in the consolidated balance sheets.

Accrued interest receivable on investment securities totaled $4.8 million and $4.8 million as of March 31, 2025 and December 31, 2024, respectively.

Table of Contents

The amortized cost, estimated fair value and weighted average yield of our AFS and HTM debt securities as of March 31, 2025, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.


(dollars in thousands)	Amortized Cost		Fair Value		Weighted Average Yield (1)
Available-for-sale:
Debt securities:
Due in one year or less	$	4,353	$	4,348	5.75	%
Due after one year through five years	38,754		38,592		4.06
Due after five years through ten years	65,568		63,748		3.80
Due after ten years	142,892		115,728		2.88
Collateralized loan obligations	31,237		30,989		5.79
Mortgage-backed securities:
Residential - U.S. government-sponsored entities and agencies	480,238		432,051		3.00
Residential - Non-government agencies	17,324		16,602		4.85
Commercial - U.S. government-sponsored entities and agencies	80,883		68,364		2.72
Commercial - Non-government agencies	9,958		9,957		4.29
Total available-for-sale securities	$	871,207	$	780,379	3.26	%


(dollars in thousands)	Amortized Cost		Fair Value		Weighted Average Yield (1)
Held-to-maturity:
Debt securities:



Due after ten years	$	42,011	$	32,969	2.26	%

Mortgage-backed securities:
Residential - U.S. government-sponsored entities and agencies	547,677		478,748		1.91



Total held-to-maturity securities	$	589,688	$	511,717	1.93	%

(1)Weighted-average yields are computed on an annual basis, and yields on tax-exempt obligations are computed on a taxable-equivalent basis using a federal statutory tax rate of 21%.

The Company did not sell any investment securities during the three months ended March 31, 2025 and 2024.

Investment securities with carrying values totaling $772.3 million and $756.0 million as of March 31, 2025 and December 31, 2024, respectively, were pledged to secure public funds on deposit, Federal Reserve Bank borrowings and other financial transactions.

There were no holdings of investment securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of shareholders' equity as of March 31, 2025 and December 31, 2024.

Table of Contents

The following tables summarize AFS and HTM investment securities, which were in a loss position as of the dates presented, aggregated by major security type and length of time in a continuous loss position. There were a total of 197 and 218 AFS investment securities which were in an unrealized loss position, without an ACL, as of March 31, 2025 and December 31, 2024, respectively. There were a total of 83 HTM investment securities which were in an unrecognized loss position, without an ACL, as of March 31, 2025 and December 31, 2024.


	Less Than 12 Months				12 Months or Longer				Total
(dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
March 31, 2025
Available-for-sale:
Debt securities:
States and political subdivisions	$	755	$	(15)	$	111,453	$	(28,052)	$	112,208	$	(28,067)

U.S. Treasury and other government-sponsored entities and agencies	6,276		(19)		12,618		(1,693)		18,894		(1,712)
Collateralized loan obligations	30,989		(248)		—		—		30,989		(248)
Mortgage-backed securities:
Residential - U.S. government-sponsored entities and agencies	55,046		(702)		260,478		(48,623)		315,524		(49,325)
Residential - Non-government agencies	5,019		(46)		7,566		(848)		12,585		(894)
Commercial - U.S. government-sponsored entities and agencies	—		—		49,312		(12,726)		49,312		(12,726)
Commercial - Non-government agencies	9,957		(1)		—		—		9,957		(1)
Total	$	108,042	$	(1,031)	$	441,427	$	(91,942)	$	549,469	$	(92,973)


	Less Than 12 Months				12 Months or Longer				Total
(dollars in thousands)	Fair Value		Unrecognized Losses		Fair Value		Unrecognized Losses		Fair Value		Unrecognized Losses
March 31, 2025
Held-to-maturity:
Debt securities:
States and political subdivisions	$	—	$	—	$	32,969	$	(9,042)	$	32,969	$	(9,042)



Mortgage-backed securities:
Residential - U.S. government-sponsored entities and agencies	—		—		471,459		(69,008)		471,459		(69,008)



Total	$	—	$	—	$	504,428	$	(78,050)	$	504,428	$	(78,050)

Table of Contents


	Less Than 12 Months				12 Months or Longer				Total
(dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
December 31, 2024
Available-for-sale:
Debt securities:
States and political subdivisions	$	4,967	$	(85)	$	107,267	$	(30,098)	$	112,234	$	(30,183)

U.S. Treasury and other government-sponsored entities and agencies	56,139		(803)		12,971		(1,939)		69,110		(2,742)
Collateralized loan obligations	31,140		(114)		—		—		31,140		(114)
Mortgage-backed securities:
Residential - U.S. government-sponsored entities and agencies	135,224		(2,254)		260,575		(55,793)		395,799		(58,047)
Residential - Non-government agencies	5,270		(100)		7,606		(961)		12,876		(1,061)
Commercial - U.S. government-sponsored entities and agencies	12,469		(90)		48,304		(14,225)		60,773		(14,315)
Commercial - Non-government agencies	9,927		(6)		—		—		9,927		(6)
Total	$	255,136	$	(3,452)	$	436,723	$	(103,016)	$	691,859	$	(106,468)


	Less Than 12 Months				12 Months or Longer				Total
(dollars in thousands)	Fair Value		Unrecognized Losses		Fair Value		Unrecognized Losses		Fair Value		Unrecognized Losses
December 31, 2024
Held-to-maturity:
Debt securities:
States and political subdivisions	$	—	$	—	$	33,132	$	(8,884)	$	33,132	$	(8,884)



Mortgage-backed securities:
Residential - U.S. government-sponsored entities and agencies	7,470		(19)		466,079		(81,346)		473,549		(81,365)



Total	$	7,470	$	(19)	$	499,211	$	(90,230)	$	506,681	$	(90,249)

Investment securities in an unrecognized or unrealized loss position are evaluated at least on a quarterly basis, and include evaluating the changes in the investment securities' ratings issued by rating agencies and changes in the financial condition of the issuer. For mortgage-related securities, delinquency and loss information with respect to the underlying collateral, changes in levels of subordination for the Company's particular position within the repayment structure, and remaining credit enhancement as compared to projected credit losses of the security are also evaluated.

The Company has evaluated its AFS and HTM investment securities that are in an unrecognized or unrealized loss position and has determined that the unrecognized or unrealized losses on the Company's investment securities are unrelated to credit quality and primarily attributable to changes in interest rates and volatility in the financial markets since purchase. All of the investment securities in an unrecognized or unrealized loss position continue to be rated investment grade by one or more major rating agencies. The Company does not intend to sell the AFS and HTM securities that were in an unrecognized or unrealized loss position as of March 31, 2025 and December 31, 2024, and it is unlikely that the Company will be required to sell these securities before recovery of its amortized cost basis that may be at maturity. Therefore, the Company has not recorded an ACL on these securities and the unrecognized or unrealized losses on these securities have not been recognized into income.

Table of Contents

3. LOANS AND CREDIT QUALITY

The following table presents loans by class, excluding loans held for sale, net of deferred fees and costs as of the dates presented:


(dollars in thousands)	March 31, 2025		December 31, 2024



Commercial and industrial	$	634,620	$	606,936
Real estate:
Construction	160,092		145,211
Residential mortgage	1,870,239		1,892,520
Home equity	655,237		676,982
Commercial mortgage	1,552,439		1,500,680
Consumer	461,920		510,523



Loans, net of deferred fees and costs	$	5,334,547	$	5,332,852

Interest income on loans is accrued at the contractual rate of interest on the unpaid principal balance. Accrued interest receivable on loans totaled $17.9 million and $17.5 million as of March 31, 2025 and December 31, 2024, respectively, and was reported together with accrued interest receivable on investment securities and other assets on the consolidated balance sheets. Accrued interest receivable on loans is excluded from the estimate of credit losses.

During the three months ended March 31, 2025, the Company identified and reclassified $58.3 million in consumer loans to the commercial and industrial loan category as the loans' structure and characteristics more closely aligned with loans in the commercial and industrial category.

The Company did not transfer any other loans to the held for sale category during the three months ended March 31, 2025 and 2024 and did not sell any loans originally held for investment during the three months ended March 31, 2025 and 2024.

The following tables present the loan purchase information at the time of purchase by class during the periods presented. None of these loan purchases were categorized as purchased credit deteriorated ("PCD") and there were no loans categorized as PCD during the periods presented. There were no loan purchases made during the three months ended March 31, 2024.


	Three Months Ended March 31, 2025
(dollars in thousands)	U.S. Mainland Consumer - Unsecured		U.S. Mainland Consumer - Automobile		Total
Purchases:
Outstanding balance	$	—	$	31,440	$	31,440
Premium	—		236		236
Purchase price	$	—	$	31,676	$	31,676

Foreclosure Proceedings

The Company did not own any foreclosed properties as of March 31, 2025 and December 31, 2024. The Company did not sell any foreclosed properties during the three months ended March 31, 2025 and 2024.

The Company had $2.6 million and $3.9 million of residential mortgage loans collateralized by residential real estate properties that were in the process of foreclosure as of March 31, 2025 and December 31, 2024, respectively.

The Company did not have any commercial real estate loans in the process of foreclosure as of March 31, 2025 and December 31, 2024.

Nonaccrual and Past Due Loans

For all loan types, the Company determines delinquency status by considering the number of days full payments required by the contractual terms of the loan are past due. The following tables present by class, the aging of the recorded investment in past

Table of Contents

due loans as of the dates presented. The following tables also present the amortized cost of loans on nonaccrual status for which there was no related ACL as of the dates presented:


(dollars in thousands)	Accruing Loans 30 - 59 Days Past Due		Accruing Loans 60 - 89 Days Past Due		Accruing Loans 90+ Days Past Due		Nonaccrual Loans		Total Past Due and Nonaccrual		Loans Not Past Due		Total Loans		Nonaccrual Loans With No ACL
March 31, 2025



Commercial and industrial	$	2,722	$	80	$	—	$	531	$	3,333	$	631,287	$	634,620	$	—
Real estate:
Construction	—		—		—		—		—		160,092		160,092		—
Residential mortgage	7,335		6,163		—		9,199		22,697		1,847,542		1,870,239		9,199
Home equity	749		676		87		746		2,258		652,979		655,237		746
Commercial mortgage	—		556		—		—		556		1,551,883		1,552,439		—
Consumer	3,599		997		670		609		5,875		456,045		461,920		—

Total	$	14,405	$	8,472	$	757	$	11,085	$	34,719	$	5,299,828	$	5,334,547	$	9,945


(dollars in thousands)	Accruing Loans 30 - 59 Days Past Due		Accruing Loans 60 - 89 Days Past Due		Accruing Loans 90+ Days Past Due		Nonaccrual Loans		Total Past Due and Nonaccrual		Loans Not Past Due		Total Loans		Nonaccrual Loans With No ACL
December 31, 2024



Commercial and industrial	$	2,978	$	210	$	—	$	414	$	3,602	$	603,334	$	606,936	$	—
Real estate:
Construction	—		—		—		—		—		145,211		145,211		—
Residential mortgage	8,880		3,316		323		9,044		21,563		1,870,957		1,892,520		9,044
Home equity	943		485		78		952		2,458		674,524		676,982		952
Commercial mortgage	—		—		—		—		—		1,500,680		1,500,680		—
Consumer	5,255		1,444		373		608		7,680		502,843		510,523		—

Total	$	18,056	$	5,455	$	774	$	11,018	$	35,303	$	5,297,549	$	5,332,852	$	9,996

Collateral-Dependent Loans

A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral, which are individually evaluated to determine expected credit losses. The following tables present the amortized cost basis of collateral-dependent loans by class and the related ACL allocated to these loans as of the dates presented:


(dollars in thousands)	Secured by 1-4 Family Residential Properties		Allocated ACL
March 31, 2025

Real estate:

Residential mortgage	$	9,199	$	—
Home equity	746		—



Total	$	9,945	$	—

Table of Contents


(dollars in thousands)	Secured by 1-4 Family Residential Properties		Secured by Nonfarm Nonresidential Properties		Total		Allocated ACL
December 31, 2024

Real estate:

Residential mortgage	$	9,044	$	—	$	9,044	$	—
Home equity	952		—		952		—



Total	$	9,996	$	—	$	9,996	$	—

Loan Modifications for Borrowers Experiencing Financial Difficulty

Since the adoption of ASU 2022-02 on January 1, 2023 and during the three months ended March 31, 2025, the Company has not had any material modifications to loans either individually or in the aggregate for borrowers experiencing financial difficulty.

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans by credit risk. This analysis includes non-homogeneous loans, such as commercial and commercial real estate loans. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk rating of loans.

Pass. Loans classified as pass are not adversely rated, are contractually current as to principal and interest, and are otherwise in compliance with the contractual terms of the loan agreement.

Special Mention. Loans classified as special mention, while still adequately protected by the borrower's capital adequacy and payment capability, exhibit distinct weakening trends and/or elevated levels of exposure to external conditions. If left unchecked or uncorrected, these potential weaknesses may result in deteriorated prospects of repayment. These exposures require management's close attention so as to avoid becoming undue or unwarranted credit exposures.

Substandard. Loans classified as substandard are inadequately protected by the borrower's current financial condition and payment capability or of the collateral pledged, if any. These loans have a well-defined weakness or weaknesses that jeopardize the orderly repayment of debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or orderly repayment in full, on the basis of current existing facts, conditions and values, highly questionable and improbable. Possibility of loss is extremely high, but because of certain important and reasonably specific factors that may work to the advantage and strengthening of the exposure, its classification as an estimate loss is deferred until its more exact status may be determined.

Loss. Loans classified as loss are considered to be non-collectible and of such little value that their continuance as bankable assets is not warranted. This does not mean the loan has absolutely no recovery value, but rather it is neither practical nor desirable to defer writing off the loan, even though partial recovery may be obtained in the future. Losses are taken in the period in which they surface as uncollectible.

Table of Contents

The following tables present the amortized cost basis, net of deferred fees and costs, of the Company's loans by class, credit quality indicator and origination year as of the dates presented. Revolving loans converted to term as of and during the periods presented were not material to the total loan portfolio. In addition, the following tables present gross charge-offs of loans by origination year during the periods presented.


(dollars in thousands)	Amortized Cost of Term Loans by Year of Origination												Amortized Cost of Revolving Loans
March 31, 2025	2025		2024		2023		2022		2021		Prior				Total
















Commercial and industrial:
Risk Rating
Pass	$	16,247	$	191,912	$	47,166	$	65,690	$	54,737	$	151,939	$	100,222	$	627,913
Special Mention	—		—		561		—		1,449		100		—		2,110
Substandard	—		3,428		50		720		41		258		100		4,597


Subtotal	16,247		195,340		47,777		66,410		56,227		152,297		100,322		634,620
Construction:
Risk Rating
Pass	—		12,926		43,513		38,253		19,147		46,253		—		160,092




Subtotal	—		12,926		43,513		38,253		19,147		46,253		—		160,092
Residential mortgage:
Risk Rating
Pass	7,667		83,254		88,003		257,730		583,222		840,276		—		1,860,152

Substandard	—		—		259		1,599		281		7,948		—		10,087


Subtotal	7,667		83,254		88,262		259,329		583,503		848,224		—		1,870,239
Home equity:
Risk Rating
Pass	61		1,044		11,689		29,036		17,332		32,827		562,415		654,404

Substandard	—		—		—		—		—		583		250		833


Subtotal	61		1,044		11,689		29,036		17,332		33,410		562,665		655,237
Commercial mortgage:
Risk Rating
Pass	58,254		190,823		95,093		216,794		219,492		740,588		6,471		1,527,515
Special Mention	—		—		620		—		2,483		1,764		—		4,867
Substandard	—		—		—		12,671		—		7,386		—		20,057


Subtotal	58,254		190,823		95,713		229,465		221,975		749,738		6,471		1,552,439
Consumer:
Risk Rating
Pass	22,362		67,603		65,400		156,630		83,662		30,312		34,672		460,641

Substandard	—		100		66		216		85		798		—		1,265

Loss	—		—		—		—		—		14		—		14
Subtotal	22,362		67,703		65,466		156,846		83,747		31,124		34,672		461,920
Total	$	104,591	$	551,090	$	352,420	$	779,339	$	981,931	$	1,861,046	$	704,130	$	5,334,547

Table of Contents


(dollars in thousands)	Amortized Cost of Term Loans by Year of Origination												Amortized Cost of Revolving Loans
December 31, 2024	2024		2023		2022		2021		2020		Prior				Total
















Commercial and industrial:
Risk Rating
Pass	$	167,816	$	58,905	$	69,576	$	57,354	$	21,827	$	142,546	$	81,876	$	599,900
Special Mention	—		—		—		2,539		—		—		—		2,539
Substandard	3,372		110		922		11		—		82		—		4,497


Subtotal	171,188		59,015		70,498		59,904		21,827		142,628		81,876		606,936
Construction:
Risk Rating
Pass	10,141		33,646		35,398		19,217		11,754		34,937		118		145,211




Subtotal	10,141		33,646		35,398		19,217		11,754		34,937		118		145,211
Residential mortgage:
Risk Rating
Pass	85,844		89,118		259,516		589,118		393,633		465,032		—		1,882,261

Substandard	—		—		1,599		616		1,855		6,189		—		10,259


Subtotal	85,844		89,118		261,115		589,734		395,488		471,221		—		1,892,520
Home equity:
Risk Rating
Pass	1,060		11,787		28,687		18,277		8,406		25,235		582,499		675,951

Substandard	—		—		—		—		—		1,031		—		1,031


Subtotal	1,060		11,787		28,687		18,277		8,406		26,266		582,499		676,982
Commercial mortgage:
Risk Rating
Pass	180,391		95,323		235,344		223,724		111,399		635,255		5,731		1,487,167
Special Mention	—		621		—		2,506		—		2,930		—		6,057
Substandard	—		—		—		—		—		7,456		—		7,456


Subtotal	180,391		95,944		235,344		226,230		111,399		645,641		5,731		1,500,680
Consumer:
Risk Rating
Pass	95,971		60,771		173,097		92,976		20,838		14,466		51,422		509,541

Substandard	21		90		162		144		27		478		60		982


Subtotal	95,992		60,861		173,259		93,120		20,865		14,944		51,482		510,523
Total	$	544,616	$	350,371	$	804,301	$	1,006,482	$	569,739	$	1,335,637	$	721,706	$	5,332,852


(dollars in thousands)	Gross Charge-Offs by Year of Origination
Three Months Ended March 31, 2025	2025		2024		2023		2022		2021		Prior		Total



Commercial and industrial	$	—	$	34	$	93	$	147	$	82	$	224		$	580





Consumer	—		212		192		1,605		633		335			2,977

Gross charge-offs	$	—	$	246	$	285	$	1,752	$	715	$	559		$	3,557


(dollars in thousands)	Gross Charge-Offs by Year of Origination
Three Months Ended March 31, 2024	2024		2023		2022		2021		2020		Prior		Total



Commercial and industrial	$	—	$	9	$	171	$	78	$	13	$	411		$	682





Consumer	—		182		2,743		1,216		165		532			4,838

Gross charge-offs	$	—	$	191	$	2,914	$	1,294	$	178	$	943		$	5,520

Table of Contents

4. ALLOWANCE FOR CREDIT LOSSES AND RESERVE FOR OFF-BALANCE SHEET CREDIT EXPOSURES

The following tables present by class, the activities in the ACL on loans during the periods presented:


(dollars in thousands)	Real Estate
Three Months Ended March 31, 2025	Commercial and Industrial		Construction		Residential Mortgage		Home Equity		Commercial Mortgage		Consumer		Total
Beginning balance	$	7,113	$	2,316	$	15,267	$	2,335	$	18,882	$	13,269	$	59,182


Provision (credit) for credit losses on loans	719		(34)		659		(530)		641		2,450		3,905
Subtotal	7,832		2,282		15,926		1,805		19,523		15,719		63,087
Charge-offs	(580)		—		—		—		—		(2,977)		(3,557)
Recoveries	171		—		10		3		—		755		939
Net (charge-offs) recoveries	(409)		—		10		3		—		(2,222)		(2,618)
Ending balance	$	7,423	$	2,282	$	15,936	$	1,808	$	19,523	$	13,497	$	60,469


(dollars in thousands)	Real Estate
Three Months Ended March 31, 2024	Commercial and Industrial		Construction		Residential Mortgage		Home Equity		Commercial Mortgage		Consumer		Total
Beginning balance	$	7,181	$	4,004	$	14,626	$	3,501	$	17,543	$	17,079	$	63,934


Provision (credit) for credit losses on loans	419		(385)		1,392		226		(539)		3,008		4,121
Subtotal	7,600		3,619		16,018		3,727		17,004		20,087		68,055
Charge-offs	(682)		—		—		—		—		(4,838)		(5,520)
Recoveries	90		—		8		6		—		893		997
Net (charge-offs) recoveries	(592)		—		8		6		—		(3,945)		(4,523)
Ending balance	$	7,008	$	3,619	$	16,026	$	3,733	$	17,004	$	16,142	$	63,532

The following table presents the activities in the reserve for off-balance sheet credit exposures, included in other liabilities, during the periods presented. The provision (credit) for off-balance sheet credit exposures is included in the provision for credit losses on the Company's income statement during the periods presented.


	Three Months Ended March 31,
(dollars in thousands)	2025		2024
Beginning balance	$	2,570	$	3,706


Provision (credit) for off-balance sheet credit exposures	267		(185)
Ending balance	$	2,837	$	3,521

5. INVESTMENTS IN UNCONSOLIDATED ENTITIES

The following table presents the components of the Company's investments in unconsolidated entities as of the dates presented:


(dollars in thousands)	March 31, 2025		December 31, 2024
Investments in low-income housing tax credit partnerships, net of amortization	$	47,196	$	48,730
Investments in common securities of statutory trusts	1,547		1,547
Investments in affiliates	92		90
Other	2,050		2,050
Total	$	50,885	$	52,417

The Company had commitments to fund low-income housing tax credit ("LIHTC") partnerships totaling $63.5 million and $63.5 million as of March 31, 2025 and December 31, 2024, respectively. Unfunded commitments related to LIHTC partnerships totaled $18.5 million and $19.1 million as of March 31, 2025 and December 31, 2024, respectively, and were

Table of Contents

included in other liabilities in the Company's consolidated balance sheets. The investments were accounted for under the proportional amortization method and were included in investments in unconsolidated entities in the Company's consolidated balance sheets.

The following table presents the expected payments for the unfunded commitments of LIHTC and other partnerships as of March 31, 2025, for the remainder of fiscal year 2025, the next five succeeding fiscal years, and all years thereafter:


(dollars in thousands)
Year Ending December 31,	LIHTC		Other		Total
2025 (remainder)	$	10,528	$	703	$	11,231
2026	7,564		—		7,564
2027	36		—		36
2028	30		—		30
2029	37		—		37
2030	30		—		30
Thereafter	305		—		305
Total unfunded commitments	$	18,530	$	703	$	19,233

The following table presents amortization and tax credits recognized associated with our investments in LIHTC partnerships for the periods presented:


	Three Months Ended March 31,
(dollars in thousands)	2025		2024
Proportional amortization method:
Amortization expense recognized in income tax expense	$	1,534	$	686
Tax credits recognized in income tax expense	1,794		800

In 2021, the Company committed $2.0 million to the JAM FINTOP Banktech Fund, L.P. The Company does not have the ability to exercise significant influence over the JAM FINTOP Banktech Fund, L.P. and the investment does not have a readily determinable fair value. As a result, the Company determined that the cost method of accounting for the investment was appropriate. The Company had $0.7 million and $0.8 million in unfunded commitments related to the investment as of March 31, 2025 and December 31, 2024, respectively, which was included in other liabilities in the Company's consolidated balance sheets.

Table of Contents

6. MORTGAGE SERVICING RIGHTS

Mortgage loans serviced for others are not reported on the Company's consolidated balance sheets. The following table presents mortgage loans serviced for others by investor, which totaled $1.17 billion and $1.18 billion as of March 31, 2025 and December 31, 2024, respectively.


(dollars in thousands)	March 31, 2025		December 31, 2024
Mortgage loan portfolio serviced for:
Federal National Mortgage Association	$	716,119	$	720,070
Federal Home Loan Mortgage Corporation	450,291		457,228
Federal Home Loan Bank	371		444
Total loans serviced for others	$	1,166,781	$	1,177,742

The following table presents changes in mortgage servicing rights ("MSR") for the periods presented:


(dollars in thousands)
Balance at December 31, 2024	$	8,473
Additions	137
Amortization	(192)
Balance at March 31, 2025	$	8,418

Balance at December 31, 2023	$	8,696
Additions	81
Amortization	(178)
Balance at March 31, 2024	$	8,599

The following table presents the fair market value and key assumptions used in determining the fair market value of MSR as of the dates presented:


(dollars in thousands)	March 31, 2025			December 31, 2024
Fair market value, beginning of year	$	12,387		$	12,185
Fair market value, end of period	12,079			12,387
Weighted average discount rate	9.5		%	9.5		%
Weighted average prepayment speed assumption	10.3			10.2

The Company performs an impairment assessment of its MSR whenever events or changes in circumstance indicate that the carrying value of the MSR may not be recoverable. The Company noted no impairment or triggering events related to its MSR as of March 31, 2025.

7. DERIVATIVES

The Company utilizes various designated and undesignated derivative financial instruments to reduce its exposure to movements in interest rates. The Company measures all derivatives at fair value on its consolidated balance sheet. In each reporting period, the Company records the derivative instruments in other assets or other liabilities depending on whether the derivatives are in an asset or liability position. For derivative instruments that are designated as cash flow hedging instruments, the Company records the effective portion of the changes in the fair value of the derivative in accumulated other comprehensive income (loss) ("AOCI"), net of tax, until earnings are affected by the variability of cash flows of the hedged transaction. The Company immediately recognizes the portion of the gain or loss in the fair value of the derivative that represents hedge ineffectiveness in current period earnings. For derivative instruments that are not designated as hedging instruments, changes in the fair value of the derivative are included in current period earnings.

Derivative financial instruments are subject to credit and counterparty risk, which is defined as the risk of financial loss if a borrower or counterparty is either unable or unwilling to repay borrowings or settle transactions in accordance with the

Table of Contents

underlying contractual terms. Credit and counterparty risks associated with derivative financial instruments are similar to those relating to traditional financial instruments. The Company manages derivative credit and counterparty risk by evaluating the creditworthiness of each borrower or counterparty and requiring collateral where appropriate.

Interest Rate Lock and Forward Sale Commitments

The Company enters into interest rate lock commitments on certain mortgage loans that are intended to be sold. To manage interest rate risk on interest rate lock commitments, the Company also enters into forward loan sale commitments on the loans that are intended to be sold. The interest rate lock and forward loan sale commitments are accounted for as undesignated derivatives and are recorded at their respective fair values in other assets and other liabilities, with changes in fair value recorded in current period earnings. These instruments serve to reduce the Company's exposure to movements in interest rates.

The Company was not party to any interest rate lock commitments on mortgage loans as of March 31, 2025. The Company was party to interest rate lock commitments on $0.5 million of mortgage loans as of December 31, 2024. The Company was party to forward sale commitments on mortgage loans of $2.4 million and $4.9 million as of March 31, 2025 and December 31, 2024, respectively.

Risk Participation Agreements

From time to time, the Company may enter into credit risk participation agreements ("RPA") with financial institution counterparties for interest rate swaps related to loans in which it participates. The RPAs entered into by us and a participant bank provide credit protection to the financial institution counterparties should the borrowers fail to perform on their interest rate derivative contracts with the financial institutions. The RPAs are accounted for as undesignated derivatives and are recorded at fair value, with changes in fair value recorded in current period earnings.

The Company was party to RPAs with total notional amounts of $35.0 million and $35.2 million as of March 31, 2025 and December 31, 2024, respectively. The fair value of the RPAs was insignificant to the consolidated financial statements as of March 31, 2025 and December 31, 2024.

Back-to-Back Swap Agreements

The Company established a program whereby it originates a variable rate loan and enters into a variable-to-fixed interest rate swap with the customer. The Company also enters into an equal and offsetting swap with a highly rated third-party financial institution. These "back-to-back swap agreements" are intended to offset each other and allow the Company to originate a variable rate loan, while providing a contract for fixed interest payments for the customer. The net cash flow for the Company is equal to the interest income received from a variable rate loan originated with the customer. These back-to-back swap agreements are free-standing derivatives and recorded at fair value in other assets or other liabilities on the Company's consolidated balance sheet, with changes in fair value recorded in current period earnings.

The Company has entered into swap agreements with its borrowers with total notional amounts of $61.9 million and $50.2 million as of March 31, 2025 and December 31, 2024, respectively, offset by swap agreements with third-party financial institutions with the same total notional amounts. The Company received $11.6 million and $12.9 million in counter-party cash collateral related to the back-to-back swap agreements as of March 31, 2025 and December 31, 2024, respectively.

Interest Rate Swap

To mitigate interest rate risk, during the first quarter of 2022, the Company entered into a forward starting interest rate swap, with a notional amount of $115.5 million, that was designated as a fair value hedge of certain municipal debt securities. The Company pays the counterparty a fixed rate of 2.095% and receives a floating rate based on the Federal Funds effective rate. The fair value hedge became effective on March 31, 2024 and has a maturity date of March 31, 2029.

The interest rate swap is carried on the Company’s consolidated balance sheet at its fair value in other assets (when the fair value is positive) or in other liabilities (when the fair value is negative). The changes in the fair value of the interest rate swap are recorded in interest income. The unrealized gains or losses due to changes in fair value of the hedged debt securities due to changes in benchmark interest rates are recorded as an adjustment to the hedged debt securities and offset in the same interest income line item. As of March 31, 2025, the hedge was determined to be effective and the Company expects the hedge to remain effective during the remaining term.

Table of Contents

During the three months ended March 31, 2025 and 2024, the Company recorded a gain of $0.7 million and a loss of $0.1 million on the interest rate swap, respectively, in interest income on taxable investment securities on the Company's consolidated statements of income.

The following tables present the location of all assets and liabilities associated with our derivative instruments within the consolidated balance sheets as of the dates presented:


Derivative Financial Instruments Not Designated as Hedging Instruments		Asset Derivatives				Liability Derivatives
		Fair Value at				Fair Value at
(dollars in thousands)	Balance Sheet Location	March 31, 2025		December 31, 2024		March 31, 2025		December 31, 2024
Interest rate lock and forward sale commitments	Other assets / other liabilities	$	2	$	46	$	1	$	4


Back-to-back swap agreements	Other assets / other liabilities	3,604		3,840		3,604		3,840

Derivative Financial Instruments Designated as Hedging Instruments

Asset Derivatives

Liability Derivatives

Fair Value at

(dollars in thousands)

Balance Sheet Location

March 31,
2025

December 31,
2024

March 31,
2025

December 31,
2024

Interest rate swap

Other assets / other liabilities

6,353

8,382

—

The following tables present the impact of derivative instruments and their location within the consolidated statements of income for the periods presented:

Derivative Financial Instruments
Not Designated as Hedging Instruments

Location of Gain (Loss)
Recognized in
Earnings on Derivatives

Amount of Gain (Loss)
Recognized in
Earnings on Derivatives

(dollars in thousands)

Three Months Ended March 31, 2025

Interest rate lock and forward sale commitments

Mortgage banking income

(42)

Loans held for sale

Other income

Back-to-back swap agreements

Other service charges and fees

176

Three Months Ended March 31, 2024

Interest rate lock and forward sale commitments

Mortgage banking income

Back-to-back swap agreements

Other service charges and fees

Derivative Financial Instruments
Designated as Hedging Instruments

Location of Gain (Loss)
Recognized in
Earnings on Derivatives

Amount of Gain (Loss)
Recognized in
Earnings on Derivatives

(dollars in thousands)

Three Months Ended March 31, 2025

Interest rate swap

Interest income

718

Three Months Ended March 31, 2024

Interest rate swap

Interest income

(108)

Table of Contents

The following table presents the amounts recorded on the consolidated balance sheets related to cumulative basis adjustments for fair value hedges as of the periods presented:


Line Item in the Consolidated Balance Sheets
(dollars in thousands)	March 31, 2025		December 31, 2024
Investment securities, available-for-sale:
Carrying Amount of the Hedged Assets	$	90,482	$	88,777
Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets	(6,712)		(8,805)

8. SHORT-TERM BORROWINGS AND LONG-TERM DEBT

The following table presents long-term debt, which is based on original maturity and consists of advances under the arrangement with Federal Home Loan Bank of Des Moines, junior subordinated debentures and subordinated notes as of the dates presented:


(dollars in thousands)	March 31, 2025		December 31, 2024




Long-term debt:
Federal Home Loan Bank long-term advances	$	25,000	$	50,000
Subordinated debentures	51,547		51,547
Subordinated notes, net of unamortized debt issuance costs	54,858		54,798
Total	$	131,405	$	156,345

At March 31, 2025, future principal payments on long-term debt based on redemption date or final maturity are as follows:


(dollars in thousands)
Year Ending December 31,
2025 (remainder)	$	—
2026	—
2027	—
2028	25,000
2029	—
2030	55,000
Thereafter	51,547
Total	$	131,547

Federal Home Loan Bank Advances and Other Borrowings

The Bank is a member of the Federal Home Loan Bank of Des Moines (the "FHLB") and maintained a $1.76 billion line of credit as of March 31, 2025, compared to $1.76 billion as of December 31, 2024. As of March 31, 2025, $1.66 billion was undrawn under this arrangement, compared to $1.63 billion as of December 31, 2024. There were no short-term borrowings outstanding under this arrangement as of March 31, 2025 and December 31, 2024. There was a $25.0 million long-term advance under the FHLB arrangement bearing an interest rate of 4.02% as of March 31, 2025. There were $50.0 million in long-term advances under the FHLB arrangement bearing interest rates between 4.02% and 4.62% as of December 31, 2024.

The FHLB provides standby letters of credit on behalf of the Bank to secure certain public deposits. If the FHLB is required to make a payment on a standby letter of credit, the payment amount is converted to an advance at the FHLB. Standby letters of credit under this arrangement that are used to collateralize certain government deposits totaled $83.6 million as of March 31, 2025, compared to $83.6 million as of December 31, 2024. The letters of credit are counted against the total line of credit, the same as the current outstanding debt, to determine the undrawn or total available line of credit.

Table of Contents

In accordance with the collateral provisions of the Advances, Security and Deposit Agreement with the FHLB, the FHLB advances and standby letters of credit available as of March 31, 2025 and December 31, 2024 were secured by certain real estate loans with a carrying value of approximately $3.13 billion and $3.14 billion, respectively.

The Bank had additional unused borrowings available at the Federal Reserve Discount Window of $231.7 million and $232.1 million as of March 31, 2025 and December 31, 2024, respectively. Certain commercial and commercial real estate loans with a par value totaling $125.0 million and $128.3 million as of March 31, 2025 and December 31, 2024, respectively, were pledged as collateral on our line of credit with the Federal Reserve. In addition, investment securities with a par value of $181.6 million and $184.3 million as of March 31, 2025 and December 31, 2024, respectively, were pledged to the Federal Reserve in support of the line of credit. The Federal Reserve does not have the right to sell or repledge these loans and investment securities.

The Bank had additional unused and unsecured credit lines available totaling $75.0 million as of March 31, 2025 and December 31, 2024.

Subordinated Debentures

The following table presents the Company's junior subordinated debentures outstanding, which are recorded in long-term debt on the Company's consolidated balance sheets as of the dates presented:


(dollars in thousands)
Name of Trust	March 31, 2025		December 31, 2024		Interest Rate
CPB Capital Trust IV	$	30,928	$	30,928	Three-month CME Term SOFR + tenor spread adjustment of 0.26% + 2.45%
CPB Statutory Trust V	20,619		20,619		Three-month CME Term SOFR + tenor spread adjustment of 0.26% + 1.87%
Total	$	51,547	$	51,547

In September 2004, we created a wholly-owned statutory trust, CPB Capital Trust IV ("Trust IV"). Trust IV issued $30.0 million in floating rate trust preferred securities which bore an interest rate of three-month LIBOR plus 2.45% and maturing on December 15, 2034. The principal assets of Trust IV are $30.9 million of the Company's junior subordinated debentures with an identical interest rate and maturity as the Trust IV trust preferred securities. Trust IV issued $0.9 million of common securities to the Company.

In December 2004, we created a wholly-owned statutory trust, CPB Statutory Trust V ("Trust V"). Trust V issued $20.0 million in floating rate trust preferred securities which bore an interest rate of three-month LIBOR plus 1.87% and maturing on December 15, 2034. The principal assets of Trust V are $20.6 million of the Company's junior subordinated debentures with an identical interest rate and maturity as the Trust V trust preferred securities. Trust V issued $0.6 million of common securities to the Company.

The Company is not considered the primary beneficiary of Trusts IV and V. Therefore, the trusts are not considered variable interest entities and are not consolidated in the Company's financial statements. Rather the subordinated debentures are shown as liabilities on the Company's consolidated balance sheets. The Company's investments in the common securities of the trusts are included in investment in unconsolidated entities in the Company's consolidated balance sheets.

The floating trust preferred securities, the junior subordinated debentures that are the assets of Trusts IV and V and the common securities issued by Trusts IV and V are redeemable in whole or in part on any interest payment date, or at any time in whole but not in part within 90 days following the occurrence of certain events. Our obligations with respect to the issuance of the trust preferred securities constitute a full and unconditional guarantee by the Company of each trust's obligations with respect to its trust preferred securities. Subject to certain exceptions and limitations, we may elect from time to time to defer interest payments on the subordinated debentures, which would result in a deferral of distribution payments on the related trust preferred securities, for up to 20 consecutive quarterly periods without default or penalty.

Table of Contents

The subordinated debentures are included in Tier 1 capital, with certain limitations applicable, under regulatory guidelines and interpretations.

Subordinated Notes

The following table presents the Company's subordinated notes outstanding as of the dates presented:

(dollars in thousands)

Description

March 31, 2025

December 31, 2024

Interest Rate

October 2020 Private Placement

55,000

4.75% for the first five years. Resets quarterly thereafter to the then current three-month SOFR plus 456 basis points.

On October 20, 2020, the Company completed a $55.0 million private placement of ten-year fixed-to-floating rate subordinated notes, which will be used to support regulatory capital ratios and for general corporate purposes. The Company exchanged the privately placed notes for registered notes with the same terms and in the same aggregate principal amount at the end of the fourth quarter of 2020. The subordinated notes bear a fixed interest rate of 4.75% for the first five years through November 1, 2025 and will reset quarterly thereafter for the remaining five years to the then current three-month SOFR, as published by the Federal Reserve Bank of New York, plus 456 basis points. The subordinated notes are callable quarterly after the first five years.

The subordinated notes are included in Tier 2 capital, with certain limitations applicable, under current regulatory guidelines and interpretations. The subordinated notes had a carrying value of $54.9 million and $54.8 million, net of unamortized debt issuance costs of $0.1 million and $0.2 million as of March 31, 2025 and December 31, 2024, respectively.

9. REVENUE FROM CONTRACTS WITH CUSTOMERS

The following table presents the Company's other operating income, segregated by revenue streams that are in-scope and out-of-scope of ASC 606, "Revenue from Contracts with Customers" for the periods presented:


	Three Months Ended March 31, 2025						Three Months Ended March 31, 2024
(dollars in thousands)	In-Scope		Out-of-Scope		Total		In-Scope		Out-of-Scope		Total
Other operating income:
Mortgage banking income	$	242	$	355	$	597	$	72	$	541	$	613
Service charges on deposit accounts	2,147		—		2,147		2,103		—		2,103
Other service charges and fees	5,147		619		5,766		4,670		591		5,261
Income from fiduciary activities	1,624		—		1,624		1,435		—		1,435
Income from bank-owned life insurance	—		497		497		—		1,522		1,522




Other	—		465		465		—		310		310
Total other operating income	$	9,160	$	1,936	$	11,096	$	8,280	$	2,964	$	11,244

10. SHARE-BASED COMPENSATION

Restricted and Performance Stock Units

Under the Company's 2023 Stock Compensation Plan, the Company awarded restricted stock units ("RSUs") and performance stock units ("PSUs") to certain non-officer directors and senior management personnel. The awards typically vest over a two-, three- or five-year period from the date of grant and are subject to forfeiture until performance and employment targets are achieved. Compensation expense is typically measured as the market price of the stock awards on the grant date, and is recognized over the specified vesting periods.

Table of Contents

The following table presents the activities of RSUs and PSUs for the three months ended March 31, 2025:


(dollars in thousands, except per share data)	Shares	Weighted Average Grant Date Fair Value Per Share		Fair Value of RSUs and PSUs That Vested During the Period
Non-vested RSUs and PSUs, beginning of period	284,151	$	22.48
Changes during the period:
Granted	105,751	30.17
Forfeited	(1,763)	35.19
Vested	(98,787)	25.84		$	2,933
Non-vested RSUs and PSUs, end of period	289,352	24.07

11. SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS

In 1995, 2001, 2004 and 2006, the Bank established Supplemental Executive Retirement Plans ("SERP"), which provide certain (current and former) officers of the Company with supplemental retirement benefits. On December 31, 2002, the 1995 and 2001 SERP were curtailed. In conjunction with the September 2004 merger with CB Bancshares, Inc. ("CBBI"), the Company assumed CBBI's SERP obligation.

The projected benefit obligation of the unfunded SERP is recorded in other liabilities on the Company's consolidated balance sheets. The projected benefit obligation was $8.7 million and $8.8 million as of March 31, 2025 and December 31, 2024, respectively.

The following table presents the components of net periodic benefit cost for the SERP for the periods presented:


	Three Months Ended March 31,
(dollars in thousands)	2025		2024
Interest cost	$	114	$	108




Net periodic benefit cost	$	114	$	108

All components of net periodic benefit cost are included in other operating expenses in the Company's consolidated statements of income.

12. OPERATING LEASES

The Company leases certain land and buildings for its bank branches and ATMs. In some instances, a lease may contain renewal options to extend the term of the lease. Renewal options that are likely to be exercised have been recognized as part of our right-of-use assets and lease liabilities in accordance with ASC 842, "Leases". Certain leases also contain variable payments that are primarily determined based on common area maintenance costs and Hawaii state tax rates. All leases are operating leases and we do not include any short-term leases in the calculation of the right-of-use assets and lease liabilities. The most significant assumption related to the Company’s application of ASC 842 was the discount rate assumption. As most of the Company’s lease agreements do not provide for an implicit interest rate, the Company uses the collateralized interest rate that the Company would have to pay to borrow over a similar term to estimate the Company’s lease liabilities.

Table of Contents

The following table presents total lease cost, cash flow information, weighted-average remaining lease term and weighted-average discount rate for the periods presented:


	Three Months Ended March 31,
(dollars in thousands)	2025			2024
Lease cost:
Operating lease cost	$	1,307		$	1,303
Variable lease cost	619			935

Total lease cost	$	1,926		$	2,238

Other information:
Operating cash flows from operating leases	$	(1,280)		$	(1,257)
Weighted-average remaining lease term - operating leases	10.13 years			11.15 years
Weighted-average discount rate - operating leases	4.08		%	4.08		%

The following table presents a schedule of annual undiscounted cash flows for our operating leases and a reconciliation of those cash flows to the operating lease liabilities as of March 31, 2025, for the remainder of fiscal year 2025, the next five succeeding fiscal years and all years thereafter:


(dollars in thousands)	Undiscounted Cash Flows		Lease Liability Expense		Lease Liability Reduction
Year Ending December 31,
2025 (remainder)	$	3,768	$	898	$	2,870
2026	5,002		1,065		3,937
2027	4,199		926		3,273
2028	3,443		811		2,632
2029	3,062		710		2,352
2030	2,994		616		2,378
Thereafter	15,963		2,348		13,615
Total	$	38,431	$	7,374	$	31,057

In addition, the Company, as lessor, leases certain properties that it owns. All of these leases are operating leases. The following table presents lease income related to these leases that was recognized for the periods presented:


	Three Months Ended March 31,
(dollars in thousands)	2025		2024
Total rental income recognized	$	468	$	509

Table of Contents

The following table presents estimated lease payments, based on the Company's leases as lessor as of March 31, 2025, for the remainder of fiscal year 2025, the next five succeeding fiscal years, and all years thereafter:


(dollars in thousands)
Year Ending December 31,
2025 (remainder)	$	1,104
2026	1,290
2027	1,171
2028	717
2029	641
2030	533
Thereafter	783
Total	$	6,239

13. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following tables present the components of other comprehensive income (loss) for the periods presented:


(dollars in thousands)	Before Tax		Tax Effect		Net of Tax
Three Months Ended March 31, 2025
Net change in fair value of investment securities:
Net unrealized gains on AFS investment securities arising during the period	$	15,287	$	4,032	$	11,255

Less: Amortization of unrealized losses on investment securities transferred to HTM	1,552		409		1,143
Net change in fair value of investment securities	16,839		4,441		12,398

Net change in fair value of derivatives:
Net unrealized losses arising during the period	(2,093)		(552)		(1,541)

Net change in fair value of derivatives	(2,093)		(552)		(1,541)









Other comprehensive income	$	14,746	$	3,889	$	10,857


(dollars in thousands)	Before Tax		Tax Effect		Net of Tax
Three Months Ended March 31, 2024
Net change in fair value of investment securities:
Net unrealized losses on AFS investment securities arising during the period	$	(7,035)	$	(1,855)	$	(5,180)

Less: Amortization of unrealized losses on investment securities transferred to HTM	1,638		432		1,206
Net change in fair value of investment securities	(5,397)		(1,423)		(3,974)

Net change in fair value of derivatives:
Net unrealized gains arising during the period	3,053		806		2,247

Net change in fair value of derivatives	3,053		806		2,247









Other comprehensive loss	$	(2,344)	$	(617)	$	(1,727)

Table of Contents

The following tables present the changes in each component of accumulated other comprehensive income (loss), net of tax, for the periods presented:


(dollars in thousands)	Investment Securities		Derivatives		SERP		AOCI
Three Months Ended March 31, 2025
Balance at beginning of period	$	(121,491)	$	6,494	$	575	$	(114,422)




Other comprehensive income (loss) before reclassifications	11,255		(1,541)		—		9,714
Reclassification adjustments from AOCI	1,143		—		—		1,143
Total other comprehensive income (loss)	12,398		(1,541)		—		10,857

Balance at end of period	$	(109,093)	$	4,953	$	575	$	(103,565)


(dollars in thousands)	Investment Securities		Derivatives		SERP		AOCI
Three Months Ended March 31, 2024
Balance at beginning of period	$	(127,922)	$	5,029	$	297	$	(122,596)





Other comprehensive income (loss) before reclassifications	(5,180)		2,247		—		(2,933)
Reclassification adjustments from AOCI	1,206		—		—		1,206
Total other comprehensive income (loss)	(3,974)		2,247		—		(1,727)

Balance at end of period	$	(131,896)	$	7,276	$	297	$	(124,323)

The following tables present the amounts reclassified out of each component of AOCI for the periods presented:


	Amount Reclassified from AOCI				Affected Line Item in the Statement Where Net Income is Presented
(dollars in thousands)	Three Months Ended March 31,
Details about AOCI Components	2025		2024





Amortization of unrealized losses on investment securities transferred to HTM:
Amortization	$	1,552	$	1,638	Interest and dividends on investment securities
Tax effect	(409)		(432)		Income tax benefit
Net of tax	1,143		1,206










Total reclassification adjustments from AOCI for the period, net of tax	$	1,143	$	1,206

Table of Contents

14. EARNINGS PER SHARE

The following table presents the information used to compute basic and diluted earnings per share for the periods presented:


	Three Months Ended March 31,
(dollars in thousands, except per share data)	2025		2024
Net income	$	17,760	$	12,945

Weighted average common shares outstanding - basic	27,087,154		27,046,525
Dilutive effect of employee stock options and awards	126,252		52,576
Weighted average common shares outstanding - diluted	27,213,406		27,099,101

Basic earnings per share	$	0.66	$	0.48
Diluted earnings per share	$	0.65	$	0.48

Anti-dilutive employee stock options and awards	2,415		1,443

15. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

Disclosures about Fair Value of Financial Instruments

Fair value estimates, methods and assumptions are set forth below for our financial instruments.

Short-Term Financial Instruments

The carrying values of short-term financial instruments are deemed to approximate fair values. Such instruments are considered readily convertible to cash and include cash and due from financial institutions, interest-bearing deposits in other financial institutions, accrued interest receivable, the majority of short-term FHLB advances and other short-term borrowings, and accrued interest payable.

Investment Securities

The fair value of investment securities is based on market price quotations received from third-party pricing services. The third-party pricing services utilize pricing models supported with timely market data information. Where quoted market prices are not available, fair values are based on quoted market prices of comparable securities.

Loans

Fair values of loans are estimated based on discounted cash flows of portfolios of loans with similar financial characteristics including the type of loan, interest terms and repayment history. Fair values are calculated by discounting scheduled cash flows through estimated maturities using estimated market discount rates. Estimated market discount rates are reflective of credit and interest rate risks inherent in the Company's various loan types and are derived from available market information, as well as specific borrower information. The weighted average discount rate used in the valuation of loans was 6.69% and 7.07% as of March 31, 2025 and December 31, 2024, respectively. In accordance with ASU 2016-01, the fair values of loans are measured based on the notion of exit price.

Loans Held for Sale

The fair value of loans classified as held for sale are generally based upon quoted prices for similar assets in active markets, acceptance of firm offer letters with agreed upon purchase prices, discounted cash flow models that take into account market observable assumptions, or independent appraisals of the underlying collateral securing the loans. We report loans previously held for investment that were transferred to loans held for sale, if any, at fair value, net of estimated selling costs on our consolidated balance sheets.

Table of Contents

Deposit Liabilities

The fair values of deposits with no stated maturity, such as noninterest-bearing demand deposits and interest-bearing demand and savings accounts, for the purposes of this disclosure, are shown to equal the carrying amount which is the amount payable on demand. The fair value of time deposits is estimated by discounting future cash flows using rates currently offered for FHLB advances of similar remaining maturities. The weighted average discount rate used in the valuation of time deposits was 4.44% and 4.50% as of March 31, 2025 and December 31, 2024, respectively.

Long-Term Debt

The fair values of our long-term debt is estimated by discounting scheduled cash flows over the contractual borrowing period at the estimated market rate for similar borrowing arrangements. The weighted average discount rate used in the valuation of long-term debt was 7.13% and 6.68% as of March 31, 2025 and December 31, 2024, respectively.

Derivatives

The fair values of derivative financial instruments are based upon current market values, if available. If there are no relevant comparable values, fair values are based on pricing models using current assumptions for forward sale commitments, interest rate lock commitments, risk participation agreements, back-to-back swap agreements, and interest rate swaps.

Off-Balance Sheet Financial Instruments

The fair values of off-balance sheet financial instruments are estimated based on the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties, current settlement values or quoted market prices of comparable instruments.

Limitations

Fair value estimates are made at a specific point in time based on relevant market and financial instrument information. These estimates do not reflect any premium or discount that could result from offering for sale at one time our entire holdings of a particular financial instrument. Because no market exists for a significant portion of our financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates cannot be determined with precision as they are subjective in nature and involve uncertainties and matters of significant judgment. Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing on- and off-balance sheet financial instruments without attempting to estimate the value of future business and the value of assets and liabilities that are not considered financial instruments. For example,

Table of Contents

significant assets and liabilities that are not considered financial assets or liabilities include deferred tax assets and premises and equipment.


					Fair Value Measurement Using
(dollars in thousands)	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2025
Financial assets:
Cash and due from financial institutions	$	106,670	$	106,670	$	106,670	$	—	$	—
Interest-bearing deposits in other financial institutions	170,226		170,226		170,226		—		—
Investment securities	1,370,067		1,292,096		60,718		1,224,534		6,844
Loans held for sale	2,788		2,788		—		2,788		—
Loans	5,334,547		4,974,386		—		—		4,974,386



Accrued interest receivable	24,743		24,743		873		4,544		19,326

Financial liabilities:
Deposits:
Noninterest-bearing demand	1,854,241		1,854,241		1,854,241		—		—
Interest-bearing demand and savings and money market	3,684,935		3,684,935		3,684,935		—		—
Time	1,056,872		1,049,635		—		—		1,049,635

Long-term debt	131,405		126,098		—		—		126,098
Accrued interest payable	8,757		8,757		107		—		8,650


							Fair Value Measurement Using
(dollars in thousands)	Notional Amount		Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2025
Off-balance sheet financial instruments:
Commitments to extend credit	$	1,257,406	$	—	$	1,179	$	—	$	1,179	$	—
Standby letters of credit and financial guarantees written	2,714		—		41		—		41		—

Derivatives:

Forward sale commitments	2,370		1		1		—		1		—
Risk participation agreements	34,969		—		—		—		—		—
Back-to-back swap agreements:
Assets	61,909		3,604		3,604		—		—		3,604
Liabilities	(61,909)		(3,604)		(3,604)		—		—		(3,604)
Interest rate swap agreements	115,545		6,353		6,353		—		6,353		—

Table of Contents


					Fair Value Measurement Using
(dollars in thousands)	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2024
Financial assets:
Cash and due from financial institutions	$	77,774	$	77,774	$	77,774	$	—	$	—
Interest-bearing deposits in other financial institutions	303,167		303,167		303,167		—		—
Investment securities	1,334,588		1,244,339		59,498		1,177,994		6,847
Loans held for sale	5,662		5,662		—		5,662		—
Loans	5,332,852		4,916,765		—		—		4,916,765



Accrued interest receivable	23,378		23,378		462		4,607		18,309

Financial liabilities:
Deposits:
Noninterest-bearing demand	1,888,937		1,888,937		1,888,937		—		—
Interest-bearing demand and savings and money market	3,667,889		3,667,889		3,667,889		—		—
Time	1,087,185		1,079,275		—		—		1,079,275

Long-term debt	156,345		153,760		—		—		153,760
Accrued interest payable	10,051		10,051		113		—		9,938


							Fair Value Measurement Using
(dollars in thousands)	Notional Amount		Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2024
Off-balance sheet financial instruments:
Commitments to extend credit	$	1,219,537	$	—	$	1,167	$	—	$	1,167	$	—
Standby letters of credit and financial guarantees written	2,702		—		41		—		41		—

Derivatives:
Interest rate lock commitments	469		(4)		(4)		—		(4)		—
Forward sale commitments	4,909		46		46		—		46		—
Risk participation agreements	35,183		—		—		—		—		—
Back-to-back swap agreements:
Assets	50,202		3,840		3,840		—		—		3,840
Liabilities	(50,202)		(3,840)		(3,840)		—		—		(3,840)
Interest rate swap agreements	115,545		8,382		8,382		—		8,382		—

Fair Value Measurements

We group our financial assets and liabilities at fair value into three levels based on the markets in which the financial assets and liabilities are traded and the reliability of the assumptions used to determine fair value as follows:

•Level 1 — Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities traded in active markets. A quoted price in an active market provides the most reliable evidence of fair value and shall be used to measure fair value whenever available.

•Level 2 — Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

Table of Contents

•Level 3 — Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect our own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of discounted cash flow models and similar techniques that requires the use of significant judgment or estimation.

We base our fair values on the price that we would expect to receive if an asset were sold, or the price that we would expect to pay to transfer a liability in an orderly transaction between market participants at the measurement date. We also maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements.

We use fair value measurements to record adjustments to certain financial assets and liabilities and to determine fair value disclosures. Available-for-sale securities and derivatives are recorded at fair value on a recurring basis. Periodically, we may be required to record other financial assets at fair value on a nonrecurring basis such as loans held for sale, individually evaluated loans, mortgage servicing rights, and other real estate owned. These nonrecurring fair value adjustments typically involve application of the lower of cost or fair value accounting or write-downs of individual assets.

During the year ended December 31, 2024, the Company transferred an interest rate swap from Level 3 to Level 2 of the fair value hierarchy. The transfer was due to a change in the methodology used. There were no transfers of financial assets and liabilities into and out of Level 3 of the fair value hierarchy during the three months ended March 31, 2025.

The following tables present the fair value of financial assets and liabilities measured on a recurring basis as of the dates presented:


			Fair Value at Reporting Date Using
(dollars in thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2025
Available-for-sale securities:
Debt securities:
States and political subdivisions	$	118,629	$	—	$	112,467	$	6,162

U.S. Treasury and other government-sponsored entities and agencies	103,787		60,718		43,069		—
Collateralized loan obligations	30,989		—		30,989		—
Mortgage-backed securities:
Residential - U.S. government-sponsored entities and agencies	432,051		—		432,051		—
Residential - Non-government agencies	16,602		—		15,920		682
Commercial - U.S. government-sponsored entities and agencies	68,364		—		68,364		—
Commercial - Non-government agencies	9,957		—		9,957		—

Total available-for-sale investment securities	780,379		60,718		712,817		6,844



Derivatives:

Forward sale commitments	1		—		1		—


Interest rate swap agreements	6,353		—		6,353		—
Total derivatives	6,354		—		6,354		—
Total	$	786,733	$	60,718	$	719,171	$	6,844

Table of Contents


			Fair Value at Reporting Date Using
(dollars in thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2024
Available-for-sale securities:
Debt securities:
States and political subdivisions	$	116,833	$	—	$	110,668	$	6,165

U.S. Treasury and other government-sponsored entities and agencies	81,200		59,498		21,702		—
Collateralized loan obligations	31,140		—		31,140		—
Mortgage-backed securities:
Residential - U.S. government-sponsored entities and agencies	414,471		—		414,471		—
Residential - Non-government agencies	16,926		—		16,244		682
Commercial - U.S. government-sponsored entities and agencies	67,161		—		67,161		—
Commercial - Non-government agencies	9,927		—		9,927		—

Total available-for-sale investment securities	737,658		59,498		671,313		6,847



Derivatives:
Interest rate lock commitments	(4)		—		(4)		—
Forward sale commitments	46		—		46		—


Interest rate swap agreements	8,382		—		8,382		—
Total derivatives	8,424		—		8,424		—
Total	$	746,082	$	59,498	$	679,737	$	6,847

The following table presents changes in Level 3 financial assets and liabilities measured at fair value on a recurring basis for the periods presented:


	Available-For-Sale Debt Securities:
(dollars in thousands)	States and Political Subdivisions		Residential - Non-Government Agencies		Interest Rate Swap Agreements		Total
Balance at December 31, 2024	$	6,165	$	682	$	—	$	6,847
Principal payments received	(51)		(6)		—		(57)
Unrealized net gain (loss) included in other comprehensive income	48		6		—		54

Balance at March 31, 2025	$	6,162	$	682	$	—	$	6,844

Balance at December 31, 2023	$	6,436	$	714	$	6,440	$	13,590
Principal payments received	(58)		(6)		—		(64)
Unrealized net gain (loss) included in other comprehensive income	(55)		(4)		2,935		2,876

Balance at March 31, 2024	$	6,323	$	704	$	9,375	$	16,402

Based on a discounted cash flow model that calculates the present value of estimated future principal and interest payments, the estimated aggregate fair value of Level 3 financial assets and liabilities measured at fair value on a recurring basis was $6.8 million and $6.8 million as of March 31, 2025 and December 31, 2024, respectively.

The weighted-average discount rate was used as the significant unobservable input in the fair value measurement of the available-for-sale debt securities. The weighted average discount rate utilized was 6.03% and 6.22% as of March 31, 2025 and December 31, 2024, respectively, which was derived by incorporating a credit spread over the FHLB Fixed-Rate Advance

Table of Contents

curve. Significant increases (decreases) in the weighted-average discount rate could result in a significantly lower (higher) fair value measurement.

The significant unobservable input used in the fair value measurement of the Company's interest rate swap is the weighted-average discount rate. The weighted average discount rate utilized was 3.70% and 4.02% as of March 31, 2025 and December 31, 2024, respectively.

There were no financial assets or liabilities measured on a nonrecurring basis as of March 31, 2025 and December 31, 2024.

16. SEGMENT INFORMATION

The Company evaluated its operating segments in accordance with ASC 280, "Segment Reporting" and determined it operates as one reportable segment, banking operations. The Company provides a comprehensive range of financial services, such as construction and real estate development lending, commercial lending, residential mortgage lending, consumer lending, trust services, retail brokerage services and our retail branch offices, which are then aggregated as there is no material difference in the products and services offered based on customer type or geographic location. All activities are closely aligned with the core business of providing financial services and are subject to similar risks and rewards. No single customer accounts for more than 10% of total revenue. All operations are domestic and located in the State of Hawaii.

The Company's Executive Committee, who is the designated chief operating decision maker ("CODM"), evaluates performance and makes decisions based on consolidated financial information. The CODM does not separately evaluate distinct groups of products or services, nor are resources allocated differently based on individual product lines or geographic regions. Rather, performance is assessed on an overall basis, considering consolidated metrics such as total revenues, profit, and risk management of the Company as a whole, and resources are allocated to support the Company's overall business plan.

Loans, investments, and deposits provide the revenues in banking operations and are presented in the Company's consolidated balance sheets. Interest expense, provisions for credit losses, and salaries and employee benefits provide the significant expenses in banking operations and are presented in the Company's consolidated statements of income. Segment performance is evaluated using consolidated net income with the majority of the Company’s net income derived from net interest income. Accordingly, management focuses primarily on net interest income, rather than gross interest income and expense amounts, in evaluating segment profitability.

The accounting policies of the segment is consistent with those described in Note 1 - Summary of Significant Accounting Policies to the consolidated financial statements in the Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC.

17. LEGAL PROCEEDINGS

We are involved in legal proceedings that arise in the ordinary course of our business. The outcome of these matters and the timing of ultimate resolution is inherently difficult to predict. Based on information currently available to us, we do not expect that the ultimate costs to resolve these matters will have a material adverse effect on our financial condition or operations.

Table of Contents

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements and Factors that Could Affect Future Results

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. 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, the 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 and regulatory 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. Words such as "believe," "plan," "anticipate," "seek," "expect," "intend," "forecast," "hope," "target," "continue," "remain," "estimate," "will," "should," "may" and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

While we believe that our forward-looking statements and the assumptions underlying them are reasonably based, such statements and assumptions are by their nature subject to risks and uncertainties, and thus could later prove to be inaccurate or incorrect. Accordingly, actual results could differ materially from those statements or projections for a variety of reasons. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:

•the effects of inflation and interest rate fluctuations;

•the impact of the current U.S. administration's recent economic policies, including potential international tariffs, and other cost-cutting initiatives;

•disruptions in the economy, including supply chain disruptions;

•labor contract disputes and potential strikes impacting both the U.S. National and Hawaii economies;

•the increase in inventory or adverse conditions in the real estate market and deterioration in the construction industry;

•adverse changes in the financial performance and/or condition of our borrowers and, as a result, increased loan delinquency rates, deterioration in asset quality, and losses in our loan portfolio;

•the impact of local, national, and international economies and events (including natural disasters such as wildfires, volcanic eruptions, hurricanes, tsunamis, storms, and earthquakes) on the Company's business and operations and on tourism, the military, and other major industries operating within the Hawaii market and any other markets in which the Company does business;

•deterioration or malaise in domestic economic conditions, including any destabilization in the financial industry and deterioration of the real estate market, as well as the impact of declining levels of consumer and business confidence in the state of the economy in general and in financial institutions in particular;

•changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements;

•the adverse effects of bank failures and the potential impact of such developments on customer confidence, deposit behavior, liquidity and regulatory responses thereto;

•the adverse effects of the COVID-19 pandemic virus (and its variants) and other pandemic viruses on local, national and international economies, including, but not limited to, the adverse impact on tourism and construction in the State of Hawaii, our borrowers, customers, third-party contractors, vendors and employees, as well as the effects of government programs and initiatives in response thereto;

•the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), changes in capital standards, other regulatory reform and federal and state legislation, including but not limited to regulations promulgated by the Consumer Financial Protection Bureau (the "CFPB"), government-sponsored enterprise reform, and any related rules and regulations which affect our business operations and competitiveness;

•the costs and effects of legal and regulatory developments, including legal proceedings and lawsuits we are or may become subject to, or regulatory or other governmental inquiries and proceedings and the resolution thereof, the results of regulatory examinations or reviews and the effect of, and our ability to comply with, any regulations or regulatory orders or actions we are or may become subject to, and the effect of any recurring or special FDIC assessments;

Table of Contents

•the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board ("PCAOB"), the Financial Accounting Standards Board ("FASB") and other accounting standard setters and the cost and resources required to implement such changes;

•the effects of and changes in trade, tariff, monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System (the "FRB" or the "Federal Reserve");

•changes in the competitive environment among financial holding companies and other financial service providers;

•securities market and monetary fluctuations, including the impact resulting from the elimination of the London Interbank Offered Rate Index;

•negative trends in our market capitalization and adverse changes in the price of the Company's common stock;

•the effects of any acquisitions or dispositions we may make or evaluate, and the costs associated with any potential or actual acquisition or disposition, including re-engagement in any potential acquisition process;

•political instability;

•acts of war or terrorism;

•changes in consumer spending, borrowings and savings habits;

•technological changes and developments;

•cybersecurity and data privacy breaches and the consequence therefrom;

•susceptibility of fraud on the business;

•failure to maintain effective internal control over financial reporting or disclosure controls and procedures;

•the ability to address deficiencies in our internal controls over financial reporting or disclosure controls and procedures;

•our ability to successfully implement our initiatives to lower our efficiency;

•our ability to attract and retain key personnel;

•changes in our personnel, organization, compensation and benefit plans;

•the impact of potential future Banking-as-a-Service ("BaaS") initiatives; and

•our success at managing the risks involved in the foregoing items.

For further information with respect to factors that could cause actual results to materially differ from the expectations or projections stated in the forward-looking statements, please see the Company's publicly available Securities and Exchange Commission filings, including the Company's Forms 10-Q and 10-K for the current fiscal quarter and the last fiscal year, respectively, and in particular, the discussion of "Risk Factors" set forth therein and herein. We urge investors to consider all of these factors carefully in evaluating the forward-looking statements contained in this document. Forward-looking statements speak only as of the date on which such statements are made. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events except as required by law.

Overview

Central Pacific Financial Corp. ("CPF"), a Hawaii corporation and a bank holding company registered under the Bank Holding Company Act of 1956, as amended (the "BHC Act"), was organized on February 1, 1982. Our principal business is to serve as a holding company for our bank subsidiary, Central Pacific Bank, which was incorporated in its present form in the State of Hawaii on March 16, 1982 in connection with the holding company reorganization. Its predecessor entity was incorporated in the State of Hawaii on January 15, 1954. We provide financial results based on a fiscal year ending December 31 as a single reportable segment.

We refer to Central Pacific Bank herein as "our Bank" or "the Bank," and when we say "the Company," "we," "us" or "our," we mean the holding company on a consolidated basis with the Bank and our other consolidated subsidiaries.

Central Pacific Bank is a full-service community bank with 27 branches and 55 ATMs located throughout the State of Hawaii as of March 31, 2025.

We were founded by World War II veterans who were not offered the same banking courtesies in Hawaii, even though they came home from the war as heroes. They founded the Bank to serve the needs of individuals and small businesses that did not

Table of Contents

have access to financial services in Hawaii at the time. We strive to provide exceptional customer service and products that meet our customers' needs, including:

•Loans: Our loans consist of commercial and industrial, commercial mortgage, and construction loans to small and medium-sized companies, business professionals, and real estate investors and developers, as well as residential mortgage, home equity, and consumer loans to homeowners and individuals. Our lending activities contribute to a key component of our revenues reported in interest income. We strive for a strong and diverse loan portfolio in Hawaii and selective mainland markets.

•Deposits: We offer a full range of deposit products and services including: checking, savings and time deposits, cash management, and digital banking services. We also maintain a broad branch and ATM network in the State of Hawaii. The interest paid on such deposits has a significant impact on our interest expense, an important factor in determining our earnings. In addition, fees and service charges on deposit accounts and card interchange contribute to our revenues.

Additionally, we offer wealth management products and services, such as non-deposit investment products, annuities, investment management, trust custody, estate and financial planning services.

Our foundational principles are based on continuing to be a leading bank for small businesses, a professional and reliable resource to meet Hawaii’s housing needs, and also serve as a bridge between Hawaii and Japan. Through a legacy of strong connections with Japan, including individuals, businesses and several regional banks, we continue to service the needs and promote ongoing activities primarily through deposit product offerings and two-way referrals of other products and services.

Basis of Presentation

Management's discussion and analysis of financial condition and results of operations should be read in conjunction with the accompanying consolidated financial statements under "Part I, Item 1. Financial Statements (Unaudited)." The following discussion should also be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2024 filed with the U.S. Securities and Exchange Commission (the "SEC") on February 26, 2025, including the “Risk Factors” set forth therein.

Critical Accounting Policies and Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America ("GAAP") requires that management make certain judgments and use certain estimates and assumptions that affect amounts reported and disclosures made. Actual results may differ from those estimates and such differences could be material to the financial statements.

Accounting estimates are deemed critical when a different estimate could have reasonably been used or where changes in the estimate are reasonably likely to occur from period-to-period and would materially impact our consolidated financial statements as of or for the periods presented. Management has discussed the development and selection of the critical accounting estimates noted below with the Audit Committee of the Board of Directors, and the Audit Committee has reviewed the accompanying disclosures.

The Company identified a significant accounting policy, which involves a higher degree of judgment and complexity in making certain estimates and assumptions that affect amounts reported in our consolidated financial statements. As of March 31, 2025 and December 31, 2024, the significant accounting policy that we believed to be the most critical in preparing our consolidated financial statements is the determination of the allowance for credit losses ("ACL") on loans. This is further described in Note 1 - Summary of Significant Accounting Policies included in the accompanying notes to the consolidated financial statements, Note 1 - Summary of Significant Accounting Policies included in the accompanying notes to the consolidated financial statements for the year ended December 31, 2024, and the section titled "Critical Accounting Policies and Use of Estimates" in Management's Discussion and Analysis of Financial Condition and Operating Results included in the Company's 2024 Annual Report on Form 10-K.

Financial Summary

Net income for the three months ended March 31, 2025 was $17.8 million, or $0.65 per diluted share, compared to net income of $12.9 million, or $0.48 per diluted share for the three months ended March 31, 2024.

Table of Contents

During the three months ended March 31, 2025, the Company recorded a provision for credit losses of $4.2 million, compared to a provision of $3.9 million during the three months ended March 31, 2024. The increase in the provision was primarily driven by the macro-economic forecast used in our current expected credit losses model.

The Company's pre-provision net revenue ("PPNR"), a non-GAAP financial measure which excludes the provision for credit losses and income tax expense from net income, for the three months ended March 31, 2025 was $26.7 million, compared to $20.9 million for the three months ended March 31, 2024. See the following section titled "Non-GAAP Financial Measures" for reconciliation of PPNR.

The following table presents annualized returns on average assets ("ROA") and average shareholders' equity ("ROE"), and basic and diluted earnings per share ("EPS") for the periods presented. ROA and ROE are annualized based on a 30/360 day convention.


	Three Months Ended March 31,
	2025			2024
Return on average assets	0.96		%	0.70		%
Return on average shareholders’ equity	13.04			10.33

Basic earnings per share	$	0.66		$	0.48
Diluted earnings per share	0.65			0.48

Non-GAAP Financial Measures

The Company uses certain non-GAAP financial measures in addition to our GAAP results to provide useful information which we believe are better indicators of the Company's core activities. This information should be considered as supplemental in nature and should not be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be comparable to similarly entitled measures reported by other companies.

Pre-Provision Net Revenue

The Company believes that PPNR, a non-GAAP financial measure, is useful as a tool to help evaluate the ability to provide for credit costs through operations. The following table presents a reconciliation of the Company's PPNR for the periods presented:


	Three Months Ended March 31,
(dollars in thousands)	2025		2024
GAAP net income	$	17,760	$	12,945
Add: Income tax expense	4,791		3,974
Pre-tax income	22,551		16,919
Add: Provision for credit losses	4,172		3,936
PPNR (non-GAAP)	$	26,723	$	20,855

The higher PPNR in the first quarter of 2025 was primarily due to higher net interest income of $7.5 million compared to the year-ago period. The higher net interest income was primarily due to higher average yields earned on interest-earning assets, combined with lower average rates paid on interest-bearing deposits.

Efficiency Ratio

A key measure of operating efficiency tracked by the Company is the efficiency ratio, which is calculated by dividing total other operating expenses by total pre-provision revenue (net interest income plus total other operating income). The Company believes that the efficiency ratio, a non-GAAP financial measure, provides useful supplemental information that is important to a proper understanding of its business results and operating efficiency. The Company's efficiency ratio should not be viewed as a substitute for results determined in accordance with GAAP, nor is it necessarily comparable to the efficiency ratio presented by other companies.

Table of Contents

The following table sets forth a reconciliation to our efficiency ratio for the periods presented:


	Three Months Ended March 31,
(dollars in thousands)	2025			2024
Total other operating expense	$	42,072		$	40,576



Net interest income	$	57,699		$	50,187
Total other operating income	11,096			11,244
Total revenue	$	68,795		$	61,431

Efficiency ratio (non-GAAP)	61.16		%	66.05		%

Our efficiency ratio improved to 61.16% in the first quarter of 2025, compared to 66.05% in the year-ago quarter.

The improvement in the efficiency ratio in the first quarter of 2025, compared to the same year-ago period, was primarily due to higher net interest income, offset by higher other operating expense.

Tangible Common Equity Ratio

The following table presents our tangible common equity ("TCE") ratio, a non-GAAP financial measure, which is calculated by dividing tangible common equity by tangible assets, as of the dates presented:


(dollars in thousands)	March 31, 2025			March 31, 2024
Total shareholders' equity	$	557,376		$	507,203

Less: Intangible assets	—			(1,437)
TCE (non-GAAP)	$	557,376		$	505,766



Total assets	$	7,405,239		$	7,409,999

Less: Intangible assets	—			(1,437)
Tangible assets (non-GAAP)	$	7,405,239		$	7,408,562



TCE ratio (non-GAAP)	7.53		%	6.83		%

Material Trends

The majority of our operations are concentrated in the State of Hawaii. As a result, our performance is significantly influenced by the strength of the real estate markets, the tourism industry, and the economic environment and environmental conditions in Hawaii. Macroeconomic conditions also influence our performance. A favorable business environment is generally characterized by expanding gross state product, low unemployment and rising personal income, while an unfavorable business environment is characterized by the reverse.

According to preliminary statistics from the Hawaii Tourism Authority ("HTA"), a total of 1.55 million visitors arrived to the Hawaiian Islands during the two months ended February 28, 2025, mainly from the U.S. Mainland, up 1.0% from 1.54 million visitors in the same prior year period, but down 2.9% from 1.60 million visitors in the same period in the pre-pandemic and record year in 2019. The recovery of visitors from Japan remains slow and has continued to be offset by the strength of domestic travel. Average daily census visitors from Japan were down approximately 6.3% during the two months ended February 28, 2025 compared to the same prior year period, and were down by approximately 56.3% from the same period in 2019.

Total spending for visitors arriving in the two months ended February 28, 2025 was $3.62 billion, up 4.5% from $3.47 billion in the same period last year, and up by 20.5% from $3.01 billion in the same period in 2019.

According to a February 2025 report by the University of Hawaii Economic Research Organization ("UHERO"), total visitor arrivals by air are expected to be approximately 9.94 million in 2025, which is an increase of approximately 2.6% from 9.69

Table of Contents

million in 2024. Visitor spending is expected to modestly decline by approximately 0.2% to $20.55 billion in 2025 from $20.58 billion in 2024.

The Department of Labor and Industrial Relations reported that Hawaii's seasonally adjusted annual unemployment rate was 2.9% in the month of March 2025, compared to 3.0% in the month of March 2024 and the national seasonally adjusted unemployment rate of 4.2% in the month of March 2025. UHERO projects Hawaii's seasonally adjusted annual unemployment rate to remain low at approximately 3.4% in 2025.

Hawaii's economy is measured by the growth of real personal income and real gross state product. UHERO projects real personal income to grow by 0.7% and real gross state product to grow by 1.6% in 2025.

UHERO's forecasts were made prior to the current U.S. administration's recent economic policies, including tariffs, and other cost-cutting initiatives. The impact of these economic policies and cost-cutting initiatives are uncertain and could slow growth and/or have negative impacts to Hawaii's economy.

Real estate lending is one of the primary focuses for the Company, including residential mortgage and commercial mortgage loans. As a result, the Company is dependent on the strength of Hawaii's real estate market. The Hawaii housing market overall remained strong in the first quarter of 2025 despite some mixed results. According to the Honolulu Board of Realtors, sales of Oahu single-family homes in the three months ended March 31, 2025 were down 4.0%, while sales of Oahu condominiums were up 0.4% from the same prior year period. The Oahu single-family home median price in the three months ended March 31, 2025 rose by 7.5% to $1.15 million from $1.07 million in the same prior year period. The Oahu condominium median price in the three months ended March 31, 2025 rose by 1.0% to $510,000 from $505,000 in the same prior year period.

Changes in monetary policy, including changes in interest rates, could influence: (i) the amount of interest we receive on loans and securities, (ii) the amount of interest we pay on deposits and borrowings, (iii) our ability to originate loans and obtain deposits, and (iv) the fair value of our assets and liabilities, among other things.

In an effort to rein in inflation, the FRB aggressively increased interest rates since the first quarter of 2022 when the Federal Funds Rate target range was 0.00% to 0.25%. Since then, the FRB has raised the Federal Funds Rate by more than five percentage points, up to a 22-year high, 5.25% to 5.50%. The Federal Funds Rate remained at that level until September 2024. At the September 2024 Federal Open Market Committee ("FOMC") meeting, the FOMC lowered interest rates by 50 bps to 4.75% to 5.00%, as they gained greater confidence that inflation is moving sustainably towards its 2% target. In November and December 2024, the FOMC lowered interest rates by an additional 25 bps each to a target range of 4.25% to 4.50% at the end of 2024. In 2025, the FOMC has kept the Federal Funds Rate unchanged through its March 2025 meeting.

Results of Operations

Net Interest Income and Net Interest Margin

A comparison of net interest income and net interest margin on a taxable-equivalent basis for the three months ended March 31, 2025 and 2024 is presented below. Net interest margin is defined as annualized net interest income, on a taxable-equivalent basis using a federal statutory tax rate of 21%, as a percentage of average interest earning assets.

Table of Contents


(dollars in thousands)	Three Months Ended March 31,
	2025						2024						Variance
	Average Balance		Average Yield/ Rate		Interest Income/ Expense		Average Balance		Average Yield/ Rate		Interest Income/ Expense		Average Balance		Average Yield/ Rate		Interest Income/ Expense
Assets
Interest earning assets:
Interest-bearing deposits in other financial institutions	$	206,108	4.44	%	$	2,254	$	265,418	5.47	%	$	3,611	$	(59,310)	(1.03)	%	$	(1,357)
Investment securities:
Taxable (1)	1,376,687		2.85		9,801		1,324,657		2.18		7,211		52,030		0.67		2,590
Tax-exempt (1) (2)	139,589		2.57		896		142,830		2.32		829		(3,241)		0.25		67
Total investment securities	1,516,276		2.82		10,697		1,467,487		2.19		8,040		48,789		0.63		2,657
Loans, including loans held for sale	5,311,610		4.88		64,119		5,400,558		4.67		62,819		(88,948)		0.21		1,300
FHLB and FRB stock	20,494		6.32		324		6,801		6.24		106		13,693		0.08		218
Total interest earning assets	7,054,488		4.43		77,394		7,140,264		4.19		74,576		(85,776)		0.24		2,818
Noninterest-earning assets	334,295						309,397						24,898
Total assets	$	7,388,783					$	7,449,661					$	(60,878)

Liabilities and Equity
Interest-bearing liabilities:
Interest-bearing demand deposits	$	1,355,360	0.14	%	$	452	$	1,296,865	0.15	%	$	499	$	58,495	(0.01)	%	$	(47)
Savings and money market deposits	2,345,445		1.53		8,862		2,218,250		1.53		8,443		127,195		—		419
Time deposits up to $250,000	457,473		2.51		2,832		544,279		3.21		4,339		(86,806)		(0.70)		(1,507)
Time deposits over $250,000	603,919		3.54		5,275		794,019		4.38		8,651		(190,100)		(0.84)		(3,376)
Total interest-bearing deposits	4,762,197		1.48		17,421		4,853,413		1.82		21,932		(91,216)		(0.34)		(4,511)


Long-term debt	152,201		5.56		2,086		156,129		5.88		2,283		(3,928)		(0.32)		(197)
Total interest-bearing liabilities	4,914,398		1.61		19,507		5,009,542		1.94		24,215		(95,144)		(0.33)		(4,708)
Noninterest-bearing deposits	1,798,903						1,806,399						(7,496)
Other liabilities	130,594						132,600						(2,006)
Total liabilities	6,843,895						6,948,541						(104,646)


Total equity	544,888						501,120						43,768
Total liabilities and equity	$	7,388,783					$	7,449,661					$	(60,878)

Net interest income (taxable-equivalent)					57,887						50,361						7,526
Taxable-equivalent adjustment					(188)						(174)						(14)
Net interest income (GAAP)					$	57,699					$	50,187					$	7,512

Interest rate spread			2.82	%					2.25	%					0.57	%

Net interest margin (taxable-equivalent)			3.31	%					2.83	%					0.48	%

(1) At amortized cost.
(2) Includes taxable-equivalent adjustment using a federal statutory tax rate of 21% of $188 and $174 for the three months ended March 31, 2025 and 2024, respectively.

Net interest income (expressed on a taxable-equivalent basis) was $57.9 million for the first quarter of 2025, representing an increase of $7.5 million, or 14.9% from $50.4 million in the year-ago quarter. The increase in net interest income from the year-ago quarter was primarily due to lower average interest-bearing deposit balances and lower average rates paid on interest-bearing deposits, combined with higher average yields earned on interest earning assets. These positive variances were partially offset by a decline in average loans.

Interest Income

Taxable-equivalent interest income was $77.4 million for the first quarter of 2025, representing an increase of $2.8 million, or 3.8%, from $74.6 million in the year-ago quarter. The increase during the first quarter of 2025, compared to the year-ago

Table of Contents

quarter was primarily attributable to an increase in average yield earned on loans of 21 basis points ("bp" or "bps"), resulting in an increase in interest income of approximately $2.5 million and an increase in average yield earned on investment securities of 63 bps, resulting in an increase in interest income of approximately $2.4 million. The increase in the average yield earned on investment securities was primarily attributable to the investment securities portfolio repositioning completed in the fourth quarter of 2024, combined with income of $0.7 million from an interest rate swap that became effective on March 31, 2024. These increases were partially offset by decreases in the average balance and average yield earned on interest-bearing deposits in other financial institutions resulting in an decrease in interest income of approximately $1.4 million, and a decrease in average loan balances of $88.9 million, resulting in a decrease in interest income of approximately $1.2 million.

Interest Expense

Interest expense was $19.5 million for the first quarter of 2025, representing a decrease of $4.7 million, or 19.4%, from $24.2 million in the year-ago quarter. Average interest-bearing deposits decreased by $91.2 million, resulting in a decrease in interest expense of approximately $2.3 million. In addition, average rates paid on interest-bearing deposits of 1.48% decreased by 34 bps from the year-ago quarter, resulting in a decrease in interest expense of approximately $2.1 million.

Net Interest Margin

Our net interest margin of 3.31% for the first quarter of 2025 increased by 48 bps from 2.83% in the year-ago quarter. The increase in net interest margin for the first quarter of 2025 was primarily attributable to increases in average yields earned on loans and investment securities, combined with the decrease in average rates paid on interest-bearing deposits.

Rate-Volume Analysis

For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to: (i) changes in average balances (volume) and (ii) changes in weighted average interest rates (rate). The change in volume is calculated as change in average balance, multiplied by prior period average yield/rate. The change in rate is calculated as change in average yield/rate, multiplied by current period volume. The change in interest income not solely due to change in volume or change in rate has been allocated proportionately to change in volume and change in average yield/rate.

Table of Contents


	Three Months Ended March 31, 2025 Compared To March 31, 2024
	Increase (Decrease) Due to:
(dollars in thousands)	Volume		Rate		Net Change

Interest earning assets:
Interest-bearing deposits in other financial institutions	$	(820)	$	(537)	$	(1,357)
Investment securities:
Taxable (1)	284		2,306		2,590
Tax-exempt (1) (2)	(19)		86		67
Total investment securities	265		2,392		2,657
Loans, including loans held for sale	(1,160)		2,460		1,300
FHLB and FRB stock	214		4		218
Total interest earning assets	(1,501)		4,319		2,818




Interest-bearing liabilities:
Interest-bearing demand deposits	8		(55)		(47)
Savings and money market deposits	419		—		419
Time deposits up to $250,000	(701)		(806)		(1,507)
Time deposits over $250,000	(2,098)		(1,278)		(3,376)
Total interest-bearing deposits	(2,372)		(2,139)		(4,511)


Long-term debt	(63)		(134)		(197)
Total interest-bearing liabilities	(2,435)		(2,273)		(4,708)

Net interest income (taxable-equivalent)	$	934	$	6,592	$	7,526

(1) At amortized cost.
(2) Includes taxable-equivalent adjustment using a federal statutory tax rate of 21%.

Other Operating Income

The following tables present components of other operating income for the periods presented:


	Three Months Ended March 31,
(dollars in thousands)	2025		2024		$ Change		% Change
Other operating income:
Mortgage banking income	$	597	$	613	$	(16)	-2.6	%
Service charges on deposit accounts	2,147		2,103		44		2.1
Other service charges and fees	5,766		5,261		505		9.6
Income from fiduciary activities	1,624		1,435		189		13.2
Income from bank-owned life insurance	497		1,522		(1,025)		-67.3




Other:
Equity in earnings of unconsolidated entities	1		(80)		81		-101.3

Income recovered on previously charged-off loans	36		52		(16)		-30.8
Other recoveries	30		24		6		25.0
Unrealized gains on loans held for sale	75		—		75		N.M.
Commissions on sale of checks	75		78		(3)		-3.8


Other	248		236		12		5.1
Total other operating income	$	11,096	$	11,244	$	(148)	-1.3

Not meaningful ("N.M.")

For the first quarter of 2025, total other operating income was $11.1 million, which decreased by $0.1 million, or 1.3%, from $11.2 million in the year-ago quarter. The decrease was primarily due to lower income from bank-owned life insurance ("BOLI") of $1.0 million, partially offset by higher other service charges and fees of $0.5 million, and income from fiduciary

Table of Contents

activities of $0.2 million. The lower income from BOLI was primarily attributable to volatile equity market returns and their impact on corporate-owned life insurance ("COLI") policies used to hedge deferred compensation expense.

Other Operating Expense

The following tables present components of other operating expense for the periods presented:


	Three Months Ended March 31,
(dollars in thousands)	2025		2024		$ Change		% Change
Other operating expense:
Salaries and employee benefits	$	21,819	$	20,735	$	1,084	5.2	%
Net occupancy	4,392		4,600		(208)		-4.5
Computer software	4,714		4,287		427		10.0
Legal and professional services	2,798		2,320		478		20.6
Equipment	1,082		1,010		72		7.1
Advertising	887		914		(27)		-3.0
Communication	1,033		837		196		23.4



Other:
SERP expense	114		108		6		5.6

Charitable contributions	146		199		(53)		-26.6
FDIC insurance assessment	850		959		(109)		-11.4
Miscellaneous loan expenses	298		275		23		8.4
ATM and debit card expenses	856		924		(68)		-7.4
Armored car expenses	425		483		(58)		-12.0
Entertainment and promotions	304		406		(102)		-25.1
Stationery and supplies	170		172		(2)		-1.2
Directors’ fees and expenses	301		338		(37)		-10.9
Directors' deferred compensation plan expense	(267)		138		(405)		-293.5


Amortization and impairment of intangible assets	—		24		(24)		-100.0



Loss (gain) on disposal of fixed assets	—		3		(3)		-100.0


Other	2,150		1,844		306		16.6
Total other operating expense	$	42,072	$	40,576	$	1,496	3.7

Not meaningful ("N.M.")

Note: Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period.

For the first quarter of 2025, total other operating expense was $42.1 million, which increased by $1.5 million, or 3.7%, from $40.6 million in the year-ago quarter. The increase was primarily due to higher salaries and employee benefits of $1.1 million, legal and professional services of $0.5 million, and computer software of $0.4 million, partially offset by lower directors' deferred compensation plan expense of $0.4 million. The lower directors' deferred compensation plan expense were partially attributable to volatile equity market returns and are hedged with COLI policies, reported together with income from BOLI.

Income Taxes

The Company recorded income tax expense of $4.8 million for the first quarter of 2025, compared to $4.0 million in the same year-ago period. The effective tax rate ("ETR") for the first quarter of 2025 was 21.25%, compared to 23.49% in the same year-ago period. The increase in income tax expense for the three months ended March 31, 2025 was primarily attributable to higher pre-tax income compared to the same year-ago period. The decrease in the effective tax rate in the first quarter of 2025 was primarily attributable to higher low-income housing tax credits recognized in the first quarter of 2025, compared to the same year-ago period.

Table of Contents

The Company's net deferred tax assets ("DTA"), net of valuation allowance, totaled $12.5 million and $17.8 million as of March 31, 2025 and December 31, 2024, respectively, and was included in other assets on our consolidated balance sheets.

The valuation allowance on our net deferred tax assets ("DTA") as of March 31, 2025 and December 31, 2024 totaled $3.1 million, which related entirely to our DTA from net apportioned net operating loss ("NOL") carryforwards for California state income tax purposes, as the Company does not expect to generate sufficient income in California to utilize the DTA.

On August 16, 2022, the Inflation Reduction Act ("IRA") of 2022 was signed into law to implement new tax provisions and provide various incentives and tax credits. The IRA created a 15% corporate alternative minimum tax and an excise tax of 1% on stock repurchases from publicly traded U.S. corporations, among other changes. As of March 31, 2025, the Company determined that neither this Act nor changes to income tax laws or regulations in other jurisdictions had a significant impact on income tax expense. As of March 31, 2025, the Company accrued $21 thousand of excise tax on the Company's stock repurchases.

Financial Condition

Total assets were $7.41 billion as of March 31, 2025 and decreased by $66.9 million, or 0.9%, from $7.47 billion as of December 31, 2024 primarily due to declines in interest-bearing deposits in other financial institutions, total deposits and long-term borrowings, partially offset by increases in investment securities and FRB stock.

Investment Securities

Investment securities totaled $1.37 billion as of March 31, 2025, which increased by $35.5 million, or 2.7%, from $1.33 billion as of December 31, 2024. The increase in the investment securities portfolio reflected purchases of $40.8 million and an increase in the market valuation on the AFS portfolio of $16.8 million, partially offset by principal runoff of $22.2 million.

Table of Contents

Loans

The following table presents outstanding loans by category and geographic location as of the dates presented:


(dollars in thousands)	March 31, 2025		December 31, 2024		$ Change		% Change
Hawaii:



Commercial and industrial	$	461,020	$	430,167	$	30,853	7.2	%
Real estate:
Construction	159,081		145,182		13,899		9.6
Residential mortgage	1,870,239		1,892,520		(22,281)		(1.2)
Home equity	655,237		676,982		(21,745)		(3.2)
Commercial mortgage	1,174,573		1,165,060		9,513		0.8
Consumer	219,941		274,712		(54,771)		(19.9)

Total loans	4,540,091		4,584,623		(44,532)		(1.0)
Less: ACL	(45,937)		(45,967)		30		(0.1)
Loans, net of ACL	$	4,494,154	$	4,538,656	$	(44,502)	(1.0)

U.S. Mainland:



Commercial and industrial	$	173,600	$	176,769	$	(3,169)	(1.8)
Real estate:
Construction	1,011		29		982		3,386.2


Commercial mortgage	377,866		335,620		42,246		12.6
Consumer	241,979		235,811		6,168		2.6

Total loans	794,456		748,229		46,227		6.2
Less: ACL	(14,532)		(13,215)		(1,317)		10.0
Loans, net of ACL	$	779,924	$	735,014	$	44,910	6.1

Total:



Commercial and industrial	$	634,620	$	606,936	$	27,684	4.6
Real estate:
Construction	160,092		145,211		14,881		10.2
Residential mortgage	1,870,239		1,892,520		(22,281)		(1.2)
Home equity	655,237		676,982		(21,745)		(3.2)
Commercial mortgage	1,552,439		1,500,680		51,759		3.4
Consumer	461,920		510,523		(48,603)		(9.5)

Total loans	5,334,547		5,332,852		1,695		—
Less: ACL	(60,469)		(59,182)		(1,287)		2.2
Loans, net of ACL	$	5,274,078	$	5,273,670	$	408	—

The Company strategically enhances its Hawaii loan portfolio by selectively pursuing commercial and non-residential consumer loan opportunities on the U.S. Mainland. This approach offers greater growth potential, increased diversification, and the possibility of higher yields, all while upholding the Company's rigorous credit standards and underwriting guidelines.

Loans, net of deferred costs, totaled $5.33 billion as of March 31, 2025, which increased marginally by $1.7 million, or 0.03%, from $5.33 billion as of December 31, 2024. The increase was primarily due to increases in commercial mortgage of $51.8 million, commercial and industrial of $27.7 million, and construction of $14.9 million. These increases were partially offset by decreases in consumer of $48.6 million, residential mortgage of $22.3 million, and home equity of $21.7 million.

The Hawaii loan portfolio decreased by $44.5 million, or 1.0%, from December 31, 2024. The decrease reflected decreases in consumer of $54.8 million, residential mortgage of $22.3 million, and home equity of $21.7 million. These decreases were partially offset by increases in commercial and industrial of $30.9 million, construction of $13.9 million, and commercial mortgage of $9.5 million. During the three months ended March 31, 2025, the Company identified and reclassified $58.3 million in Hawaii consumer loans to the Hawaii commercial and industrial loan category as the loans' structure and characteristics more closely aligned with loans in the commercial and industrial category.

Table of Contents

The U.S. Mainland loan portfolio increased by $46.2 million, or 6.2%, from December 31, 2024. The increase was primarily attributable to increases in commercial mortgage of $42.2 million and consumer of $6.2 million, partially offset by a decrease in commercial and industrial of $3.2 million.

Nonperforming Assets and Accruing Loans 90+ Days Past Due

The following table presents nonperforming assets and accruing loans 90+ days past due as of the dates presented:


(dollars in thousands)	March 31, 2025			December 31, 2024			$ Change		% Change
Nonperforming Assets ("NPAs")
Nonaccrual loans:



Commercial and industrial	$	531		$	414		$	117	28.3	%
Real estate:

Residential mortgage	9,199			9,044			155		1.7
Home equity	746			952			(206)		(21.6)

Consumer	609			608			1		0.2

Total nonaccrual loans	11,085			11,018			67		0.6













Other real estate owned ("OREO")	—			—			—		N.M.
Total NPAs	11,085			11,018			67		0.6

Accruing Loans 90+ Days Past Due




Real estate:

Residential mortgage	—			323			(323)		(100.0)
Home equity	87			78			9		11.5

Consumer	670			373			297		79.6

Total accruing loans 90+ days past due	757			774			(17)		(2.2)

Total NPAs and accruing loans 90+ days past due	$	11,842		$	11,792		$	50	0.4

Ratio of nonaccrual loans to total loans	0.21		%	0.21		%			—	%
Ratio of NPAs to total assets	0.15		%	0.15		%			—	%

Ratio of NPAs and accruing loans 90+ days past due to total loans and OREO	0.22		%	0.22		%			—	%
Ratio of classified assets and OREO to tier 1 capital and ACL	4.78		%	3.17		%			1.61	%

Not meaningful ("N.M.")

The following table presents year-to-date activities in nonperforming assets for the period presented:


(dollars in thousands)
Balance at December 31, 2024	$	11,018
Additions	2,397
Reductions:
Payments	(614)
Return to accrual status	(558)

Charge-offs, valuation and other adjustments	(1,158)
Total reductions	(2,330)
Net increase	67
Balance at March 31, 2025	$	11,085

Table of Contents

Nonperforming assets totaled $11.1 million, or 0.15% of total assets as of March 31, 2025, compared to $11.0 million, or 0.15% of total assets as of December 31, 2024. The increase in nonperforming assets from December 31, 2024 was primarily attributable to additions to nonaccrual loans totaling $2.4 million, partially offset by $0.6 million in repayments of nonaccrual loans, $0.6 million in loans returned to accrual status and $1.2 million in net charge-offs, valuation and other adjustments.

Criticized loans as of March 31, 2025 increased by $11.0 million from December 31, 2024 to $43.8 million, or 0.8% of the total loan portfolio. Special mention loans declined by $1.6 million to $7.0 million, or 0.1% of the total loan portfolio. Classified loans increased by $12.6 million to $36.9 million, or 0.7% of the total loan portfolio.

The Company's ratio of classified assets and other real estate owned to tier 1 capital and the ACL was 4.78% as of March 31, 2025, which increased from 3.17% as of December 31, 2024.

Allowance for Credit Losses

The following table presents certain information with respect to the ACL on loans as of the dates and for the periods presented:


	Three Months Ended March 31,
(dollars in thousands)	2025			2024
Allowance for Credit Losses ("ACL") on Loans:
Balance at beginning of period	$	59,182		$	63,934



Provision for credit losses on loans	3,905			4,121

Charge-offs:



Commercial and industrial	(580)			(682)





Consumer	(2,977)			(4,838)

Total charge-offs	(3,557)			(5,520)

Recoveries:



Commercial and industrial	171			90
Real estate:

Residential mortgage	10			8
Home equity	3			6

Consumer	755			893

Total recoveries	939			997
Net charge-offs	(2,618)			(4,523)


Balance at end of period	$	60,469		$	63,532

Average loans, net of deferred fees and costs	$	5,311,610		$	5,400,558
Ratio of annualized net charge-offs to average loans	0.20		%	0.34		%
Ratio of ACL to total loans	1.13		%	1.18		%

Ratio of ACL to nonaccrual loans	545.50		%	627.04		%

Our ACL on loans totaled $60.5 million as of March 31, 2025, compared to $59.2 million as of December 31, 2024 and $63.5 million as of March 31, 2024.

During the three months ended March 31, 2025, we recorded a provision for credit losses on loans of $3.9 million and net charge-offs of $2.6 million. During the three months ended March 31, 2024, we recorded a provision for credit losses on loans of $4.1 million and net charge-offs of $5.5 million.

Our ratio of ACL to total loans was 1.13% as of March 31, 2025, compared to 1.11% as of December 31, 2024 and 1.18% as of March 31, 2024.

Table of Contents

In accordance with GAAP, loans held for sale and other real estate assets are not included in our assessment of the ACL.

Deposits

The following table presents the composition of our deposits by category as of the dates presented:


(dollars in thousands)	March 31, 2025		December 31, 2024		$ Change		% Change
Noninterest-bearing demand deposits	$	1,854,241	$	1,888,937	$	(34,696)	(1.8)	%
Interest-bearing demand deposits	1,368,519		1,338,719		29,800		2.2
Savings and money market deposits	2,316,416		2,329,170		(12,754)		(0.5)
Time deposits up to $250,000	436,437		483,378		(46,941)		(9.7)
Core deposits	5,975,613		6,040,204		(64,591)		(1.1)
Other time deposits greater than $250,000	475,861		500,693		(24,832)		(5.0)
Government time deposits	144,574		103,114		41,460		40.2

Total time deposits greater than $250,000	620,435		603,807		16,628		2.8
Total deposits	$	6,596,048	$	6,644,011	$	(47,963)	(0.7)

The Company's deposit portfolio is diversified and long-standing, reflecting a business model centered on fostering long-term customer relationships. As of March 31, 2025, approximately 53% of deposit customers have maintained accounts with the Bank for over a decade. Although primarily focused in Hawaii, the Company's deposit-gathering strategies extend beyond local markets through ongoing relationships with Japanese regional banks, corporations and non-resident alien individuals, who refer and deposit U.S. dollar funds with the Bank.

Total deposits of $6.60 billion as of March 31, 2025 decreased by $48.0 million, or 0.7%, from total deposits of $6.64 billion as of December 31, 2024. The decreases in time deposits up to $250,000 of $46.9 million, noninterest-bearing demand deposits of $34.7 million, other time deposits greater than $250,000 of $24.8 million, and savings and money market deposits of $12.8 million, were partially offset by increases in government time deposits of $41.5 million and interest-bearing demand deposits of $29.8 million. The Company did not have any wholesale, brokered or listing service deposits.

Core deposits, which we define as demand deposits, savings and money market deposits, and time deposits up to $250,000, totaled $5.98 billion as of March 31, 2025 and decreased by $64.6 million, from $6.04 billion as of December 31, 2024. Core deposits as a percentage of total deposits was 90.6% as of March 31, 2025, compared to 90.9% as of December 31, 2024. Our average cost of total deposits was 108 bps during the three months ended March 31, 2025, compared to 121 bps during the three months ended December 31, 2024, and 132 bps during the same year-ago period.

As an FDIC-insured institution, our deposits are insured up to applicable limits by the Deposit Insurance Fund of the FDIC. The Company reported estimated uninsured deposits of $2.77 billion, or 42% of total deposits in its FDIC Call Report as of March 31, 2025, compared to an estimated $2.82 billion, or 42% of total deposits as of December 31, 2024. The Company had fully collateralized deposits of approximately $316.2 million and $282.3 million as of March 31, 2025 and December 31, 2024, respectively. The Company's estimated uninsured deposits, excluding fully collateralized deposits, totaled $2.45 billion, or 37% of total deposits as of March 31, 2025, compared to the estimated $2.54 billion, or 38% of total deposits as of December 31, 2024.

Table of Contents

The following table presents the amount of time deposits in excess of the FDIC insurance limit of $250,000 by remaining maturity as of March 31, 2025:


(dollars in thousands)	March 31, 2025
Remaining maturity:
Three months or less	$	280,250
Over three through twelve months	325,890
Over one year through three years	13,795
Over three years	500
Total	$	620,435

Capital Resources

In order to ensure adequate levels of capital, we perform ongoing assessment of projected sources and uses of capital in conjunction with an analysis of the size and quality of our assets, the anticipated performance of our business, changes in monetary and fiscal policies, and the level of risk and regulatory capital requirements. As a part of this assessment, the Board of Directors reviews our capital position on an ongoing basis to ensure it is adequate, including, but not limited to, the need for raising additional capital (whether debt and/or equity) or the ability to return capital to our shareholders, including the ability to declare cash dividends or repurchase our securities.

Common Equity

Our total shareholders' equity was $557.4 million as of March 31, 2025, compared to $538.4 million as of December 31, 2024. The change in total shareholders' equity was primarily attributable to net income of $17.8 million and other comprehensive income of $10.9 million in the three months ended March 31, 2025, partially offset by cash dividends declared of $7.3 million, the repurchase of $2.1 million in shares of our common stock under our stock repurchase programs.

Our total shareholders' equity to total assets ratio was 7.53% as of March 31, 2025, compared to 7.21% as of December 31, 2024. Our book value per share was $20.60 and $19.89 as of March 31, 2025 and December 31, 2024, respectively.

Holding Company Capital Resources

CPF is required to act as a source of strength to the Bank under the Dodd-Frank Act. CPF is obligated to pay its expenses and payments on its junior subordinated debentures which fund payments on the outstanding trust preferred securities and subordinated notes.

CPF relies on the Bank to pay dividends to fund its obligations. In order to meet its ongoing obligations, on a stand-alone basis, CPF had an available cash balance of $21.1 million and $23.0 million as of March 31, 2025 and December 31, 2024, respectively.

As a Hawaii state-chartered bank, the Bank may only pay dividends to the extent it has retained earnings as defined under Hawaii banking law ("Statutory Retained Earnings"), which differs from GAAP retained earnings. The Bank had Statutory Retained Earnings of $207.8 million and $196.8 million as of March 31, 2025 and December 31, 2024, respectively.

Dividends are payable at the discretion of the Board of Directors and there can be no assurance that the Board of Directors will allow the Company to continue to pay dividends at the same rate, or at all, in the future. Our ability to pay cash dividends to our shareholders is subject to restrictions under federal and Hawaii law, including restrictions imposed by the FRB and covenants set forth in various agreements we are a party to, including covenants set forth in our subordinated debentures and subordinated notes.

Share Repurchases

In January 2025, the Company’s Board of Directors approved a new authorization to repurchase up to $30.0 million of its common stock from time to time in the open market or in privately negotiated transactions (the "2025 Repurchase Plan"), pursuant to a newly authorized share repurchase plan. The 2025 Repurchase Plan replaces and supersedes in its entirety the share repurchase plan previously approved by the Board of Directors.

Table of Contents

During the three months ended March 31, 2025, the Company repurchased 77,316 shares of common stock, at an aggregate cost of $2.1 million under the 2025 Repurchase Plan. As of March 31, 2025, $27.9 million remained available for repurchase under the 2025 Repurchase Plan.

Trust Preferred Securities

As of March 31, 2025, the Company has two statutory trusts, CPB Capital Trust IV ("Trust IV") and CPB Statutory Trust V ("Trust V"), which issued a total of $50.0 million in floating rate trust preferred securities. The trust preferred securities, the underlying floating rate junior subordinated debentures that are the assets of Trusts IV and V, and the common securities issued by Trusts IV and V are redeemable in whole or in part on any interest payment date for Trust IV and V, or at any time in whole but not in part within 90 days following the occurrence of certain events.

On July 3, 2023, after the cessation of the LIBOR benchmark rate on June 30, 2023, the Company amended its Trust IV and Trust V debt agreements to replace the LIBOR-based reference rate with an adjusted CME Term Secured Overnight Financing Rate ("SOFR") plus a tenor spread adjustment. Accounting Standards Codification ("ASC") 848 allows us to account for the modification as a continuation of the existing contract without additional analysis. The $30.0 million in floating rate trust preferred securities of Trust IV bear an interest rate of three-month CME Term SOFR plus a tenor spread adjustment of 0.26% plus 2.45% and the $20.0 million in floating rate trust preferred securities of Trust V bear an interest rate of three-month CME Term SOFR plus a tenor spread adjustment of 0.26% plus 1.87%.

Our obligations with respect to the issuance of the trust preferred securities constitute a full and unconditional guarantee by the Company of each trust's obligations with respect to its trust preferred securities. Subject to certain exceptions and limitations, we may elect from time to time to defer subordinated debenture interest payments, which would result in a deferral of dividend payments on the related trust preferred securities, for up to 20 consecutive quarterly periods without default or penalty.

Subordinated Notes

On October 20, 2020, the Company completed a $55.0 million private placement of ten-year fixed-to-floating rate subordinated notes, which was used to support regulatory capital ratios and for general corporate purposes. The Company exchanged the privately placed notes for registered notes with the same terms and in the same aggregate principal amount at the end of the fourth quarter of 2020. The notes bear a fixed interest rate of 4.75% for the first five years through November 1, 2025 and will reset quarterly thereafter for the remaining five years to the then current three-month SOFR, as published by the Federal Reserve Bank of New York, plus 4.56%. The subordinated notes are callable quarterly after the first five years. The subordinated notes had a carrying value of $54.9 million as of March 31, 2025, which was net of unamortized debt issuance costs of $0.1 million that is being amortized over the expected life.

Regulatory Capital Ratios

The Company and the Bank are subject to various regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action.

Federal banking agencies previously issued an interim final rule that delayed the estimated impact on regulatory capital resulting from the adoption of CECL. The interim final rule provided banking organizations that implement CECL before the end of 2020 the option to delay for two years the estimated impact of CECL on regulatory capital relative to regulatory capital determined under the prior incurred loss methodology, followed by a three-year transition period to phase out the aggregate amount of capital benefit provided during the initial two-year delay. The federal banking agencies subsequently issued a final rule that made certain technical changes to the interim final rule. The changes in the final rule apply only to those banking organizations that elected the CECL transition relief provided under the rule. The Company elected this option and the transition period ended on December 31, 2024.

General capital adequacy regulations adopted by the FRB and FDIC require an institution to maintain minimum leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ("CET1") capital ratios. In addition to these uniform risk-based capital guidelines and leverage ratios that apply across the industry, the regulators have the discretion to set individual minimum capital requirements for specific institutions at rates significantly above the minimum guidelines and ratios. For a further discussion of capital requirements for the Company and the Bank and the effect of forthcoming changes in

Table of Contents

required regulatory capital ratios, see the discussion in the "Business — Supervision and Regulation" sections of our 2024 Form 10-K.

The following table presents the regulatory capital ratios for the Company and the Bank, as well as the minimum capital adequacy requirements applicable to all financial institutions, as of the dates presented. The leverage capital, tier 1 risk-based capital, total risk-based capital, and CET1 risk-based capital ratios for the Company and the Bank as of March 31, 2025 and December 31, 2024, were above the levels required for a "well capitalized" regulatory designation.


	Actual				Minimum Required for Capital Adequacy Purposes				Minimum Required to be Well Capitalized
(dollars in thousands)	Amount		Ratio		Amount		Ratio [1]		Amount		Ratio
Central Pacific Financial Corp.
March 31, 2025
Leverage capital	$	710,578	9.4	%	$	302,530	4.0	%	N/A		N/A
CET1 risk-based capital	660,578		12.4		239,274		4.5		N/A		N/A
Tier 1 risk-based capital	710,578		13.4		319,033		6.0		N/A		N/A
Total risk-based capital	828,883		15.6		425,377		8.0		N/A		N/A


December 31, 2024
Leverage capital	$	704,045	9.3	%	$	301,967	4.0	%	N/A		N/A
CET1 risk-based capital	654,045		12.3		239,366		4.5		N/A		N/A
Tier 1 risk-based capital	704,045		13.2		319,155		6.0		N/A		N/A
Total risk-based capital	820,796		15.4		425,540		8.0		N/A		N/A


Central Pacific Bank
March 31, 2025
Leverage capital	$	740,524	9.8	%	$	302,038	4.0	%	$	377,547	5.0	%
CET1 risk-based capital	740,524		14.0		238,724		4.5		344,824		6.5
Tier 1 risk-based capital	740,524		14.0		318,299		6.0		424,399		8.0
Total risk-based capital	803,829		15.2		424,399		8.0		530,498		10.0


December 31, 2024
Leverage capital	$	731,155	9.7	%	$	301,410	4.0	%	$	376,763	5.0	%
CET1 risk-based capital	731,155		13.8		238,814		4.5		344,953		6.5
Tier 1 risk-based capital	731,155		13.8		318,419		6.0		424,558		8.0
Total risk-based capital	792,906		14.9		424,558		8.0		530,698		10.0

[1] Under the Basel III Capital Rules, the Company and the Bank must also maintain a 2.5% Capital Conservation Buffer ("CCB") to avoid becoming subject to restrictions on capital distributions and certain discretionary bonus payments to management. The CCB is calculated as a ratio of CET1 capital to risk-weighted assets, and effectively increases the required minimum risk-based capital ratios. As of March 31, 2025 and December 31, 2024, the Company and the Bank's risk-based capital exceeded the required CCB.

Market Risk

Market risk is the risk of loss in a financial instrument arising from adverse changes in market rates/prices such as interest rates, foreign currency rates, commodity prices and equity prices. Our primary market risk exposure is interest rate risk that occurs when rate-sensitive assets and rate-sensitive liabilities mature or reprice during different periods or in differing amounts.

Asset/Liability Management and Interest Rate Risk

Our earnings and capital are sensitive to risk of interest rate fluctuations. Interest rate risk arises when rate-sensitive assets and rate-sensitive liabilities mature or reprice during different periods or in differing amounts. In the normal course of business, the Company is subject to interest rate risk through the activities of making loans and taking deposits, as well as from our

Table of Contents

investment securities portfolio and other interest-bearing funding sources. Asset/liability management attempts to coordinate our rate-sensitive assets and rate-sensitive liabilities to meet our financial objectives.

Our Asset/Liability Management Policy seeks to maximize the risk-adjusted return to shareholders while maintaining consistently acceptable levels of liquidity, interest rate risk and capitalization. The Asset/Liability Management Committee ("ALCO") manages interest rate risk utilizing a detailed and dynamic earnings and capital simulation model to analyze earnings and capital in various interest rate scenarios and balance sheet forecasts. Earnings are typically measured by estimated changes in net interest income ("NII") under different rate scenarios. Capital impact is measured through an Economic Value of Equity ("EVE") analysis which monitors the impact of the durations of rate sensitive assets and liabilities. The EVE analysis simulates the cash flows for all on- and off- balance sheet instruments under different rate scenarios which are then discounted to determine a present value for each scenario. The net present value of our assets and liabilities represents the EVE for each scenario. The EVE results for each scenario are then compared to the base scenario to determine the Company’s sensitivities to longer term rate exposures. The results of the analyses are shared with the Board of Directors and informs strategic actions to mitigate and optimize our risk position and profitability. Adverse interest rate risk exposures are managed through the shortening or lengthening of the duration of assets and liabilities.

The ALCO simulation model used to measure and manage interest rate risk exposures includes both dynamic and static balance sheet and rate scenarios. The dynamic model scenarios provide an enhanced view that enables management and the Board of Directors to have a realistic view of the expected impact to earnings and capital from forecasted non-parallel movements in interest rates as well as balance sheet changes. On the other hand, static rate scenarios are a measurement of embedded interest rate risk in the balance sheet as of a point in time and incorporate various hypothetical interest rate scenarios that may include gradual or immediate parallel rate changes. The static scenarios have the benefit of comparability over time, as well as against other financial institutions, but are not intended to represent management's forecast. Both dynamic and static model simulations include the use of a number of key modeling assumptions including prepayment speeds, pricing spreads of assets and liabilities, deposit decay rates and the timing and magnitude of deposit rate changes in relation to changes in the overall level of interest rates. The assumptions are typically based on analyses of institution specific actual historical data and trends. Market information is also incorporated where relevant and appropriate. Assumptions are periodically reviewed and updated by ALCO. During periods of increased market volatility, assumptions will be reviewed more frequently. While management believes the assumptions are reasonable, actual behaviors and results may likely differ.

The following table reflects our static net interest income sensitivity analysis as of the dates presented. The simulations estimate net interest income assuming no balance sheet growth under a flat interest rate scenario. The net interest income sensitivity is measured as the change in net interest income in alternate interest rate scenarios as a percentage of the flat rate scenario. The alternate rate scenarios assume rates move up or down 100 bps, 200 bps or 300 bps in either a gradual (defined as the stated change over a 12-month period in equal increments) or an instantaneous, parallel fashion. The net interest income sensitivity table shows that the Company’s balance sheet is relatively well-matched against movements in interest rates and within our ALCO Policy risk limits that have been approved by the Board of Directors.


	March 31, 2025				December 31, 2024
	Estimated Net Interest Income Sensitivity				Estimated Net Interest Income Sensitivity
Rate Change	Gradual		Instantaneous		Gradual		Instantaneous
+300 bps	2.77	%	4.68	%	3.03	%	4.00	%
+200 bps	1.87	%	3.16	%	1.91	%	2.68	%
+100bps	0.96	%	1.59	%	0.84	%	1.36	%
-100bps	(1.05)	%	(2.25)	%	(1.36)	%	(2.21)	%
-200 bps	(2.44)	%	(4.75)	%	(2.93)	%	(4.74)	%
-300 bps	(3.83)	%	(7.22)	%	(4.55)	%	(7.41)	%

Liquidity and Borrowing Arrangements

Our objective in managing liquidity is to maintain a balance between sources and uses of funds in order to economically meet the cash requirements of customers for loans and deposit withdrawals and participate in lending and investment opportunities as they arise. We monitor our liquidity position in relation to changes in loan and deposit balances on a daily basis to ensure maximum utilization, maintenance of an adequate level of readily marketable assets and access to short-term funding sources.

Table of Contents

The Company performs regular liquidity stress testing under a variety of scenarios to ensure that liquidity is adequate under certain potential liquidity stress events. Further, forecasts of Company cash flows are updated and analyzed periodically and more frequently during periods of elevated liquidity risk.

Core deposits have historically provided us with a sizable source of relatively stable and low cost funds, but are subject to competitive pressure in our market. A significant portion of our deposits are granular, long-tenured, and relationship-based. In addition to core deposit funding, we also have access to a variety of other short-term and long-term funding sources, which include proceeds from maturities of our loans and investment securities, as well as secondary funding sources available to meet our liquidity needs, such as the Federal Home Loan Bank of Des Moines (the "FHLB"), secured repurchase agreements and the Federal Reserve discount window.

As of March 31, 2025, the Company had $276.9 million in cash on its balance sheet and approximately $2.54 billion in total other liquidity sources, including available borrowing capacity and unpledged investment securities. Refer to Note 8 - Short-Term Borrowings and Long-Term Debt in the accompanying notes to the consolidated financial statements in this report for information on the Company's borrowing arrangements.

Information regarding our material contractual obligations is provided in "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no material changes in our cash requirements from known contractual and other obligations since December 31, 2024.

Table of Contents

Item 3. Quantitative and Qualitative Disclosures about Market Risk

For quantitative and qualitative disclosures regarding market risks, refer to "Market Risk" and "Asset/Liability Management and Interest Rate Risk" of Part I, Item 2, "Management’s Discussion and Analysis of Financial Condition and Results of Operations."

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report and pursuant to Rule 13a-15 of the Securities Exchange Act of 1934, as amended, (the "Exchange Act"), the Company's management, including the principal executive officer and principal financial officer, conducted an evaluation of the effectiveness and design of the Company's disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act). Based upon that evaluation, the Company's principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the period covered by this report, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Table of Contents

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

There have been no material changes from the Risk Factors as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 26, 2025, except as described below:

The financial services industry and broader economy may be subject to new or changing government policy, legislation and regulation.

Our success depends, to a certain extent, upon local, national and global economic and political conditions, as well as governmental monetary, trade and interest rate policies. The current U.S. administration has and continues to implement significant and rapid changes in federal government operations and policies, including international trade policies, which may impact economic stability, the financial markets and the financial services industry broadly. Conditions such as an economic recession, stagflation, rising unemployment, the effects of tariffs, trade wars, inflationary prices and other factors beyond our control may adversely affect our asset quality, deposit levels, loan demand, demand for our products and services and the ability to manage costs associated with employees and vendors. The occurrence of any of the foregoing events could have a material adverse effect on our business, financial condition or results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

On January 27, 2025, the Company's Board of Directors approved a new share repurchase authorization of up to $30.0 million of its common stock from time to time in the open market or in privately negotiated transactions, pursuant to a newly authorized share repurchase plan (the "2025 Repurchase Plan"). The 2025 Repurchase Plan replaced and superseded in its entirety the share repurchase program previously approved by the Company’s Board of Directors.

During the three months ended March 31, 2025, the Company repurchased 77,316 shares of common stock, at a cost of $2.1 million or $27.09 per share, under the Company's share repurchase program.

As of March 31, 2025, $27.9 million in share repurchase authorization remained available for repurchase under the Company's 2025 Repurchase Plan. We cannot provide any assurance as to whether or not we will continue to repurchase common stock under our share repurchase program.


	Issuer Purchases of Equity Securities
Period	Total Number of Shares Purchased [1]	Average Price Paid per Share		Total Shares Purchased as Part of Publicly Announced Programs	Maximum Dollar Value of Shares That May Yet Be Purchased Under the Program
January 1-31, 2025	—	$	—	—	$	30,000,000
February 1-28, 2025	26,478	29.67		500	29,985,733
March 1-31, 2025	76,816	27.08		76,816	27,905,524
Total	103,294	$	27.74	77,316	27,905,524

[1] During the three months ended March 31, 2025, 25,978 shares were acquired from employees in connection with income tax withholding obligations related to the vesting of restricted stock and/or performance stock units. These purchases were not included within the Company's publicly announced share repurchase program.

Table of Contents

Item 5. Other Information

Rule 10b5-1 Trading Arrangements

On February 3, 2025, Ms. A. Catherine Ngo, a director of the Company, adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1(c) for the sale of up to 39,996 shares of the Company’s common stock beginning May 5, 2025 through May 5, 2026.

On March 5, 2025, Mr. Paul K. Yonamine, a director of the Company, adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1(c) for the sale of up to 8,295 shares of the Company’s common stock beginning June 5, 2025 through September 1, 2025.

None of the Company’s other directors or officers (as defined in Rule 16a-1(f)) adopted, modified or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (in each case, as defined in item 408 of Regulation S-K) for the purchase or sale of the Company's common stock during the three months ended March 31, 2025.

Item 6. Exhibits


Exhibit No.						Document















31.1						Rule 13a-14(a) Certification of Chief Executive Officer in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 *

31.2						Rule 13a-14(a) Certification of Chief Financial Officer in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 *

32.1						Section 1350 Certification of Chief Executive Officer in accordance with Section 906 of the Sarbanes-Oxley Act of 2002 **

32.2						Section 1350 Certification of Chief Financial Officer in accordance with Section 906 of the Sarbanes-Oxley Act of 2002 **

101.1						Interactive Data Files pursuant to Rule 405 of Regulation S-T formatted in Inline Extensible Business Reporting Language (“Inline XBRL”) *













104						Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101.1)


*						Filed herewith.

**						Furnished herewith.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		CENTRAL PACIFIC FINANCIAL CORP.



Date:	April 30, 2025	/s/ Arnold D. Martines
		Arnold D. Martines
		Chairman, President and Chief Executive Officer
		(Principal Executive Officer)

		/s/ Dayna N. Matsumoto
		Dayna N. Matsumoto
		Executive Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)