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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 September 30, 2026

or

☐         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)

Hawaii99-0212597
(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 classTrading Symbol(s)Name of each exchange on which registered
Common stock, No Par ValueCPFNew 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 October 23, 2026 was 25,443,686 shares.

Table of Contents
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Form 10-Q

Table of Contents
Page

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PART I.   FINANCIAL INFORMATION

Item 1. Financial Statements

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)

As of
(Dollars in thousands)September 30,
2026		December 31,
2025
Assets
Cash and due from financial institutions$116,691 $88,200 
Interest-bearing deposits in other financial institutions242,725 290,453 
Investment securities:
Debt securities available-for-sale, at fair value806,230 748,212 
Debt securities held-to-maturity, at amortized cost; fair value of: $434,634 as of September 30, 2026 and $495,845 as of December 31, 2025
535,182 562,391 
Total investment securities1,341,412 1,310,603 
Loans held for sale777 1,084 
Loans5,313,070 5,289,096 
Allowance for credit losses(59,841)(59,621)
Loans, net of allowance for credit losses5,253,229 5,229,475 
Premises and equipment, net100,305 100,620 
Accrued interest receivable25,176 23,559 
Investment in unconsolidated entities56,051 61,349 
Other real estate owned973 — 
Mortgage servicing rights, net8,212 8,672 
Bank-owned life insurance183,444 180,717 
Federal Reserve Bank ("FRB") and Federal Home Loan Bank of Des Moines ("FHLB") stock24,818 25,836 
Right-of-use lease assets22,296 24,822 
Other assets73,501 63,851 
Total assets$7,449,610 $7,409,241 
Liabilities and Equity
Deposits:
Noninterest-bearing demand$1,897,421 $1,891,198 
Interest-bearing demand1,423,298 1,388,107 
Savings and money market2,398,449 2,346,522 
Time944,694 983,937 
Total deposits6,663,862 6,609,764 
Long-term debt
76,547 76,547 
Lease liabilities23,045 25,549 
Accrued interest payable5,397 7,068 
Other liabilities99,322 97,732 
Total liabilities6,868,173 6,816,660 
Contingent liabilities and other commitments (see Note 18)
Equity:
Preferred stock, no par value, authorized 1,000,000 shares;
issued and outstanding: none as of September 30, 2026 and December 31, 2025
— — 
Common stock, no par value, authorized 185,000,000 shares;
issued and outstanding: 25,513,202 as of September 30, 2026 and 26,374,967 as of December 31, 2025
348,135 381,158 
Additional paid-in capital108,239 107,308 
Retained earnings232,878 191,383 
Accumulated other comprehensive loss(107,815)(87,268)
Total equity581,437 592,581 
Total liabilities and equity$7,449,610 $7,409,241 

See accompanying notes to consolidated financial statements.
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CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
(Dollars in thousands, except per share data)2026202520262025
Interest and dividend income:
Loans, including fees$66,695 $67,222 $196,571 $197,009 
Interest and dividends on investment securities:
Taxable investment securities10,277 9,776 29,219 29,448 
Tax-exempt investment securities685 709 2,051 2,126 
Deposits in other financial institutions2,558 1,857 7,389 5,595 
Dividend income on FRB and FHLB stock413 395 1,183 1,107 
Total interest income80,628 79,959 236,413 235,285 
Interest expense:
Deposits:
Demand765 490 2,044 1,385 
Savings and money market8,009 8,898 23,065 26,174 
Time6,308 7,410 19,461 23,133 
FHLB advances and other short-term borrowings1 — 1 — 
Long-term debt1,072 1,860 3,177 5,797 
Total interest expense16,155 18,658 47,748 56,489 
Net interest income64,473 61,301 188,665 178,796 
Provision for credit losses 1,892 4,157 8,627 13,316 
Net interest income after provision for credit losses62,581 57,144 180,038 165,480 
Other operating income:
Mortgage banking income548 958 1,890 2,299 
Service charges on deposit accounts2,450 2,330 6,999 6,601 
Other service charges and fees6,516 6,472 18,635 18,195 
Income from fiduciary activities1,614 1,547 4,617 4,672 
Income from bank-owned life insurance584 1,879 3,982 4,636 
Net loss on sales of investment securities— (30)— (30)
Other645 351 2,428 1,243 
Total other operating income12,357 13,507 38,551 37,616 
Other operating expense:
Salaries and employee benefits24,148 24,749 72,605 69,264 
Net occupancy4,671 4,598 13,292 13,243 
Computer software5,025 5,151 15,022 15,185 
Legal and professional services2,825 2,669 7,816 8,340 
Equipment822 867 2,451 2,899 
Advertising813 730 2,572 2,449 
Communication983 791 2,646 2,725 
Other5,483 7,454 18,212 18,922 
Total other operating expense44,770 47,009 134,616 133,027 
Income before income taxes 30,168 23,642 83,973 70,069 
Income tax expense7,392 5,068 19,650 15,464 
Net income$22,776 $18,574 $64,323 $54,605 
Per common share data:
Basic earnings per share$0.89 $0.69 $2.48 $2.02 
Diluted earnings per share$0.88 $0.69 $2.46 $2.01 
Cash dividends declared$0.30 $0.27 $0.88 $0.81 
Basic weighted average shares outstanding25,676,279 26,968,163 25,982,180 27,014,059 
Diluted weighted average shares outstanding25,817,417 27,083,280 26,111,724 27,118,824 

See accompanying notes to consolidated financial statements.
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CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

Three Months Ended September 30,Nine Months Ended September 30,
(Dollars in thousands)2026202520262025
Net income$22,776 $18,574 $64,323 $54,605 
Other comprehensive (loss) income, net of tax:
Net change in unrealized (loss) gain on investment securities(22,016)8,670 (26,315)21,653 
Reclassification adjustment for loss on sale of investment securities— 22 — 22 
Amortization of unrealized losses on investment securities transferred to held-to-maturity1,293 1,339 3,677 3,787 
Net change in fair value of derivatives1,263 (429)2,089 (3,096)
Supplemental Executive Retirement Plan1 — 2 — 
Total other comprehensive (loss) income, net of tax(19,459)9,602 (20,547)22,366 
Comprehensive income$3,317 $28,176 $43,776 $76,971 

See accompanying notes to consolidated financial statements.
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CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)

(Dollars in thousands, 
except per share data)		Common
Shares
Outstanding		Preferred
Stock		Common
Stock		Additional Paid-In CapitalRetained EarningsAccum.
Other
Comp.
Loss		Total
Balance at June 30, 202625,806,418 $— $359,364 $107,534 $217,789 $(88,356)$596,331 
Net income— — — — 22,776 — 22,776 
Other comprehensive loss— — — — — (19,459)(19,459)
Cash dividends paid ($0.30 per share)
— — — — (7,687)— (7,687)
Common stock repurchases under share repurchase program(294,110)— (11,229)— — — (11,229)
Common shares withheld to satisfy tax obligations related to share‑based compensation(427)— — (16)— — (16)
Share-based compensation1,321 — — 721 — — 721 
Balance at September 30, 202625,513,202 $— $348,135 $108,239 $232,878 $(107,815)$581,437 

(Dollars in thousands, 
except per share data)		Common
Shares
Outstanding		Preferred
Stock		Common
Stock		Additional Paid-In CapitalRetained EarningsAccum.
Other
Comp.
Loss		Total
Balance at June 30, 202526,981,436 $— $399,823 $106,033 $164,676 $(101,658)$568,874 
Net income— — — — 18,574 — 18,574 
Other comprehensive income— — — — — 9,602 9,602 
Cash dividends paid ($0.27 per share)
— — — — (7,282)— (7,282)
Common stock repurchases under share repurchase program(78,255)— (2,344)— — — (2,344)
Common shares withheld to satisfy tax obligations related to share‑based compensation(159)— — (4)— — (4)
Share-based compensation490 — — 646 — — 646 
Balance at September 30, 202526,903,512 $— $397,479 $106,675 $175,968 $(92,056)$588,066 

See accompanying notes to consolidated financial statements.
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CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (continued)
(Unaudited)

(Dollars in thousands, 
except per share data)		Common
Shares
Outstanding		Preferred
Stock		Common
Stock		Additional Paid-In CapitalRetained EarningsAccum.
Other
Comp.
Loss		Total
Balance at December 31, 202526,374,967 $— $381,158 $107,308 $191,383 $(87,268)$592,581 
Net income— — — — 64,323 — 64,323 
Other comprehensive loss— — — — — (20,547)(20,547)
Cash dividends paid ($0.88 per share)
— — — — (22,828)— (22,828)
Common stock repurchases under share repurchase program(937,364)— (33,023)— — — (33,023)
Common shares withheld to satisfy tax obligations related to share‑based compensation(41,034)— — (1,412)— — (1,412)
Share-based compensation116,633 — — 2,343 — — 2,343 
Balance at September 30, 202625,513,202 $— $348,135 $108,239 $232,878 $(107,815)$581,437 

(Dollars in thousands, 
except per share data)		Common
Shares
Outstanding		Preferred
Stock		Common
Stock		Additional Paid-In CapitalRetained EarningsAccum.
Other
Comp.
Loss		Total
Balance at December 31, 202427,065,570 $— $404,494 $105,054 $143,259 $(114,422)$538,385 
Net income— — — — 54,605 — 54,605 
Other comprehensive income— — — — — 22,366 22,366 
Cash dividends paid ($0.81 per share)
— — — — (21,896)— (21,896)
Common stock repurchases under share repurchase program(258,648)— (7,015)— — — (7,015)
Common shares withheld to satisfy tax obligations related to share‑based compensation(27,124)— — (802)— — (802)
Share-based compensation123,714 — — 2,423 — — 2,423 
Balance at September 30, 202526,903,512 $— $397,479 $106,675 $175,968 $(92,056)$588,066 

See accompanying notes to consolidated financial statements.
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CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Nine Months Ended September 30,
(Dollars in thousands)20262025
Cash flows from operating activities:
Net income$64,323 $54,605 
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses8,627 13,316 
Depreciation and amortization of premises and equipment5,166 5,357 
Loss on disposal of premises and equipment— 2,002 
Non-cash lease expense22 — 
Cash flows from operating leases(3,757)(3,842)
Amortization of mortgage servicing rights700 607 
Net accretion of discount on investment securities(1,356)(918)
Share-based compensation2,343 2,423 
Net loss on sales of investment securities— 30 
Net gain on sales of residential mortgage loans(518)(909)
Proceeds from sales of loans held for sale28,202 61,600 
Originations of loans held for sale(27,617)(56,586)
Equity in the earnings of unconsolidated entities(22)(37)
Distributions from unconsolidated entities105 878 
Net increase in cash surrender value of bank-owned life insurance(3,982)(5,781)
Deferred income tax(884)(853)
Net tax expense from share-based compensation— 137 
Net change in other assets and liabilities19,753 5,721 
Net cash provided by operating activities91,105 77,750 
Cash flows from investing activities:
Purchases of investment securities available-for-sale(162,627)(50,592)
Proceeds from maturities, prepayments and calls of investment securities available-for-sale70,778 59,043 
Proceeds from sales of investment securities available-for-sale— 1,480 
Proceeds from maturities, prepayments and calls of investment securities held-to-maturity31,571 30,557 
Loan payments, net37,834 55,298 
Purchases of loan portfolios(70,469)(99,592)
Purchases of bank-owned life insurance(1,196)(1,027)
Proceeds from bank-owned life insurance death benefits2,451 3,281 
Purchases of premises, equipment and land(4,783)(3,761)
Contributions to unconsolidated entities(11,754)(4,159)
Net redemption (purchases) of FRB and FHLB stock1,018 (18,286)
Net cash used in investing activities(107,177)(27,758)
Cash flows from financing activities:
Net increase (decrease) in deposits54,098 (66,327)
Repayments of long-term debt— (25,000)
Cash dividends paid on common stock(22,828)(21,896)
Repurchases of common stock and other related costs(33,023)(7,015)
Common shares withheld to satisfy tax obligations related to share‑based compensation(1,412)(802)
Net cash used in financing activities(3,165)(121,040)
Net decrease in cash and cash equivalents(19,237)(71,048)
Cash and cash equivalents at beginning of period378,653 380,941 
Cash and cash equivalents at end of period$359,416 $309,893 


CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Unaudited)

Nine Months Ended September 30,
(Dollars in thousands)20262025
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest expense paid$49,419 $57,936 
Income taxes paid, net9,977 7,429 
Supplemental disclosure of non-cash information:
Net reclassification of loans to other real estate owned924 — 
Lease liabilities arising from obtaining right-of-use lease assets499 2,451 
Amortization of unrealized losses on investment securities transferred to held-to-maturity at fair value4,973 5,143 

See accompanying notes to consolidated financial statements.
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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, 2025. 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 deducted from the amortized cost basis of loans to present the net amount expected to be collected. The Company’s policy is to charge off loans against the ACL in the period they are deemed uncollectible. Any previously accrued but uncollected interest is reversed against current period interest income. Subsequent receipts, if any, are applied 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 expected credit losses over the life of the Company’s loan portfolio as of a given balance sheet date. The ACL on loans is measured on a collective basis when similar risk characteristics exist. Management estimates the ACL balance using relevant internal and external information, including historical experience, current conditions, and reasonable and supportable forecasts of future economic conditions. When future forecasts are no longer supportable, management reverts to historical loss data.

The Company's ACL model incorporates a one-year reasonable and supportable forecast period and reverts to historical loss data 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 data 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 and practices, imprecision in forecasting future economic conditions, loan profile, lending staff, problem loan trends, loan review, collateral values, credit concentrations, or other internal and external factors.

Economic Forecasts and Model Assumptions

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 includes 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.

The Company periodically evaluates and updates the economic forecast models and related loss drivers used within its ACL methodologies. These models incorporate macroeconomic variables that management believes are most relevant to the credit risk characteristics of each portfolio segment. Selected variables and model specifications are reviewed at least annually and may be updated as additional portfolio performance data becomes available or if management determines that a different model better reflects the relationship between economic conditions and expected credit losses.
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Portfolio Segmentation

The Company generally segments its portfolio by the loan classes established in the Federal Financial Institutions Examination Council ("FFIEC") Call Report, with additional sub-segments to better reflect underlying portfolio dynamics. The following is a description and associated risk characteristics of each loan segment:

Commercial and industrial loans

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 policies and practices generally require 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, as construction loans pose higher credit risks than typical secured loans. The predominant risk characteristics of this segment are the financial strength of the borrower, project completion risk (the risk that the project will not be completed on time and within budget), and geographic location.

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 include 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 changes, delinquency, and draw period maturity.

Consumer loans

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

Purchased consumer loans

Purchased consumer loans consist of dealer and unsecured consumer loans. The predominant risk characteristics of this segment include current and projected economic conditions, employment and income levels, and the quality of purchased consumer loans.

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The following table presents the Company's loan portfolio segments and the methodology used to measure expected credit losses.

SegmentExpected Credit Loss MethodologyHistorical Look-Back PeriodEconomic Forecast LengthReversion Method
Commercial and industrialDiscounted Cash Flow2008 to presentOne yearOne year
(straight-line
basis)
ConstructionDiscounted Cash Flow
Commercial real estate - Multi-familyDiscounted Cash Flow
Commercial real estate - All othersDiscounted Cash Flow
Residential mortgageDiscounted Cash Flow
Home equityDiscounted Cash Flow
ConsumerDiscounted Cash Flow
Consumer - PurchasedWeighted Average Remaining Maturity

ACL Methodologies

The Company utilizes the Discounted Cash Flow ("DCF") methodology for all segments, except for purchased consumer loans, as management believes the DCF methodology provides better alignment with the Current Expected Credit Losses ("CECL") standard by incorporating more granular assumptions and forward-looking forecasts. The DCF methodology incorporates assumptions regarding Probability of Default and Loss Given Default ("PD/LGD"), prepayment speeds, curtailment behavior, recovery rates, and recovery timing. These assumptions are reviewed periodically and updated as appropriate based on portfolio performance, internal experience, third-party studies, and other relevant information.

The DCF analysis is performed using a third-party software platform and leverages historical data. The Company uses the Moody's baseline forecast, which includes a one-year economic forecast period, followed by a one-year, straight-line reversion to the historical averages of the macroeconomic variables utilized.

The Company uses updated forecast models to incorporate post-COVID pandemic data and excludes data from the COVID-19 pandemic period due to abnormal and volatile economic and portfolio performance. Management continues to evaluate the relevance of historical periods utilized in model development and may adjust the data set as additional post-pandemic performance history becomes available.

For purchased consumer loans, the Company applies the Remaining Life methodology, also known as the Weighted Average Remaining Maturity ("WARM") methodology, due to the pooled nature of this portfolio.

Key assumptions and forecast model specifications are reviewed at least annually and updated as appropriate.

Discounted Cash Flow Methodology

The DCF methodology estimates CECL reserves as the difference between the amortized cost of a loan and the present value of expected future cash flows. Expected future cash flows are projected based on assumptions regarding PD/LGD, prepayments, curtailments, recovery rates, and recovery timing. The expected cash flows are discounted using the loan’s effective interest rate. The Company periodically reviews and updates these assumptions using internal portfolio data, third-party benchmark information, management judgment, and other relevant analyses.

Remaining Life or Weighted Average Remaining Maturity Methodology

Under the Remaining Life, or WARM methodology, lifetime expected credit losses are calculated by applying a historical loss rate over this remaining life of the loan pool. The remaining life is adjusted for expected prepayments. This method is used for pooled portfolios where individual loan-level modeling is not practical.

Impact of Recently Issued Accounting Pronouncements on Future Filings

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
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entities to disclose, in the notes to the financial statements, disaggregated information about specified categories of expenses included within income statement line items. 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, with early adoption permitted. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial position or results of operations.

In September 2025, the FASB issued ASU 2025‑06, "Intangibles—Goodwill and Other—Internal‑Use Software (Subtopic 350‑40): Targeted Improvements to the Accounting for Internal‑Use Software," which clarifies and modernizes the guidance for costs related to internal‑use software. The amendments remove references to project stages and clarify the capitalization threshold for software development costs. ASU 2025‑06 is effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial position or results of operations.

In September 2025, the FASB issued ASU 2025‑07, "Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract." The ASU introduces a scope exception from derivative accounting for certain non-exchange-traded contracts with underlyings based on the operations or activities specific to one of the parties to the contract, such as ESG-linked metrics or litigation funding arrangements. Additionally, the ASU clarifies that share-based noncash consideration received from a customer for the transfer of goods or services should initially be accounted for under Topic 606, with other guidance (e.g., Topic 815 or Topic 321) applied only when the right to receive or retain such consideration becomes unconditional. ASU 2025-07 is effective for fiscal years beginning after December 15, 2026, and interim periods within those fiscal years, with early adoption permitted. Entities may apply the guidance prospectively to new contracts or on a modified retrospective basis through a cumulative-effect adjustment to opening retained earnings in the year of adoption. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial position or results of operations.

In November 2025, the FASB issued ASU 2025‑08, "Financial Instruments—Credit Losses (Topic 326): Purchased Loans", which introduces the concept of purchased seasoned loans ("PSLs") and requires entities to apply the gross‑up approach to PSLs at acquisition (i.e., recognize an allowance for expected credit losses as an adjustment to the loan’s amortized cost basis rather than through Day 1 earnings). This change eliminates the historical Day 1 "double count" of expected credit losses for many acquired loans and is expected to improve comparability and better align accounting with acquisition economics, including in business combinations. Under ASU 2025-08, loans (excluding credit cards, debt securities, and trade receivables) are PSLs if (i) acquired in a business combination, or (ii) obtained more than 90 days after origination and the acquirer was not involved in origination. Existing accounting for purchased credit‑deteriorated ("PCD") assets is unchanged. ASU 2025-08 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted, and is to be applied on a prospective basis. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial position or results of operations.

In November 2025, the FASB issued ASU 2025-09, "Derivatives and Hedging (Topic 815)", which simplifies hedge accounting by (i) permitting aggregation of forecasted transactions with similar risk exposure, (ii), enabling hedge accounting for “choose-your-rate” debt interest payments, (iii) permitting hedging of variable price components that are clearly and closely related to the nonfinancial forecasted asset being purchased or sold, (iv) expanding the use of net written options as hedging instruments, and (v) eliminating the recognition and presentation mismatch for a dual hedge strategy. ASU 2025-09 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted, and is to be applied on a prospective basis. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial position or results of operations.

In December 2025, the FASB issued ASU 2025-11, "Interim Reporting (Topic 270)", which clarifies and reorganizes ASC 270 by improving navigability, specifying required interim disclosures, clarifying which entities the guidance applies to, and introducing a principle to disclose material events occurring since the last annual period. The update is effective for interim reporting periods in fiscal years beginning after December 15, 2027, with both prospective and retrospective adoption permitted, and to be applied on a prospective or retrospective basis. Early adoption is permitted and the amendments can be applied on a prospective or retrospective basis. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial position or results of operations.

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2. INVESTMENT SECURITIES

The following tables present the amortized cost, fair value and related ACL on available-for-sale ("AFS") and held-to-maturity ("HTM") investment securities as of September 30, 2026 and December 31, 2025 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) and gross unrecognized gains and losses:

(Dollars in thousands)Amortized CostGross Unrealized GainsGross Unrealized LossesFair ValueACL
September 30, 2026
Available-for-sale:
Debt securities:
States and political subdivisions$140,209 $— $(31,406)$108,803 $— 
Corporate securities15,000 16 (331)14,685 — 
U.S. Treasury and other government-sponsored entities and agencies95,307 26 (3,452)91,881 — 
Collateralized loan obligations110,147 50 (142)110,055 — 
Mortgage-backed securities:
Residential - U.S. government-sponsored entities and agencies455,824 10 (56,136)399,698 — 
Residential - Non-government agencies14,768 — (1,394)13,374 — 
Commercial - U.S. government-sponsored entities and agencies82,095 150 (14,511)67,734 — 
Total available-for-sale investment securities$913,350 $252 $(107,372)$806,230 $— 

(Dollars in thousands)Amortized CostGross Unrecognized GainsGross Unrecognized LossesFair ValueACL
September 30, 2026
Held-to-maturity:
Debt securities:
States and political subdivisions$41,794 $— $(9,068)$32,726 $— 
Mortgage-backed securities:
Residential - U.S. government-sponsored entities and agencies493,388 — (91,480)401,908 — 
Total held-to-maturity investment securities$535,182 $— $(100,548)$434,634 $— 

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(Dollars in thousands)Amortized CostGross Unrealized GainsGross Unrealized LossesFair ValueACL
December 31, 2025
Available-for-sale:
Debt securities:
States and political subdivisions$141,163 $55 $(24,177)$117,041 $— 
U.S. Treasury and other government-sponsored entities and agencies100,215 1,103 (1,293)100,025 — 
Collateralized loan obligations40,960 32 (165)40,827 — 
Mortgage-backed securities:
Residential - U.S. government-sponsored entities and agencies442,221 3,032 (38,200)407,053 — 
Residential - Non-government agencies15,935 150 (722)15,363 — 
Commercial - U.S. government-sponsored entities and agencies79,040 415 (11,552)67,903 — 
Total available-for-sale investment securities$819,534 $4,787 $(76,109)$748,212 $— 


(Dollars in thousands)Amortized CostGross Unrecognized GainsGross Unrecognized LossesFair ValueACL
December 31, 2025
Held-to-maturity:
Debt securities:
States and political subdivisions$41,925 $— $(7,226)$34,699 $— 
Mortgage-backed securities:
Residential - U.S. government-sponsored entities and agencies520,466 131 (59,451)461,146 — 
Total held-to-maturity investment securities$562,391 $131 $(66,677)$495,845 $— 

The Company did not transfer any investment securities that were classified as AFS to HTM during the three and nine months ended September 30, 2026 and 2025.

During the three and nine months ended September 30, 2026, the Company recorded a total of $1.8 million and $5.0 million, respectively, in amortization of unrecognized losses on investment securities previously transferred from AFS to HTM. During the three and nine months ended September 30, 2025, the Company recorded a total of $1.8 million and $5.1 million, respectively, in amortization of unrecognized losses on investment securities previously transferred from AFS to HTM.

The Company elected to not estimate credit losses on accrued interest receivable, as any uncollectible accrued interest receivable is written off 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. As of September 30, 2026 and December 31, 2025, accrued interest receivable on investment securities totaled $5.2 million and $4.5 million, respectively.

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The amortized cost, estimated fair value and weighted average yield of the Company's AFS and HTM investment securities as of September 30, 2026, are presented below, grouped by contractual maturity. Expected maturities may differ from contractual maturities due to the issuer's option to call or prepay obligations, with or without penalties. Securities that are not due at a single maturity date, such as mortgage-backed securities and other asset-backed investments, are presented separately.

(Dollars in thousands)Amortized CostFair Value
Weighted Average Yield (1)
September 30, 2026
Available-for-sale:
Debt securities:
Due in one year or less$1,387 $1,377 2.87 %
Due after one year through five years67,936 64,578 3.67 
Due after five years through ten years53,825 49,615 4.21 
Due after ten years127,368 99,799 2.91 
Collateralized loan obligations110,147 110,055 5.07 
Mortgage-backed securities:
Residential - U.S. government-sponsored entities and agencies455,824 399,698 3.04 
Residential - Non-government agencies14,768 13,374 4.29 
Commercial - U.S. government-sponsored entities and agencies82,095 67,734 2.91 
Total available-for-sale securities$913,350 $806,230 3.43 %

(Dollars in thousands)Amortized CostFair Value
Weighted Average Yield (1)
September 30, 2026
Held-to-maturity:
Debt securities:
Due after ten years$41,794 $32,726 2.29 %
Mortgage-backed securities:
Residential - U.S. government-sponsored entities and agencies493,388 401,908 1.84 
Total held-to-maturity securities$535,182 $434,634 1.89 %
(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 and nine months ended September 30, 2026. During the three and nine months ended September 30, 2025, the Company sold five AFS debt securities issued by state and political subdivisions. The investment securities had a cost basis of $1.5 million and were sold at a gross loss of $30 thousand.

Investment securities with carrying values totaling $664.6 million and $736.7 million as of September 30, 2026 and December 31, 2025, respectively, were pledged to secure public deposits, borrowings from the Federal Reserve Discount Window and other financial obligations.

As of September 30, 2026 and December 31, 2025, the Company did not hold investment securities of any one issuer, other than the U.S. Government and its agencies, that exceeded 10% of shareholders' equity.

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The following tables summarize AFS and HTM investment securities that were in a loss position as of the dates presented. The data is aggregated by major security type and the length of time the securities have been in a continuous loss position.

There were a total of 229 and 179 AFS investment securities that were in an unrealized loss position, without an ACL, as of September 30, 2026 and December 31, 2025, respectively. There were a total of 83 and 81 HTM investment securities that were in an unrecognized loss position, without an ACL, as of September 30, 2026 and December 31, 2025, respectively.

Less Than 12 Months12 Months or LongerTotal
(Dollars in thousands)Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
September 30, 2026
Available-for-sale:
Debt securities:
States and political subdivisions$17,526 $(1,315)$91,277 $(30,091)$108,803 $(31,406)
Corporate securities9,669 (331)— — 9,669 (331)
U.S. Treasury and other government-sponsored entities and agencies72,482 (1,847)10,339 (1,605)82,821 (3,452)
Collateralized loan obligations80,650 (142)— — 80,650 (142)
Mortgage-backed securities:
Residential - U.S. government-sponsored entities and agencies168,450 (6,238)227,494 (49,898)395,944 (56,136)
Residential - Non-government agencies7,253 (448)6,121 (946)13,374 (1,394)
Commercial - U.S. government-sponsored entities and agencies16,920 (452)45,005 (14,059)61,925 (14,511)
Total$372,950 $(10,773)$380,236 $(96,599)$753,186 $(107,372)

Less Than 12 Months12 Months or LongerTotal
(Dollars in thousands)Fair ValueGross Unrecognized LossesFair ValueGross Unrecognized LossesFair ValueGross Unrecognized Losses
September 30, 2026
Held-to-maturity:
Debt securities:
States and political subdivisions$— $— $32,726 $(9,068)$32,726 $(9,068)
Mortgage-backed securities:
Residential - U.S. government-sponsored entities and agencies7,608 (45)394,300 (91,435)401,908 (91,480)
Total$7,608 $(45)$427,026 $(100,503)$434,634 $(100,548)

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Less Than 12 Months12 Months or LongerTotal
(Dollars in thousands)Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
December 31, 2025
Available-for-sale:
Debt securities:
States and political subdivisions$2,196 $(12)$105,922 $(24,165)$108,118 $(24,177)
U.S. Treasury and other government-sponsored entities and agencies20,687 (48)11,976 (1,245)32,663 (1,293)
Collateralized loan obligations21,002 (99)10,020 (66)31,022 (165)
Mortgage-backed securities:
Residential - U.S. government-sponsored entities and agencies— — 261,335 (38,200)261,335 (38,200)
Residential - Non-government agencies— — 6,954 (722)6,954 (722)
Commercial - U.S. government-sponsored entities and agencies— — 49,246 (11,552)49,246 (11,552)
Total$43,885 $(159)$445,453 $(75,950)$489,338 $(76,109)

Less Than 12 Months12 Months or LongerTotal
(Dollars in thousands)Fair ValueGross Unrecognized LossesFair ValueGross Unrecognized LossesFair ValueGross Unrecognized Losses
December 31, 2025
Held-to-maturity:
Debt securities:
States and political subdivisions$— $— $34,699 $(7,226)$34,699 $(7,226)
Mortgage-backed securities:
Residential - U.S. government-sponsored entities and agencies— — 450,997 (59,451)450,997 (59,451)
Total$— $— $485,696 $(66,677)$485,696 $(66,677)

Investment securities in an unrealized or unrecognized loss position are evaluated at least quarterly to determine whether a credit loss exists. This evaluation includes a review of changes in the investment securities' credit ratings issued by major rating agencies and assessments of the issuers' financial condition. For mortgage-related securities, the Company also considers delinquency and loss data related to the underlying collateral, changes in subordination levels for the Company's position within the repayment structure, and remaining credit enhancement relative to projected credit losses.

The Company has reviewed its AFS and HTM investment securities that are in an unrealized or unrecognized loss position and determined that the losses are not related to credit quality, but are primarily attributable to changes in interest rates and volatility in the financial markets since the time of purchase. All of the investment securities in a loss position continue to be rated investment grade by one or more major rating agencies.

As of September 30, 2026 and December 31, 2025, the Company did not intend to sell the AFS and HTM securities that were in a loss position, and it was not more likely than not that the company would be required to sell such securities before recovery of their amortized cost basis. The Company evaluated these securities for credit losses and concluded that the decline in fair value was not attributable to credit factors. Accordingly, no ACL was recorded on these securities.

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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)September 30, 2026December 31, 2025
Commercial and industrial$578,574 $594,592 
Construction217,144 213,191 
Residential mortgage1,802,348 1,839,191 
Home equity568,114 600,082 
Commercial mortgage1,713,014 1,594,433 
Consumer433,876 447,607 
Loans, net of deferred fees and costs$5,313,070 $5,289,096 

Interest income on loans is accrued at the contractual rate of interest based on the unpaid principal balance. The Company has elected to not measure an estimate of credit losses on accrued interest receivable, as any uncollectible accrued interest receivable is written off in a timely manner. Accrued interest receivable on loans is reported together with accrued interest receivable on investment securities and other assets in the consolidated balance sheets. As of September 30, 2026 and December 31, 2025, accrued interest receivable on loans totaled $18.0 million and $18.3 million, respectively.

The Company did not transfer any loans to the held for sale category during the three and nine months ended September 30, 2026 and 2025 and did not sell any loans originally held for investment during the three and nine months ended September 30, 2026 and 2025.

Purchased Loans

The following table presents loan purchase activity by class at the time of purchase for the periods presented. None of the purchased loans were classified as purchased credit deteriorated ("PCD"), and there were no loans categorized as PCD during the periods presented.

Purchases of U.S. Mainland Consumer - Dealer:Three Months Ended September 30,Nine Months Ended September 30,
(Dollars in thousands)2026202520262025
Outstanding balance$29,688 $33,297 $68,343 $97,524 
Premium1,462 832 2,126 2,068 
Purchase price$31,150 $34,129 $70,469 $99,592 

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. These loans 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:

September 30, 2026December 31, 2025
(Dollars in thousands)Secured by 1-4 Family Residential PropertiesAllocated ACLSecured by 1-4 Family Residential PropertiesAllocated ACL
Residential mortgage$9,620 $— $10,572 $— 
Home equity2,673 — 2,608 — 
Total$12,293 $— $13,180 $— 

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Other Real Estate Owned and Foreclosure Proceedings

As of September 30, 2026, other real estate owned totaled $1.0 million and consisted of a residential real estate property acquired through foreclosure during the second quarter of 2026. The property was transferred from loans to other real estate owned at a carrying value of $924 thousand. During the three months ended September 30, 2026, the carrying value of the property increased by approximately $49 thousand due to capitalized improvements made to the property. As of December 31, 2025, the Company did not own any foreclosed properties. The Company did not acquire any additional foreclosed properties or sell a foreclosed property during the three months ended September 30, 2026 and the three and nine months ended September 30, 2025.

The Company had $8.6 million and $10.3 million of residential mortgage and home equity loans collateralized by residential real estate properties that were in the process of foreclosure as of September 30, 2026 and December 31, 2025, respectively. The Company did not have any commercial real estate loans in the process of foreclosure as of September 30, 2026 and December 31, 2025.

Nonaccrual and Past Due Loans

For all loan types, the delinquency status is determined based on 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 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:

Accruing Loans 30 - 59 Days Past DueAccruing Loans 60 - 89 Days Past DueAccruing Loans 90 Days or More Past DueNonaccrual LoansTotal Past Due and NonaccrualCurrent LoansTotal LoansNonaccrual Loans With No ACL
(Dollars in thousands)
September 30, 2026
Commercial and industrial$968 $453 $— $138 $1,559 $577,015 $578,574 $— 
Construction— — — — — 217,144 217,144 — 
Residential mortgage— 2,484 — 9,620 12,104 1,790,244 1,802,348 9,620 
Home equity2,080 1,723 — 2,673 6,476 561,638 568,114 2,673 
Commercial mortgage32,691 — — — 32,691 1,680,323 1,713,014 — 
Consumer3,699 749 521 606 5,575 428,301 433,876 — 
Total$39,438 $5,409 $521 $13,037 $58,405 $5,254,665 $5,313,070 $12,293 

Accruing Loans 30 - 59 Days Past DueAccruing Loans 60 - 89 Days Past DueAccruing Loans 90 Days or More Past DueNonaccrual LoansTotal Past Due and NonaccrualCurrent LoansTotal LoansNonaccrual Loans With No ACL
(Dollars in thousands)
December 31, 2025
Commercial and industrial$461 $218 $— $591 $1,270 $593,322 $594,592 $— 
Construction— — — — — 213,191 213,191 — 
Residential mortgage6,399 2,030 664 10,572 19,665 1,819,526 1,839,191 10,572 
Home equity1,029 809 485 2,608 4,931 595,151 600,082 2,608 
Commercial mortgage— — — — — 1,594,433 1,594,433 — 
Consumer3,357 1,312 403 615 5,687 441,920 447,607 — 
Total$11,246 $4,369 $1,552 $14,386 $31,553 $5,257,543 $5,289,096 $13,180 

Loan Modifications for Borrowers Experiencing Financial Difficulty

In the third quarter of 2026, the Company executed one loan modification for a borrower experiencing financial difficulty. The modification consisted of a term extension on a commercial real estate loan with an amortized cost basis of $0.6 million at the time of modification. The modified loan represented 0.03% of commercial real estate loans as of September 30, 2026. The financial effect of the modification for the term extension was not material.

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In the first quarter of 2026, the Company executed one loan modification for a borrower experiencing financial difficulty. The modification consisted of a term extension on a commercial and industrial loan with an amortized cost basis of $1.0 million at the time of modification. The modified loan represented 0.16% of commercial and industrial loans as of September 30, 2026. The financial effect of the modification for the term extension was not material.

The Company did not execute any material loan modifications for borrowers experiencing financial difficulty, either individually or in the aggregate, during the nine months ended September 30, 2025.

The Company did not grant any concessions involving principal forgiveness or interest rate reductions during the three and nine months ended September 30, 2026 and 2025.

As of September 30, 2026, the modified loans remained current and were performing in accordance with the modified terms. No payment defaults were recorded during the period ended September 30, 2026 related to loans modified for borrowers experiencing financial difficulty within the preceding twelve months.

When the Company determines that a modified loan, or a portion thereof, is uncollectible, the loan is charged off. The amortized cost basis of the loan is reduced by the amount charged off, with a corresponding reduction to the allowance for credit losses.

Credit Quality Indicators

The Company categorizes loans into risk ratings based on the evaluation of the borrower's ability to meet debt obligations such as: current financial information, historical payment experience, credit documentation, publicly available 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 regularly on an ongoing basis. For more information about the Company's credit quality indicators, refer to Note 3 - Loans and Credit Quality included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.

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 total loans. In addition, the following tables present gross charge-offs of loans by origination year during the periods presented.
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Amortized Cost of Term Loans by Year of OriginationAmortized Cost of Revolving Loans
(Dollars in thousands)20262025202420232022PriorTotal
September 30, 2026
Commercial and industrial:
Risk Rating
Pass$51,041 $41,575 $153,174 $27,593 $49,705 $135,437 $112,854 $571,379 
Special Mention— 436 990 — — — 298 1,724 
Substandard1,692 238 1,247 1,594 — 700 — 5,471 
Subtotal52,733 42,249 155,411 29,187 49,705 136,137 113,152 578,574 
Construction:
Risk Rating
Pass3,763 122,768 30,607 — 7,575 31,736 — 196,449 
Substandard— — — — — 20,695 — 20,695 
Subtotal3,763 122,768 30,607 — 7,575 52,431 — 217,144 
Residential mortgage:
Risk Rating
Pass96,858 87,097 51,832 70,817 224,102 1,262,022 — 1,792,728 
Substandard— — — 234 1,317 8,069 — 9,620 
Subtotal96,858 87,097 51,832 71,051 225,419 1,270,091 — 1,802,348 
Home equity:
Risk Rating
Pass106 333 1,209 8,977 23,149 46,901 484,766 565,441 
Substandard— — — 1,189 — — 1,484 2,673 
Subtotal106 333 1,209 10,166 23,149 46,901 486,250 568,114 
Commercial mortgage:
Risk Rating
Pass259,294 189,417 95,518 86,739 206,029 820,774 — 1,657,771 
Special Mention— — 1,967 — — 2,030 — 3,997 
Substandard— — 35,343 2,167 6,427 7,309 — 51,246 
Subtotal259,294 189,417 132,828 88,906 212,456 830,113 — 1,713,014 
Consumer:
Risk Rating
Pass42,426 114,963 71,950 34,489 63,585 64,313 41,024 432,750 
Substandard20 205 98 87 97 619 — 1,126 
Subtotal42,446 115,168 72,048 34,576 63,682 64,932 41,024 433,876 
Total$455,200 $557,032 $443,935 $233,886 $581,986 $2,400,605 $640,426 $5,313,070 

Gross Charge-Offs by Year of Origination
(Dollars in thousands)20262025202420232022PriorTotal
Nine Months Ended September 30, 2026
Commercial and industrial$— $362 $833 $383 $197 $1,519 $3,294 
Real estate:
Residential mortgage— — — 9 14 — 23 
Consumer15 772 954 521 3,076 1,912 7,250 
Gross charge-offs$15 $1,134 $1,787 $913 $3,287 $3,431 $10,567 

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Amortized Cost of Term Loans by Year of OriginationAmortized Cost of Revolving Loans
(Dollars in thousands)20252024202320222021PriorTotal
December 31, 2025
Commercial and industrial:
Risk Rating
Pass$63,780 $166,412 $34,598 $56,913 $47,935 $115,991 $103,393 $589,022 
Special Mention— 660 1,869 — — — — 2,529 
Substandard— 1,056 805 — 103 480 597 3,041 
Subtotal63,780 168,128 37,272 56,913 48,038 116,471 103,990 594,592 
Construction:
Risk Rating
Pass57,887 24,133 24,091 48,970 17,741 40,369 — 213,191 
Subtotal57,887 24,133 24,091 48,970 17,741 40,369 — 213,191 
Residential mortgage:
Risk Rating
Pass95,400 72,780 79,382 237,379 556,527 786,487 — 1,827,955 
Substandard— — 246 2,263 405 8,322 — 11,236 
Subtotal95,400 72,780 79,628 239,642 556,932 794,809 — 1,839,191 
Home equity:
Risk Rating
Pass416 988 10,944 25,112 15,989 31,915 511,625 596,989 
Substandard— — 1,185 — — 1,423 485 3,093 
Subtotal416 988 12,129 25,112 15,989 33,338 512,110 600,082 
Commercial mortgage:
Risk Rating
Pass204,072 146,975 92,107 204,149 210,061 681,060 5,771 1,544,195 
Special Mention— — 593 — — 471 — 1,064 
Substandard— 32,987 2,200 5,978 2,194 5,815 — 49,174 
Subtotal204,072 179,962 94,900 210,127 212,255 687,346 5,771 1,594,433 
Consumer:
Risk Rating
Pass81,799 85,641 54,227 97,994 71,458 17,527 37,944 446,590 
Substandard95 101 81 109 148 483 — 1,017 
Subtotal81,894 85,742 54,308 98,103 71,606 18,010 37,944 447,607 
Total$503,449 $531,733 $302,328 $678,867 $922,561 $1,690,343 $659,815 $5,289,096 

Gross Charge-Offs by Year of Origination
(Dollars in thousands)20252024202320222021PriorTotal
Nine Months Ended September 30, 2025
Commercial and industrial$74 $2,152 $207 $876 $231 $969 $4,509 
Consumer105 874 538 4,733 1,630 785 8,665 
Gross charge-offs$179 $3,026 $745 $5,609 $1,861 $1,754 $13,174 

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

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

(Dollars in thousands)Commercial & IndustrialConstructionResidential MortgageHome EquityCommercial MortgageConsumerTotal
Three Months Ended September 30, 2026
Beginning balance$8,165 $4,319 $13,092 $1,075 $21,353 $12,577 $60,581 
Provision (credit) for credit losses on loans120 (222)(10)11 (240)2,270 1,929 
Gross charge-offs(885)— — — — (2,666)(3,551)
Gross recoveries284 — 9 3 — 586 882 
Net (charge-offs) recoveries(601)— 9 3 — (2,080)(2,669)
Ending balance$7,684 $4,097 $13,091 $1,089 $21,113 $12,767 $59,841 

(Dollars in thousands)Commercial & IndustrialConstructionResidential MortgageHome EquityCommercial MortgageConsumerTotal
Three Months Ended September 30, 2025
Beginning balance$7,240 $3,363 $13,878 $1,049 $20,265 $13,816 $59,611 
Provision (credit) for credit losses on loans516 603 303 105 299 1,614 3,440 
Gross charge-offs(1,071)— — — — (2,824)(3,895)
Gross recoveries204 — 8 9 — 1,016 1,237 
Net (charge-offs) recoveries(867)— 8 9 — (1,808)(2,658)
Ending balance$6,889 $3,966 $14,189 $1,163 $20,564 $13,622 $60,393 

(Dollars in thousands)Commercial & IndustrialConstructionResidential MortgageHome EquityCommercial MortgageConsumerTotal
Nine Months Ended September 30, 2026
Beginning balance$7,982 $3,815 $14,219 $1,242 $19,544 $12,819 $59,621 
Provision (credit) for credit losses on loans2,339 280 (1,132)(168)1,569 5,069 7,957 
Gross charge-offs(3,294)— (23)— — (7,250)(10,567)
Gross recoveries657 2 27 15 — 2,129 2,830 
Net (charge-offs) recoveries(2,637)2 4 15 — (5,121)(7,737)
Ending balance$7,684 $4,097 $13,091 $1,089 $21,113 $12,767 $59,841 

(Dollars in thousands)Commercial & IndustrialConstructionResidential MortgageHome EquityCommercial MortgageConsumerTotal
Nine Months Ended September 30, 2025
Beginning balance$7,113 $2,316 $15,267 $2,335 $18,882 $13,269 $59,182 
Provision (credit) for credit losses on loans3,715 1,647 (1,103)(1,193)1,682 6,407 11,155 
Gross charge-offs(4,509)— — — — (8,665)(13,174)
Gross recoveries570 3 25 21 — 2,611 3,230 
Net (charge-offs) recoveries(3,939)3 25 21 — (6,054)(9,944)
Ending balance$6,889 $3,966 $14,189 $1,163 $20,564 $13,622 $60,393 

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The following table presents the activities in the reserve for off-balance sheet credit exposures, which is reported within other liabilities on the Company's consolidated balance sheets, for the periods presented. The related provision (credit) for off-balance sheet credit exposures is included in the provision for credit losses on the Company's consolidated statements of income for the periods presented.
Three Months Ended September 30,Nine Months Ended September 30,
(Dollars in thousands)2026202520262025
Beginning balance$6,149 $4,014 $5,442 $2,570 
(Credit) provision for off-balance sheet credit exposures(37)717 670 2,161 
Ending balance$6,112 $4,731 $6,112 $4,731 

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)September 30, 2026December 31, 2025
Investments in low income housing tax credit partnerships$53,281 $58,496 
Investments in common securities of statutory trusts1,547 1,547 
Investments in affiliates37 120 
Other1,186 1,186 
Total$56,051 $61,349 

As of September 30, 2026 and December 31, 2025, the Company's total commitments to fund low-income housing tax credit ("LIHTC") partnerships were $80.1 million and $80.0 million, respectively.

Unfunded commitments related to LIHTC partnerships totaled $14.3 million and $25.9 million as of September 30, 2026 and December 31, 2025, respectively. These amounts were included in other liabilities in the Company's consolidated balance sheets.

The Company accounts for its investments in LIHTC partnerships using the proportional amortization method, and these investments are reported in investments in unconsolidated entities in the Company's consolidated balance sheets.

The following table presents the expected payments for unfunded commitments related to LIHTC and other partnership investments as of September 30, 2026. The table includes expected funding for the remainder of fiscal year 2026, the next five succeeding fiscal years, and all years thereafter:

(Dollars in thousands)LIHTCOtherTotal
Year Ending December 31,
2026 (remainder)$522 $553 $1,075 
20272,793 — 2,793 
20285,482 — 5,482 
20294,921 — 4,921 
2030141 — 141 
203146 — 46 
Thereafter398 — 398 
Total unfunded commitments$14,303 $553 $14,856 

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

Three Months Ended September 30,Nine Months Ended September 30,
(Dollars in thousands)2026202520262025
Proportional amortization method:
Amortization expense recognized in income tax expense$1,783 $1,537 $5,351 $4,604 
Tax credits recognized in income tax expense2,086 1,798 6,258 5,386 

The Company has a commitment of $2.0 million to the JAM FINTOP Banktech Fund, L.P. ("JAM FINTOP"). The Company does not have the ability to exercise significant influence over JAM FINTOP, and the investment does not have a readily determinable fair value. Accordingly, the Company determined that the cost method of accounting for the investment was appropriate.

In 2025, the Company received a distribution of proceeds from the sale of one of JAM FINTOP's portfolio companies of $0.9 million. The proceeds were treated as a return on capital and applied against the cost basis of the investment in JAM FINTOP.

The Company's unfunded commitment related to JAM FINTOP was $0.6 million and $0.6 million as of September 30, 2026 and December 31, 2025, respectively. These amounts are included in other liabilities in the Company's consolidated balance sheets.

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:

(Dollars in thousands)September 30, 2026December 31, 2025
Mortgage loan portfolio serviced for:
Federal National Mortgage Association$710,192 $741,186 
Federal Home Loan Mortgage Corporation400,280 429,933 
Federal Home Loan Bank280 303 
Total loans serviced for others$1,110,752 $1,171,422 

The following tables present changes in the carrying value and the fair value of mortgage servicing rights for the periods presented:

Three Months EndedNine Months Ended
(Dollars in thousands)September 30, 2026September 30, 2025September 30, 2026September 30, 2025
Beginning balance$8,364 $8,436 $8,672 $8,473 
Additions70 233 240 593 
Amortization(222)(210)(700)(607)
Ending balance$8,212 $8,459 $8,212 $8,459 
Fair value, beginning balance$11,467 $11,897 $11,301 $12,387 
Fair value, ending balance$12,241 $11,454 $12,241 $11,454 

The Company measures its mortgage servicing rights ("MSRs") using the amortization method, amortizing MSRs proportionally over the period of expected net servicing income. New MSRs and amortization are reported within mortgage banking income, while ancillary income is recorded in other operating income. MSRs are recognized when loans are sold with servicing retained and pooled by similar characteristics.

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MSRs are initially recorded at fair value at the time of loan sale and thereafter carried at the lower of amortized cost or fair value and are evaluated for impairment at each reporting date. The Company estimates fair value using discounted cash flow models that incorporate expected servicing cash flows, prepayment assumptions, discount rates, servicing income and servicing costs. Changes in prepayment speeds, which are influenced by interest rates, home prices, and borrower behavior, can have a significant impact on MSR fair values. Generally, declining interest rates increase prepayment activity and reduce MSR value, while rising rates decrease prepayment activity and may increase MSR values. These assumptions are subjective and require management judgment and are updated periodically to reflect changes in market conditions, loan characteristics, and expected borrower behavior. MSRs are classified as Level 3 assets within the fair value hierarchy because the valuation relies on significant unobservable inputs.

Fair value estimates and underlying assumptions are reviewed periodically and, where available, compared with observable market data and third-party valuations.

The following table presents the key assumptions used in estimating the fair value of MSRs as of the dates presented:

September 30, 2026December 31, 2025
Weighted average discount rate9.5 %9.5 %
Weighted average prepayment speed assumption9.6 12.3 

The Company evaluates MSRs for impairment at each reporting date. Impairment exists when the carrying amount of the MSRs exceeds their estimated fair value. Any impairment is recognized through a valuation allowance, with subsequent recoveries recognized to the extent of previously recorded impairment. The Company recorded no impairment related to its MSRs as of September 30, 2026.

7. DERIVATIVES

The Company utilizes both designated and undesignated derivative financial instruments to manage exposure to interest rate fluctuations. All derivatives are measured at fair value and reported in other assets or other liabilities on the consolidated balance sheets, depending on their position.

For derivative instruments that are designated as cash flow hedging instruments, the effective portion of the changes in the fair value of the derivative is recorded in accumulated other comprehensive income (loss) ("AOCI"), net of tax, until the hedged cash flows impact earnings. Any ineffective portion of the hedge is immediately recognized 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 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 had no interest rate lock commitments outstanding as of September 30, 2026 and December 31, 2025.

The Company had $0.8 million and $1.1 million of forward sale commitments outstanding as of September 30, 2026 and December 31, 2025, respectively.

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Risk Participation Agreements

The Company may enter into credit risk participation agreements ("RPA") with financial institution counterparties related to interest rate swaps on participation loans. 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.

RPAs are accounted for as undesignated derivatives and are measured at fair value, with changes in fair value recorded in current period earnings.

The Company had RPAs with total notional amounts of $51.8 million and $52.4 million as of September 30, 2026 and December 31, 2025, respectively.

Back-to-Back Swap Agreements

The Company has established a program in which it originates variable-rate loans and simultaneously enters into variable-to-fixed interest rate swaps with borrowers. To offset interest rate exposure, the Company also enters into equal and opposite swap agreements with third-party financial institutions. These back-to-back swap agreements are designed to economically offset each other, allowing the Company to maintain a variable rate loan while providing the borrower with fixed-rate payments.

The Company's net cash flow from these arrangements equals the interest income earned on the variable-rate loan. These back-to-back swap agreements are considered free-standing derivatives and are recorded at fair value in either other assets or other liabilities on the Company's consolidated balance sheet. Changes in fair value are recognized in current period earnings.

As of September 30, 2026, the Company had entered into swap agreements with borrowers totaling $84.8 million in notional amount, compared to $60.7 million as of December 31, 2025. These agreements were offset by back-to-back swap agreements with third-party financial institutions for the same notional amounts. The Company received $11.6 million and $6.6 million in counter-party cash collateral related to the back-to-back swap agreements as of September 30, 2026 and December 31, 2025, respectively.

Interest Rate Swap

To mitigate interest rate risk, the Company entered into a forward starting interest rate swap during the first quarter of 2022, with a notional amount of $115.5 million, designated as a fair value hedge of certain municipal debt securities. Under the terms of the swap, the Company pays 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 matures on March 31, 2029.

During the second quarter of 2025, a $1.0 million municipal debt security underlying the hedge was called, resulting in a partial termination of the interest rate swap and a reduction of the notional amount to $114.6 million. All other terms of the interest rate swap remained unchanged.

The interest rate swap is carried at fair value on the Company’s consolidated balance sheet, recorded in other assets (if the fair value is positive) or other liabilities (if the fair value is negative). The changes in the fair value of the interest rate swap are recognized in interest income. Unrealized gains or losses on the hedged municipal securities attributable to changes in benchmark interest rates are recorded as adjustments to the carrying value of the hedged debt securities and recognized in the same interest income line item.

The hedged municipal debt securities are classified as AFS securities. Accordingly, unrealized gains and losses on these securities are initially recognized in AOCI. As part of the fair value hedge relationship, the portion of the change in fair value attributable to changes in the designated benchmark interest rate is subsequently reclassified from AOCI to interest income through adjustments to the carrying value of the hedged securities. These amounts offset changes in the fair value of the interest rate swap recognized in interest income.

The Company uses the long-haul method to assess hedge effectiveness, which is a statistical regression analysis that consists of historical observations of prior period periodic changes in fair value of both the hedge and the hedged item. The assessment is based on the Federal Funds benchmark interest rate component of the hedged item only with changes in credit unhedged. The assessment is performed on a quarterly basis. As of September 30, 2026, the hedge was determined to be highly effective, and the Company expects the hedge to remain effective for the duration of the swap.

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During the three months ended September 30, 2026 and 2025, the Company recognized net interest income of $0.4 million and $0.7 million, respectively, from net periodic settlements on its interest rate swap, which is included in interest income on taxable investment securities. For the nine months ended September 30, 2026 and 2025, the Company recognized net interest income of $1.2 million and $2.1 million, respectively, from the swap.

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 InstrumentsAsset DerivativesLiability Derivatives
Fair Value atFair Value at
(Dollars in thousands)Balance Sheet LocationSeptember 30,
2026		December 31,
2025		September 30,
2026		December 31,
2025
Interest rate lock and forward sale commitmentsOther assets / other liabilities$4 $— $— $4 
Risk participation agreementsOther assets / other liabilities— — — 3 
Back-to-back swap agreementsOther assets / other liabilities3,898 3,045 3,898 3,045 
Derivative Financial Instruments Designated as Hedging InstrumentsAsset DerivativesLiability Derivatives
Fair Value atFair Value at
(Dollars in thousands)Balance Sheet LocationSeptember 30,
2026		December 31,
2025		September 30,
2026		December 31,
2025
Interest rate swapOther assets / other liabilities$6,907 $4,163 $— $— 

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 September 30, 2026
Interest rate lock and forward sale commitmentsMortgage banking income$8 
Loans held for saleOther income(5)
Back-to-back swap agreementsOther service charges and fees184 
Three Months Ended September 30, 2025
Interest rate lock and forward sale commitmentsMortgage banking income(16)
Back-to-back swap agreementsOther service charges and fees49 

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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)
Nine Months Ended September 30, 2026
Interest rate lock and forward sale commitmentsMortgage banking income$7 
Loans held for saleOther income2 
Risk participation agreementsOther service charges and fees3 
Back-to-back swap agreementsOther service charges and fees252 
Nine Months Ended September 30, 2025
Interest rate lock and forward sale commitmentsMortgage banking income(59)
Loans held for saleOther income78 
Back-to-back swap agreementsOther service charges and fees225 

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 September 30, 2026
Interest rate swapInterest income$401 
Three Months Ended September 30, 2025
Interest rate swapInterest income675 

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)
Nine Months Ended September 30, 2026
Interest rate swapInterest income$1,232 
Nine Months Ended September 30, 2025
Interest rate swapInterest income2,142 

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)September 30, 2026December 31, 2025
Investment securities, available-for-sale:
Carrying amount of the hedged assets$86,026 $92,517 
Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged assets(7,226)(4,385)

8. SHORT-TERM BORROWINGS AND LONG-TERM DEBT

The following table presents the Company's long-term debt, which is based on original maturity and consists of advances under the arrangement with Federal Home Loan Bank of Des Moines (the "FHLB") and junior subordinated debentures as of the dates
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presented. These borrowing agreements may include customary financial covenants, with which the Company was in compliance as of September 30, 2026 and December 31, 2025.

(Dollars in thousands)September 30, 2026December 31, 2025
Long-term debt:
Federal Home Loan Bank long-term advances$25,000 $25,000 
Junior subordinated debentures51,547 51,547 
Total$76,547 $76,547 

At September 30, 2026, future principal payments on long-term debt based on redemption date or final maturity are as follows:

(Dollars in thousands)
Year Ending December 31,
2026 (remainder)$— 
2027— 
202825,000 
2029— 
2030— 
2031— 
Thereafter51,547 
Total$76,547 

Federal Home Loan Bank Advances and Other Borrowings

The Bank is a member of the Federal Home Loan Bank of Des Moines. As of September 30, 2026, the Bank maintained a $1.88 billion line of credit, compared to $1.80 billion as of December 31, 2025. The undrawn amount under this arrangement was $1.75 billion as of September 30, 2026, compared to $1.68 billion as of December 31, 2025. There were no short-term borrowings outstanding under this arrangement as of September 30, 2026 and December 31, 2025.

As of September 30, 2026 and December 31, 2025, there was a $25.0 million long-term advance under the FHLB arrangement bearing an interest rate of 4.02%, and matures on February 1, 2028.

The FHLB also provides standby letters of credit on behalf of the Bank to secure certain public deposits. If the FHLB is required to make a payment under a standby letter of credit, the amount is converted to an advance. As of September 30, 2026, standby letters of credit under this arrangement totaled $102.5 million, compared to $95.6 million as of December 31, 2025. These letters of credit reduce the available borrowing capacity under the total line of credit, similar to outstanding advances.

In accordance with the collateral provisions of the Advances, Security and Deposit Agreement with the FHLB, the Bank pledged certain real estate loans with a carrying value of approximately $2.73 billion and $2.76 billion as of September 30, 2026 and December 31, 2025, respectively, as collateral for the FHLB advances and standby letters of credit.

The Bank also had access to the Federal Reserve Discount Window, with additional unused borrowing capacity of $188.7 million and $206.4 million as of September 30, 2026 and December 31, 2025, respectively. Certain commercial and commercial real estate loans with a par value totaling $93.0 million and $98.9 million as of September 30, 2026 and December 31, 2025, respectively, were pledged to the Federal Reserve as collateral on the line of credit. In addition, investment securities with a par value of $162.2 million and $172.0 million as of September 30, 2026 and December 31, 2025, 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 assets.

Additionally, the Bank had unused unsecured credit lines with other lenders totaling $75.0 million that was available as of September 30, 2026 and December 31, 2025.

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Junior 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)September 30, 2026December 31, 2025Interest Rate and Maturity Date
CPB Capital Trust IV ("Trust IV")$30,928 $30,928 
Three-month CME Term SOFR + tenor spread adjustment of 0.26% + 2.45%, maturing on December 15, 2034
CPB Statutory Trust V ("Trust V")20,619 20,619 
Three-month CME Term SOFR + tenor spread adjustment of 0.26% + 1.87%, maturing on December 15, 2034
Total$51,547 $51,547 

The trust preferred securities, the junior subordinated debentures, and the common securities issued by Trusts IV and V are redeemable in whole or in part on any interest payment date, or in whole but not in part within 90 days following the occurrence of certain specified events. The Company provides a full and unconditional guarantee of each trust's obligations related to its trust preferred securities.

Subject to certain exceptions and limitations, the Company may elect to defer interest payments on the junior subordinated debentures for up to 20 consecutive quarterly periods without triggering default or penalty. This would result in a corresponding deferral of distribution payments on the related trust preferred securities.

The Company's investments in the common securities of Trusts IV and V are recorded under investment in unconsolidated entities, while the junior subordinated debentures are reported as liabilities on the Company's consolidated balance sheets. The trusts are not consolidated in the Company's consolidated financial statements as the Company is not the primary beneficiary of these variable interest entities.

Under applicable regulatory guidelines and interpretations, the junior subordinated debentures qualify for inclusion in Tier 1 capital, subject to certain limitations.

9. EQUITY
 
As a Hawaii state-chartered bank, Central Pacific Bank may only pay dividends to the extent it has Statutory Retained Earnings, as defined under Hawaii banking law, which differs from GAAP retained earnings. As of September 30, 2026 and December 31, 2025, the Bank had Statutory Retained Earnings of $243.5 million and $234.7 million, respectively.

Dividends are payable at the discretion of the Board of Directors and may be restricted by federal and Hawaii state laws, regulatory guidance from the FRB, and covenants set forth in various agreements we are a party to, including covenants set forth in our junior subordinated debentures. There is no assurance that dividends will continue at the current rate, or at all.

The Company repurchases shares of its common stock when it believes such repurchases are in the best interests of the Company.

In January 2025, the Company’s Board of Directors authorized a share repurchase plan (the "2025 Repurchase Plan"), permitting the repurchase up to $30.0 million of the Company's common stock in open market or privately negotiated transactions. The 2025 Repurchase Plan replaced and superseded in its entirety the share repurchase plan previously approved by the Company's Board of Directors, which had $19.1 million in remaining repurchase authority.

In the year ended December 31, 2025, a total of 788,261 shares of common stock, at a cost of $23.3 million, were repurchased under the 2025 Repurchase Plan.

In January 2026, the Company's Board of Directors authorized a share repurchase plan (the "2026 Repurchase Plan"), permitting the repurchase of up to $55.0 million of the Company's common stock. Repurchases may be made from time to time in the open market or through privately negotiated transactions. The 2026 Repurchase Plan replaced and superseded in its entirety the 2025 Repurchase Plan previously approved by the Company’s Board of Directors, which had $6.7 million in remaining repurchase authority.

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During the nine months ended September 30, 2026, the Company repurchased 937,364 shares of common stock at an aggregate cost of $33.0 million under the 2026 Repurchase Plan. As of September 30, 2026, $22.0 million remained available for repurchase under the 2026 Repurchase Plan. There can be no assurance that share repurchases will continue at the current rate or at all.

The Company accounts for share repurchases under the cost method, recording the total cost of repurchased shares as a reduction of common stock until their future disposition is determined. These shares are held as authorized but unissued and may be reissued from time to time on such terms, prices, and conditions as determined by the Board of Directors.

In connection with the Company's recapitalization in 2011, the total number of authorized shares of common stock was increased to 185,000,000. From the completion of the Company’s 2011 recapitalization through September 30, 2026 and December 31, 2025, the Company has repurchased an aggregate of 18,459,870 and 17,522,506 shares, respectively.

10. 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. For more information about the Company's revenue-generating activities, refer to Note 12 - Revenue From Contracts with Customers included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.

Three Months Ended September 30, 2026Three Months Ended September 30, 2025
(Dollars in thousands)In-ScopeOut-of-ScopeTotalIn-ScopeOut-of-ScopeTotal
Other operating income:
Mortgage banking income$229 $319 $548 $297 $661 $958 
Service charges on deposit accounts2,450 — 2,450 2,330 — 2,330 
Other service charges and fees5,941 575 6,516 5,914 558 6,472 
Income from fiduciary activities1,614 — 1,614 1,547 — 1,547 
Income from bank-owned life insurance— 584 584 — 1,879 1,879 
Net (losses) gains on sales of investment securities— — — — (30)(30)
Other380 265 645 — 351 351 
Total other operating income$10,614 $1,743 $12,357 $10,088 $3,419 $13,507 


Nine Months Ended September 30, 2026Nine Months Ended September 30, 2025
(Dollars in thousands)In-ScopeOut-of-ScopeTotalIn-ScopeOut-of-ScopeTotal
Other operating income:
Mortgage banking income$779 $1,111 $1,890 $736 $1,563 $2,299 
Service charges on deposit accounts6,999 — 6,999 6,601 — 6,601 
Other service charges and fees16,941 1,694 18,635 16,372 1,823 18,195 
Income from fiduciary activities4,617 — 4,617 4,672 — 4,672 
Income from bank-owned life insurance— 3,982 3,982 — 4,636 4,636 
Net (losses) gains on sales of investment securities— — — — (30)(30)
Other1,492 936 2,428 — 1,243 1,243 
Total other operating income$30,828 $7,723 $38,551 $28,381 $9,235 $37,616 

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11. SHARE-BASED COMPENSATION

Restricted and Performance Stock Units

Under the Company's 2023 Stock Compensation Plan, restricted stock units ("RSUs") and performance stock units ("PSUs") were awarded to certain non-officer directors and management personnel. These awards typically vest over two-, three- or five-year periods from the grant date and are subject to forfeiture until performance and employment conditions are achieved.

Compensation expense is generally measured based on the fair value of the Company's stock on the grant date, and is recognized over the applicable vesting period.

The following table presents the activities of RSUs and PSUs for the nine months ended September 30, 2026:

(Dollars in thousands, except per share data)SharesWeighted Average Grant Date Fair Value Per ShareFair Value of RSUs and PSUs That Vested During the Period
Unvested RSUs and PSUs outstanding, beginning of period289,154 $24.27 
Changes during the period:
Granted94,810 32.33 
Forfeited/cancelled(35,298)24.63 
Added by performance factor22,509 21.95 
Vested(104,228)22.90 $3,588 
Unvested RSUs and PSUs outstanding, end of period266,947 27.43 

The following table presents the activities of RSUs and PSUs for the nine months ended September 30, 2025:

(Dollars in thousands, except per share data)SharesWeighted Average Grant Date Fair Value Per ShareFair Value of RSUs and PSUs That Vested During the Period
Unvested RSUs and PSUs outstanding, beginning of period284,151 $22.48 
Changes during the period:
Granted108,246 30.12 
Forfeited/cancelled(1,763)29.05 
Vested(102,355)25.45 $3,032 
Unvested RSUs and PSUs outstanding, end of period288,279 24.22 

12. SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS

The Bank has a Supplemental Executive Retirement Plan ("SERP") which provides supplemental retirement benefits to former officers of the Company. The SERP holds no plan assets other than employer contributions that are paid as benefits during the year.

The projected benefit obligation of the unfunded SERP is recorded in other liabilities on the Company's consolidated balance sheets. As of September 30, 2026, the projected benefit obligation was $8.8 million, compared to $8.9 million as of December 31, 2025. The Company expects to pay approximately $0.6 million in benefit payments under the SERP in the next 12 months.

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

Three Months Ended September 30,Nine Months Ended September 30,
(Dollars in thousands)2026202520262025
Interest cost$107 $113 $321 $341 
Amortization of net actuarial gain1 — 2 — 
Net periodic benefit cost$108 $113 $323 $341 

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

13. OPERATING LEASES

The Company leases certain land and buildings for its bank branches and ATMs. Some leases include renewal options, which are evaluated and included in the measurement of right-of-use ("ROU") assets and lease liabilities when it is reasonably certain that the options will be exercised, in accordance with ASC 842, "Leases."

All leases are classified as operating leases. Several leases contain variable payments, primarily related to common area maintenance costs and Hawaii state tax rates.

The Company has elected the short-term exemption, for leases with terms of 12 months or less. Such leases are excluded from the calculation of the ROU assets and lease liabilities and are not included on the Company's balance sheets. The Company has also elected to account for lease and non-lease components as a single lease component for all classes of underlying assets.

The most significant assumption in applying ASC 842 is the discount rate. Because most lease agreements do not specify an implicit interest rate, the Company estimates the discount rate using the collateralized borrowing rate it would pay for a loan with a similar term.

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 September 30,Nine Months Ended September 30,
(Dollars in thousands)2026202520262025
Lease cost:
Operating lease cost$1,260 $1,316 $3,779 $3,959 
Variable lease cost778 727 2,204 1,989 
Total lease cost$2,038 $2,043 $5,983 $5,948 
Other information:
Operating cash flows from operating leases$(1,263)$(1,283)$(3,757)$(3,842)
Weighted-average remaining lease term - operating leases 8.92 years9.38 years8.92 years9.38 years
Weighted-average discount rate - operating leases4.14 %4.15 %4.14 %4.15 %

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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 September 30, 2026, for the remainder of fiscal year 2026, the next five succeeding fiscal years and all years thereafter:

Undiscounted Cash FlowsLease Liability ExpenseLease Liabilities
(Dollars in thousands)
Year Ending December 31,
2026 (remainder)$1,247 $234 $1,013 
20274,257 843 3,414 
20283,432 722 2,710 
20293,016 619 2,397 
20303,036 519 2,517 
20312,683 420 2,263 
Thereafter10,166 1,435 8,731 
Total $27,837 $4,792 $23,045 

During the third quarter of 2025, as part of a strategic consolidation of the Company's Operations Center into its main headquarters, the Company terminated its lease for the Operations Center, which was originally scheduled to run through 2038. As a result of the lease termination, the Company recognized a reduction of the ROU asset of $4.7 million, a reduction of the ROU liability of $4.1 million, and a credit of $0.6 million to other operating expense.

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 September 30,Nine Months Ended September 30,
(Dollars in thousands)2026202520262025
Total rental income recognized$386 $402 $1,166 $1,351 

The following table presents estimated lease payments, based on the Company's leases as lessor as of September 30, 2026, for the remainder of fiscal year 2026, the next five succeeding fiscal years, and all years thereafter:

(Dollars in thousands)
Year Ending December 31,
2026 (remainder)$392 
20271,453 
20281,017 
2029859 
2030724 
2031621 
Thereafter692 
Total $5,758 

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14. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following tables present the components of AOCI for the periods presented:

(Dollars in thousands)Before TaxTax EffectNet of Tax
Three Months Ended September 30, 2026
Net change in fair value of investment securities:
Net unrealized losses on AFS investment securities arising during the period$(29,921)$(7,905)$(22,016)
Less: Amortization of unrealized losses on investment securities transferred to HTM1,756 463 1,293 
Net change in fair value of investment securities(28,165)(7,442)(20,723)
Net change in fair value of derivatives:
Net unrealized gains arising during the period1,716 453 1,263 
Net change in fair value of derivatives1,716 453 1,263 
SERP:
Amortization of net actuarial gain2 1 1 
SERP2 1 1 
Other comprehensive loss$(26,447)$(6,988)$(19,459)

(Dollars in thousands)Before TaxTax EffectNet of Tax
Three Months Ended September 30, 2025
Net change in fair value of investment securities:
Net unrealized gains on AFS investment securities arising during the period$11,774 $3,104 $8,670 
Less: Reclassification adjustments from AOCI realized in net income30 8 22 
Less: Amortization of unrealized losses on investment securities transferred to HTM1,818 479 1,339 
Net change in fair value of investment securities13,622 3,591 10,031 
Net change in fair value of derivatives:
Net unrealized losses arising during the period(583)(154)(429)
Other comprehensive income$13,039 $3,437 $9,602 

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(Dollars in thousands)Before TaxTax EffectNet of Tax
Nine Months Ended September 30, 2026
Net change in fair value of investment securities:
Net unrealized losses on AFS investment securities arising during the period$(35,798)$(9,483)$(26,315)
Less: Amortization of unrealized losses on investment securities transferred to HTM4,973 1,296 3,677 
Net change in fair value of investment securities(30,825)(8,187)(22,638)
Net change in fair value of derivatives:
Net unrealized gains arising during the period2,840 751 2,089 
SERP:
Amortization of net actuarial gain3 1 2 
SERP3 1 2 
Other comprehensive loss$(27,982)$(7,435)$(20,547)

(Dollars in thousands)Before TaxTax EffectNet of Tax
Nine Months Ended September 30, 2025
Net change in fair value of investment securities:
Net unrealized gains on AFS investment securities arising during the period$29,408 $7,755 $21,653 
Less: Reclassification adjustments from AOCI realized in net income30 8 22 
Less: Amortization of unrealized losses on investment securities transferred to HTM5,143 1,356 3,787 
Net change in fair value of investment securities34,581 9,119 25,462 
Net change in fair value of derivatives:
Net unrealized losses arising during the period$(4,205)$(1,109)$(3,096)
Other comprehensive income$30,376 $8,010 $22,366 


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 SecuritiesDerivativesSERPAOCI
Three Months Ended September 30, 2026
Balance at beginning of period$(92,809)$4,066 $387 $(88,356)
Other comprehensive (loss) income before reclassifications(22,016)1,263 — (20,753)
Reclassification adjustments from AOCI1,293 — 1 1,294 
Total other comprehensive (loss) income(20,723)1,263 1 (19,459)
Balance at end of period$(113,532)$5,329 $388 $(107,815)

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(Dollars in thousands)Investment SecuritiesDerivativesSERPAOCI
Three Months Ended September 30, 2025
Balance at beginning of period$(106,060)$3,827 $575 $(101,658)
Other comprehensive income (loss) before reclassifications8,670 (429)— 8,241 
Reclassification adjustments from AOCI1,361 — — 1,361 
Total other comprehensive income (loss)10,031 (429)— 9,602 
Balance at end of period$(96,029)$3,398 $575 $(92,056)

(Dollars in thousands)Investment SecuritiesDerivativesSERPAOCI
Nine Months Ended September 30, 2026
Balance at beginning of period$(90,894)$3,240 $386 $(87,268)
Other comprehensive (loss) income before reclassifications(26,315)2,089 — (24,226)
Reclassification adjustments from AOCI3,677 — 2 3,679 
Total other comprehensive (loss) income(22,638)2,089 2 (20,547)
Balance at end of period$(113,532)$5,329 $388 $(107,815)

(Dollars in thousands)Investment SecuritiesDerivativesSERPAOCI
Nine Months Ended September 30, 2025
Balance at beginning of period$(121,491)$6,494 $575 $(114,422)
Other comprehensive income (loss) before reclassifications21,653 (3,096)— 18,557 
Reclassification adjustments from AOCI3,809 — — 3,809 
Total other comprehensive income (loss)25,462 (3,096)— 22,366 
Balance at end of period$(96,029)$3,398 $575 $(92,056)


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

Details about AOCI ComponentsAmount Reclassified from AOCIAffected Line Item in the Statement Where Net Income is Presented
Three Months Ended September 30,
(Dollars in thousands)20262025
Sale of AFS investment securities:
Realized loss on sale of AFS investment securities$— $30 Net loss on sale of investment securities
Tax effect— (8)Income tax benefit
Net of tax— 22 
Amortization of unrealized losses on investment securities transferred to HTM:
Amortization$1,756 $1,818 Interest and dividends on investment securities
Tax effect(463)(479)Income tax benefit
Net of tax1,293 1,339 
SERP:
Amortization of net actuarial gain2 — Other operating expense - other
Tax effect(1)— Income tax expense
Net of tax1 — 
Total reclassification adjustments from AOCI for the period, net of tax$1,294 $1,361 

Details about AOCI ComponentsAmount Reclassified from AOCIAffected Line Item in the Statement Where Net Income is Presented
Nine Months Ended September 30,
(Dollars in thousands)20262025
Sale of AFS investment securities:
Realized loss on sale of AFS investment securities$— $30 Net loss on sale of investment securities
Tax effect— (8)Income tax benefit
Net of tax— 22 
Amortization of unrealized losses on investment securities transferred to HTM:
Amortization$4,973 $5,143 Interest and dividends on investment securities
Tax effect(1,296)(1,356)Income tax benefit
Net of tax3,677 3,787 
SERP:
Amortization of net actuarial gain3 — Other operating expense - other
Tax effect(1)— Income tax expense
Net of tax2 — 
Total reclassification adjustments from AOCI for the period, net of tax$3,679 $3,809 
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15. 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 September 30,Nine Months Ended September 30,
(Dollars in thousands, except per share data)2026202520262025
Net income$22,776 $18,574 $64,323 $54,605 
Weighted-average shares outstanding for basic earnings per share25,676,279 26,968,163 25,982,180 27,014,059 
Add: Dilutive effect of employee stock options and awards141,138 115,117 129,544 104,765 
Weighted-average shares outstanding for diluted earnings per share25,817,417 27,083,280 26,111,724 27,118,824 
Basic earnings per share$0.89 $0.69 $2.48 $2.02 
Diluted earnings per share$0.88 $0.69 $2.46 $2.01 
Anti-dilutive employee stock options and awards— — 545 309 

16. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

Disclosures about Fair Value of Financial Instruments

The following summarizes the methods and assumptions used to estimate the fair values of the Company's financial instruments:

Short-Term Financial Instruments

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

Investment Securities

Fair values of investment securities are determined using market price quotations provided by third-party pricing services, which apply pricing models supported by current market data. Where quoted market prices are unavailable, fair values are based on comparable securities.

Loans

Fair values of loans are estimated using discounted cash flows models applied to portfolios of loans with similar financial characteristics including the type of loan, interest terms, and repayment history. Cash flows are discounted using estimated market rates that reflect credit and interest rate risks. These rates are derived from market data and borrower-specific information. The weighted average discount rate used in the valuation of loans was 7.68% as of September 30, 2026, and 6.33% as of December 31, 2025. Fair value measurements are based on the exit price notion, in accordance with ASU 2016-01.

Loans Held for Sale

Fair values 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.

Loans transferred from held-for-investment to held-for-sale are reported at fair value, net of estimated selling costs on the consolidated balance sheets.

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Mortgage Servicing Rights

MSRs are initially recorded at fair value determined by a discounted cash flow model prepared by a third-party service provider using market-based assumptions at origination. Subsequent impairment assessments are performed at each reporting period and use current market assumptions. Key assumptions include mortgage prepayment speeds, discount rates, servicing income, and costs. These inputs are subjective and require management judgment. Changes in assumptions are made to reflect evolving market trends and loan product types.

MSRs are classified as Level 3 assets in the fair value hierarchy due to significant unobservable inputs. The Company’s valuation techniques rely on discounted cash flow models reflecting expected cash flows, prepayment behavior, and cost structures. Fair value measurements and related assumptions are reviewed periodically and validated against market data and third-party valuations.

Deposit Liabilities

For deposits with no stated maturity, such as noninterest-bearing demand deposits and interest-bearing demand and savings accounts, fair value equals the carrying amount, representing the amount payable on demand.

For time deposits, fair value 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 4.42% as of September 30, 2026 and 3.81% as of December 31, 2025.

Long-Term Debt

Fair values of long-term debt are estimated by discounting scheduled cash flows over the contractual borrowing period using estimated market rates for similar borrowing arrangements. The weighted average discount rate used in the valuation of long-term debt was 6.69% as of September 30, 2026 and 6.12% as of December 31, 2025.

Derivatives

Fair values of derivative financial instruments are based on current market values, when 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

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 of Fair Value Estimates

Fair value estimates are made at a specific point in time and are based on relevant market conditions and available 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 and assumptions 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 inherently subjective in nature and involve uncertainties and matters of significant judgment. Changes in assumptions could significantly impact the estimates.

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Fair value estimates are limited to existing on- and off-balance sheet financial instruments and do not include the estimated value of future business or non-financial assets and liabilities such as 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)
September 30, 2026
Financial assets:
Cash and due from financial institutions$116,691 $116,691 $116,691 $— $— 
Interest-bearing deposits in other financial institutions242,725 242,725 242,725 — — 
Investment securities1,341,412 1,240,864 58,363 1,176,327 6,174 
Loans held for sale777 777 — 777 — 
Loans5,313,070 4,909,265 — — 4,909,265 
Mortgage servicing rights8,212 12,241 — — 12,241 
Accrued interest receivable25,176 25,176 1,187 5,005 18,984 
Financial liabilities:
Deposits:
Noninterest-bearing demand1,897,421 1,897,421 1,897,421 — — 
Interest-bearing demand and savings and money market3,821,747 3,821,747 3,821,747 — — 
Time944,694 937,050 — — 937,050 
Long-term debt76,547 76,053 — — 76,053 
Accrued interest payable5,397 5,397 81 — 5,316 

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)
September 30, 2026
Off-balance sheet financial instruments:
Commitments to extend credit$1,388,023 $— $1,142 $— $1,142 $— 
Standby letters of credit and financial guarantees written2,751 — 41 — 41 — 
Derivatives:
Forward sale commitments785 4 4 — 4 — 
Risk participation agreements51,760 — — — — — 
Back-to-back swap agreements:
Assets84,814 3,898 3,898 — 3,898 — 
Liabilities(84,814)(3,898)(3,898)— (3,898)— 
Interest rate swap agreements114,580 6,907 6,907 — 6,907 — 
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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, 2025
Financial assets:
Cash and due from financial institutions$88,200 $88,200 $88,200 $— $— 
Interest-bearing deposits in other financial institutions290,453 290,453 290,453 — — 
Investment securities1,310,603 1,244,057 61,291 1,176,050 6,716 
Loans held for sale1,084 1,084 — 1,084 — 
Loans5,289,096 5,016,971 — — 5,016,971 
Mortgage servicing rights8,672 11,301 — — 11,301 
Accrued interest receivable 23,559 23,559 651 4,075 18,833 
Financial liabilities:
Deposits:
Noninterest-bearing demand1,891,198 1,891,198 1,891,198 — — 
Interest-bearing demand and savings and money market3,734,629 3,734,629 3,734,629 — — 
Time983,937 978,868 — — 978,868 
Long-term debt76,547 73,579 — — 73,579 
Accrued interest payable7,068 7,068 102 — 6,966 

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, 2025
Off-balance sheet financial instruments:
Commitments to extend credit$1,337,099 $— $1,063 $— $1,063 $— 
Standby letters of credit and financial guarantees written2,624 — 39 — 39 — 
Derivatives:
Forward sale commitments1,095 (4)(4)— (4)— 
Risk participation agreements52,435 (3)(3)— (3)— 
Back-to-back swap agreements:
Assets60,660 3,045 3,045 — 3,045 — 
Liabilities(60,660)(3,045)(3,045)— (3,045)— 
Interest rate swap agreements114,580 4,163 4,163 — 4,163 — 

Fair Value Measurements

The Company classifies its financial assets and liabilities measured at fair value into a three-level hierarchy, 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 — Fair value is based on 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 — Fair value is based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, or model-based valuation techniques for which all significant assumptions are observable in the market.

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•Level 3 — Fair value is determined by using model-based techniques that rely on significant assumptions not observable in the market. These unobservable assumptions reflect the Company's own estimates of assumptions that market participants would use in pricing the asset or liability. Techniques may include the use of discounted cash flow models and other similar methods that require the use of significant judgment or estimation.

Fair value is measured based 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. The Company also prioritizes the use of observable inputs and minimizes reliance on unobservable inputs when developing fair value estimates.

Fair Value Hierarchy Transfers

During the nine months ended September 30, 2026, the Company did not transfer any financial assets or liabilities to or from Level 3.

In 2025, the Company transferred its back-to-back swaps from Level 3 to Level 2 of the fair value hierarchy due to a change in valuation methodology.

Recurring and Nonrecurring Fair Value Measurements

The Company uses 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, the Company may be required to record other financial assets, such as loans held for sale, individually evaluated loans, mortgage servicing rights, and other real estate owned, at fair value on a nonrecurring basis. These nonrecurring fair value adjustments typically involve application of lower of cost or fair value accounting, or write-downs of individual assets.

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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 ValueQuoted Prices
in Active
Markets for
Identical Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
September 30, 2026
Available-for-sale securities:
Debt securities:
States and political subdivisions$108,803 $— $103,242 $5,561 
Corporate securities14,685 — 14,685 — 
U.S. Treasury and other government-sponsored entities and agencies91,881 58,363 33,518 — 
Collateralized loan obligations110,055 — 110,055 — 
Mortgage-backed securities:
Residential - U.S. government-sponsored entities and agencies399,698 — 399,698 — 
Residential - Non-government agencies13,374 — 12,761 613 
Commercial - U.S. government-sponsored entities and agencies67,734 — 67,734 — 
Total available-for-sale investment securities806,230 58,363 741,693 6,174 
Derivatives:
Forward sale commitments4 — 4 — 
Back-to-back swap agreements:
Assets3,898 — 3,898 — 
Liabilities(3,898)— (3,898)— 
Interest rate swap agreements6,907 — 6,907 — 
Total derivatives6,911 — 6,911 — 
Total$813,141 $58,363 $748,604 $6,174 

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Fair Value at Reporting Date Using
(Dollars in thousands)Fair ValueQuoted Prices
in Active
Markets for
Identical Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
December 31, 2025
Available-for-sale securities:
Debt securities:
States and political subdivisions$117,041 $— $110,993 $6,048 
U.S. Treasury and other government-sponsored entities and agencies100,025 61,291 38,734 — 
Collateralized loan obligations40,827 — 40,827 — 
Mortgage-backed securities:
Residential - U.S. government-sponsored entities and agencies407,053 — 407,053 — 
Residential - Non-government agencies15,363 — 14,695 668 
Commercial - U.S. government-sponsored entities and agencies67,903 — 67,903 — 
Total available-for-sale investment securities748,212 61,291 680,205 6,716 
Derivatives:
Forward sale commitments(4)— (4)— 
Risk participation agreements(3)— (3)— 
Back-to-back swap agreements:— 
Assets3,045 — 3,045 — 
Liabilities(3,045)— (3,045)— 
Interest rate swap agreements4,163 — 4,163 — 
Total derivatives4,156 — 4,156 — 
Total$752,368 $61,291 $684,361 $6,716 

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 SubdivisionsResidential - Non-Government AgenciesTotal
Balance at December 31, 2025$6,048 $668 $6,716 
Principal payments received(220)(19)(239)
Unrealized net (loss) gain included in other comprehensive income(267)(36)(303)
Balance at September 30, 2026$5,561 $613 $6,174 
Balance at December 31, 2024$6,165 $682 $6,847 
Principal payments received(178)(18)(196)
Unrealized net gain (loss) included in other comprehensive income149 13 162 
Balance at September 30, 2025$6,136 $677 $6,813 

The Company estimates the fair value of Level 3 financial assets and liabilities using a discounted cash flow model that calculates the present value of estimated future principal and interest payments. Based on this methodology, the estimated aggregate fair value of Level 3 financial assets and liabilities measured at fair value on a recurring basis was $6.2 million as of September 30, 2026, compared to $6.7 million as of December 31, 2025.

The weighted-average discount rate is the primary unobservable input used in the fair value measurement of the available-for-sale debt securities. The weighted average discount rate utilized was 7.06% as of September 30, 2026, 5.92% as of
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December 31, 2025, and 5.78% as of September 30, 2025. These discount rates were derived by incorporating a credit spread over the FHLB Fixed-Rate Advance curve. A significant increase in the weighted-average discount rate could result in a lower fair value, while a decrease could result in a higher fair value.

There were no financial assets or liabilities measured on a nonrecurring basis as of September 30, 2026 and December 31, 2025.
17. SEGMENT INFORMATION

The Company evaluated its operating segments in accordance with ASC 280, "Segment Reporting" and determined that it operates as one reportable segment: banking operations.

The Company provides a comprehensive range of financial services, including construction and real estate development lending, commercial lending, residential mortgage lending, consumer lending, trust services, retail brokerage services, and our retail branch offices. These services are aggregated into a single segment because there is no material difference in the products or services offered based on customer type or geographic location. All activities are closely aligned with the Company's core business of providing financial services and are subject to similar risks and returns. Additionally, no single customer accounts for more than 10% of total revenue, and all operations are domestic, located in the State of Hawaii.

The Company's Executive Committee, which is designated as the chief operating decision maker ("CODM"), evaluates performance and makes strategic decisions based on consolidated financial information. The CODM does not assess performance or allocate resources based on individual product lines or geographic regions. Instead, performance is evaluated holistically using consolidated metrics such as total revenue, net income, and risk management of the Company. Resources are allocated to support the Company's overall business strategy.

Revenue is primarily generated from loans, investments, and deposits, as presented in the Company's consolidated balance sheets. Significant expenses include interest expense, provisions for credit losses, and salaries and employee benefits, as reflected in the Company's consolidated statements of income that are reviewed by the CODM. Segment performance is assessed using consolidated net income, with a primary focus on net interest income, rather than gross interest income and expense.

The accounting policies applied to the segment are consistent with those described in Note 1 - Summary of Significant Accounting Policies to the consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC.

18. CONTINGENT LIABILITIES AND OTHER COMMITMENTS

The Company and its subsidiaries are involved in legal proceedings arising in the ordinary course of business. The outcome and timing of resolution for these matters are inherently uncertain. However, based on information currently available and after consultation with legal counsel, management believes that the ultimate disposition of these matters will not have a material adverse effect on the Company's financial condition or results of operations.

In the normal course of business, the Company has contingent liabilities and other commitments, such as unused loan commitment, unused letters of credit and items held for collections, that are not reflected in the accompanying consolidated financial statements. Management does not anticipate any material losses arising from these off-balance sheet exposures. A reserve for off-balance sheet credit exposures is appropriately recorded in other liabilities on the Company's consolidated balance sheets.

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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 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, payment or nonpayment of dividends, net interest income, capital levels, credit losses, net interest margin, liquidity, and other financial items; (ii) statements of plans, objectives, and expectations of Central Pacific Financial Corp. (the "Company") or its management or Board of Directors, including those relating to business strategies, use of capital, products or services, technology initiatives, acquisitions, and regulatory developments or actions; (iii) statements concerning future economic performance and anticipated results from our business initiatives and strategic objectives; and (iv) statements regarding assumptions underlying or relating to any of the foregoing.

Words such as "believe," "plan," "anticipate," "aim," "seek," "expect," "intend," "forecast," "hope," "target," "continue," "remain," "estimate," "will," "should," "may," "could," "would," and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words.

While we believe that our forward-looking statements and the assumptions underlying them are reasonable, such statements are inherently subject to significant risks and uncertainties that are difficult to predict and are beyond our control. Actual results may differ materially from those expressed or implied by such forward-looking statements as a result of numerous factors, including, but are not limited to:

•the persistence or resurgence of current inflationary pressures in the United States and our market areas, and their effect on market interest rates, economic conditions, and credit quality;
•the impact of the current U.S. administration's economic policies, including potential international tariffs, geopolitical instability, trade tensions, fiscal policy changes, cost-cutting, and other governmental initiatives;
•disruptions in the economy, including the effects of government shutdown(s) and supply chain disruptions;
•labor contract disputes, and potential strikes impacting both the U.S. National and Hawaii economies;
•adverse trends in the real estate or construction industries, including rising inventory levels or declining property values;
•deterioration in borrowers' financial performance leading to increased loan delinquencies, asset quality issues, or loan losses;
•the impact of local, national, and international economies and natural disasters (such as wildfires, volcanic eruptions, hurricanes, tsunamis, storms, floods, or earthquakes) on our markets and major industries within Hawaii;
•weakness in domestic economic conditions, including higher unemployment levels, instability in the financial industry, deterioration in the real estate markets, and declines in consumer or business confidence;
•revisions to estimates of reserve requirements under applicable regulatory and accounting standards;
•the adverse effects of bank failures on customer confidence, deposit behavior, liquidity, and regulatory responses;
•the adverse effects of pandemics, epidemics, and other public health emergencies, including their impact on Hawaii's tourism and construction sectors, and on our borrowers, customers, vendors, and employees;
•the impact of legislative and regulatory developments, changing capital and consumer protection rules, and new regulations affecting our operations and competitiveness;
•the costs and effects of legal and regulatory proceedings, including actual or threatened litigation and the results of governmental and regulatory examinations and orders, as well as the costs of ongoing or potential compliance efforts;
•the effect of accounting standard changes adopted by regulatory agencies, the Securities and Exchange Commission ("SEC"), the Public Company Accounting Oversight Board ("PCAOB"), or the Financial Accounting Standards Board ("FASB"), and the cost and resources associated with implementation;
•changes in trade, tariff, monetary, or fiscal policies and laws, including actions by the Board of Governors of the Federal Reserve System;
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•increased competition from banks, credit unions, fintech companies, nonbank lenders, and other financial service providers;
•market volatility and monetary fluctuations;
•declines in our market capitalization or changes in the price of the Company’s common stock;
•the effects and cost of acquisitions, dispositions, strategic investments, business combinations, restructurings, or other strategic transactions we may pursue or evaluate;
•political instability, acts of war or terrorism, or other geopolitical conflicts;
•shifts in consumer spending, borrowing and savings behaviors;
•technological changes and developments;
•cybersecurity incidents, data privacy breaches, or fraud involving us or third-party vendors;
•deficiencies in our internal control over financial reporting or disclosure controls and procedures, and our ability to remediate them;
•our ability to achieve efficiency ratio improvement goals;
•changes in management, directors, key personnel, organizational structure, compensation programs, employee benefit plans, or our ability to attract and retain qualified personnel;
•risks related to the United States fiscal debt, deficit and budget uncertainties; and
•our ability to successfully manage the risks associated with any of 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 Form 10-K for the last fiscal year, respectively, and in particular, the discussion of "Risk Factors" set forth herein and therein. 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.

General

Central Pacific Financial Corp. ("CPF"), a Hawaii corporation and registered bank holding company under the Bank Holding Company Act of 1956, as amended (the "BHC Act"), was organized on February 1, 1982. CPF serves as the bank holding company for its principal subsidiary, Central Pacific Bank, which was incorporated in its present form in the State of Hawaii on March 16, 1982, following a holding company reorganization. The Bank's predecessor entity was originally incorporated in the State of Hawaii on January 15, 1954.

CPF reports financial results on a fiscal year ending December 31 and operates as a single reportable segment: banking operations.

Throughout this document, "Central Pacific Bank" is referred to as "our Bank" or "the Bank," and "the Company," "we," "us," or "our," refers to Central Pacific Financial Corp. on a consolidated basis, including the Bank and other consolidated subsidiaries.

As of September 30, 2026, Central Pacific Bank operated 27 branches and 56 ATMs across the State of Hawaii, offering full-service community banking.

Central Pacific Bank was founded by World War II veterans who, despite returning home as war heroes, faced limited banking opportunities in Hawaii. In response, they established the Bank to serve individuals and small businesses that lacked access to financial services at the time. This legacy continues to guide our commitment to creating opportunities and servicing our community through exceptional customer service and tailored financial products that meet the evolving needs of our customers, including:

•Loans: The Company's loan portfolio includes commercial and industrial loans, commercial mortgages, and construction loans to small and medium-sized businesses, professionals, and real estate investors and developers. The Company also offers residential mortgages, home equity loans, and consumer loans to individuals. Lending activities represent a core source of interest income, which is a key driver of our overall revenue. The Company aims to maintain a strong and diversified loan portfolio, primarily in Hawaii, with selective expansion into mainland markets.
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•Deposits: The Company offers a comprehensive suite of deposit products and services including checking, savings, and time deposit accounts, as well as cash management solutions and digital banking capabilities. The Company's extensive branch and ATM network across the State of Hawaii supports convenient access for its customers. The interest paid on deposits is a key component of interest expense, which significantly influences overall earnings. In addition, fees and service charges on deposit accounts, along with card interchange income contribute meaningfully to other operating revenue.

•Wealth Management: The Company offers non-deposit investment products, annuities, investment management, trust custody, estate planning, and financial advisory services.

Our foundational principles are based on continuing to be a leading bank for small businesses, and a professional and reliable resource to meet Hawaii’s housing needs. To drive growth, diversify our balance sheet, and strengthen resilience, we also focus on markets and niche segments that differentiate our Bank, which includes strategic partnerships with financial institutions in Japan and Korea.

Basis of Presentation

This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the accompanying unaudited consolidated financial statements under "Part I, Item 1. Financial Statements." 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, 2025 filed with the U.S. Securities and Exchange Commission (the "SEC") on February 27, 2026, including the "Risk Factors" disclosed 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 management to make certain judgments, estimates and assumptions that affect reported amounts and disclosures. Actual results may differ from these estimates, and such differences could be material to the financial statements.

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

Management determined the allowance for credit losses ("ACL") on loans is a critical accounting policy as of September 30, 2026 and December 31, 2025. This policy requires significant judgment and involves inherent complexity. Additional information regarding this policy is provided in Note 1 - Summary of Significant Accounting Policies included in the accompanying notes to the consolidated financial statements, as well as in Note 1 and the section titled "Critical Accounting Policies and Use of Estimates" within Management's Discussion and Analysis of Financial Condition and Operating Results in the Company's 2025 Annual Report on Form 10-K.

Executive Overview

The Company reported net income of $22.8 million, or $0.88 per diluted share for the three months ended September 30, 2026, compared to net income of $18.6 million, or $0.69 per diluted share for the same period of 2025. Net income for the nine months ended September 30, 2026 was $64.3 million, or $2.46 per diluted share, compared to net income of $54.6 million, or $2.01 per diluted share for the nine months ended September 30, 2025.

During the three months ended September 30, 2026, the Company recorded a provision for credit losses of $1.9 million, compared to a provision of $4.2 million during the same period of 2025. The provision for credit losses for the three months ended September 30, 2026 included a provision for credit losses on loans of $1.9 million, offset by a credit to the reserve for off-balance sheet credit exposures of $37 thousand. The provision for credit losses for the same period of 2025 included a provision for credit losses on loans of $3.4 million, and an increase to the reserve for off-balance sheet credit exposures of $0.7 million.

The decrease in the provision for credit losses in the three months ended September 30, 2026, compared to the same period of 2025 was primarily driven by lower reserve requirements resulting from changes in portfolio composition and loan-level credit
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characteristics. The decrease was also consistent with improved credit quality indicators, including lower nonaccrual loan balances. These favorable factors were partially offset by qualitative reserve requirements related to problem loan trends, and other portfolio-specific risks.

During the nine months ended September 30, 2026, the Company recorded a provision for credit losses of $8.6 million, compared to a provision of $13.3 million during the same period of 2025. The provision for credit losses for the nine months ended September 30, 2026 included a provision for credit losses on loans of $8.0 million, and an increase to the reserve for off-balance sheet credit exposures of $0.7 million. The provision for credit losses for the same period of 2025 included a provision for credit losses on loans of $11.2 million, and an increase to the reserve for off-balance sheet credit exposures of $2.2 million.

The decrease in the provision for credit losses in the nine months ended September 30, 2026, compared to the same period of 2025 was primarily driven by decreases in loans and net charge-offs. These decreases were partially offset by the continued application of qualitative reserves to address forecast uncertainty and certain portfolio-specific credit risks.

Three Months Ended September 30,Nine Months Ended September 30,
2026202520262025
Return on average assets1.22 %1.01 %1.15 %0.99 %
Return on average shareholders’ equity15.28 12.89 14.37 12.99 
Basic earnings per share$0.89 $0.69 $2.48 $2.02 
Diluted earnings per share0.88 0.69 2.46 2.01 

Non-GAAP Financial Measures

To supplement its consolidated financial information, the Company utilizes certain non-GAAP financial measures. These measures are not intended to be considered in isolation or as a substitute for comparable GAAP results. The Company believes these non‑GAAP financial measures provide meaningful insight to investors and other stakeholders in understanding its financial performance and position, by excluding certain transactions that may be non-recurring, non-operational, or not indicative of ongoing results. The Company also believes that these non-GAAP measures offer a useful perspective for evaluating performance trends over time and are intended to support period-to-period comparisons. In addition, the Company believes they are valuable tools for both investors and management in assessing historical results and forecasting future performance. Non-GAAP financial measures may not be comparable to similarly titled measures reported by other companies. The results for the three and nine months ended September 30, 2026 were not materially impacted by items outside of the normal course of business.

The following reconciling adjustment from GAAP to non-GAAP adjusted financial measures include a net pre-tax expenses of $1.5 million related to the consolidation of the Company's former operations center into its main office during the three months ended September 30, 2025.

Management does not consider this transaction to be representative of the Company's core operating performance. The related income tax effect was calculated using an assumed effective tax rate of 23%.

Three Months Ended September 30,Nine Months Ended September 30,
(Dollars in thousands, except per share data)2026202520262025
Financial Measures:
Net income$22,776 $18,574 $64,323 $54,605 
Diluted earnings per share$0.88 $0.69 $2.46 $2.01 
Return on average assets1.22 %1.01 %1.15 %0.99 %
Return on average shareholders' equity15.28 %12.89 %14.37 %12.99 %
Efficiency ratio (non-GAAP)58.27 %62.84 %59.25 %61.47 %
As of September 30, 2026 and 2025:
Tangible common equity ratio (non-GAAP)7.80 %7.92 %

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Three Months Ended September 30,Nine Months Ended September 30,
(Dollars in thousands, except per share data)2026202520262025
Adjusted Financial Measures (Non-GAAP):
Adjusted net income$22,776 $19,741 $64,323 $55,772 
Adjusted diluted earnings per share$0.88 $0.73 $2.46 $2.06 
Adjusted return on average assets1.22 %1.08 %1.15 %1.01 %
Adjusted return on average shareholders' equity15.28 %13.67 %14.37 %13.25 %
Adjusted efficiency ratio58.27 %60.81 %59.25 %60.77 %
As of September 30, 2026 and 2025:
Adjusted tangible common equity ratio7.80 %7.94 %

Adjusted Net Income and Diluted Earnings per Share

The following table presents a reconciliation of the Company's non-GAAP adjusted net income and adjusted diluted EPS for the periods presented, excluding the reconciling adjustments discussed above:

Three Months Ended September 30,Nine Months Ended September 30,
(Dollars in thousands, except per share data)2026202520262025
GAAP net income$22,776 $18,574 $64,323 $54,605 
Add: Expenses related to the consolidation of the Operations Center— 1,516 — 1,516 
Non-GAAP pre-tax adjustments— 1,516 — 1,516 
Less: Income tax effects (assumes 23% ETR)— (349)— (349)
Non-GAAP adjustments, net of tax
— 1,167 — 1,167 
Adjusted net income (non-GAAP)$22,776 $19,741 $64,323 $55,772 
Diluted weighted average shares outstanding25,817,417 27,083,280 26,111,724 27,118,824 
GAAP diluted EPS$0.88 $0.69 $2.46 $2.01 
Add: Non-GAAP adjustments, net of tax— 0.04 — 0.05 
Adjusted diluted EPS (non-GAAP)$0.88 $0.73 $2.46 $2.06 
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Adjusted Return on Average Assets and Adjusted Return on Average Shareholders' Equity

The following table presents a calculation of the Company's non-GAAP adjusted ROA and adjusted ROE for the periods presented, excluding the reconciling adjustments discussed above:

Three Months Ended September 30,Nine Months Ended September 30,
(Dollars in thousands)2026202520262025
Average assets$7,463,644 $7,341,281 $7,431,431 $7,347,895 
Add: Non-GAAP adjustments, net of tax— 1,167 — 389 
Adjusted average assets (non-GAAP)$7,463,644 $7,342,448 $7,431,431 $7,348,284 
ROA (GAAP net income divided by average assets)1.22 %1.01 %1.15 %0.99 %
Add: Non-GAAP adjustments, net of tax— 0.07 — 0.02 
Adjusted ROA (non-GAAP)1.22 %1.08 %1.15 %1.01 %
Average shareholders' equity$596,147 $576,531 $596,655 $560,671 
Add: Non-GAAP adjustments, net of tax— 1,167 — 389 
Adjusted average shareholders' equity (non-GAAP)$596,147 $577,698 $596,655 $561,060 
ROE (GAAP net income divided by average shareholders' equity)15.28 %12.89 %14.37 %12.99 %
Add: Non-GAAP adjustments, net of tax— 0.78 — 0.26 
Adjusted ROE (non-GAAP)15.28 %13.67 %14.37 %13.25 %

Efficiency Ratio

A key measure of operating efficiency monitored by the Company is the efficiency ratio, which is derived from GAAP-based amounts. It is calculated by dividing total other operating expenses by total pre-provision revenue (defined as net interest income plus total other operating income). The Company believes that the efficiency ratio, a non-GAAP financial measure, provides a useful supplemental metric that enhances understanding of its business performance and operating efficiency. The following table presents the Company's efficiency ratio for the periods presented:

Three Months Ended September 30,Nine Months Ended September 30,
(Dollars in thousands)2026202520262025
Total other operating expense$44,770 $47,009 $134,616 $133,027 
Less: Expenses related to the consolidation of the Operations Center— (1,516)— (1,516)
Non-GAAP pre-tax adjustments— (1,516)— (1,516)
Adjusted total other operating expense (non-GAAP)$44,770 $45,493 $134,616 $131,511 
Net interest income$64,473 $61,301 $188,665 $178,796 
Total other operating income12,357 13,507 38,551 37,616 
Total revenue$76,830 $74,808 $227,216 $216,412 
Efficiency ratio (non-GAAP)58.27 %62.84 %59.25 %61.47 %
Less: Non-GAAP pre-tax adjustments— (2.03)— (0.70)
Adjusted efficiency ratio (non-GAAP)58.27 %60.81 %59.25 %60.77 %

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Tangible Common Equity Ratio

The tangible common equity ("TCE") ratio, a non-GAAP financial measure, is calculated by dividing tangible common equity by tangible assets. The following table presents the Company's TCE ratio and adjusted TCE ratio as of the dates presented:

(Dollars in thousands)September 30, 2026September 30, 2025
Total equity$581,437 $588,066 
Less: Intangible assets— — 
TCE$581,437 588,066 
Add: Non-GAAP adjustments, net of tax— 1,167 
Adjusted TCE (non-GAAP)$581,437 $589,233 
Total assets$7,449,610 $7,421,478 
Less: Intangible assets— — 
Tangible assets$7,449,610 7,421,478 
Add: Non-GAAP adjustments, net of tax— 1,167 
Adjusted tangible assets (non-GAAP)$7,449,610 $7,422,645 
TCE ratio (non-GAAP)7.80 %7.92 %
Add: Non-GAAP adjustments, net of tax— 0.02 
Adjusted TCE ratio (non-GAAP)7.80 %7.94 %

Material Trends

Our operations are primarily concentrated in the State of Hawaii, making our performance highly sensitive to local economic, environmental, and industry-specific conditions — particularly those affecting real estate, tourism, and broader macroeconomic trends. A favorable business climate in Hawaii is typically characterized by expanding gross state product, low unemployment and rising personal income, while an unfavorable climate reflects the opposite.

Labor Market and Economic Indicators

The Hawaii State Department of Business, Economic Development and Tourism ("DBEDT") reported that Hawaii's seasonally adjusted unemployment rate was 2.8% in September 2026, higher than 2.2% in December 2025, but well below the national seasonally adjusted unemployment rate of 4.2%. University of Hawaii Economic Research Organization ("UHERO") forecasts Hawaii's seasonally adjusted unemployment rate to remain relatively steady at 2.5% for the full year 2026.

According to UHERO, inflation is expected to average 4.8% in 2026 before falling to 3.3% in 2027, driven by the impact of high oil prices due to the U.S. conflict with Iran. UHERO expects, Hawaii's Real GDP to grow 0.5% this year which has slowed due to the impact of oil prices and an unusually active storm season.

Construction remains a significant contributor to the economy through large federal military projects, the Honolulu Skyline rail project, and private condominium development.

Real Estate Market

Real estate lending, particularly residential and commercial mortgage loans, is a core focus of the Company. Consequently, our performance is closely tied to the health of Hawaii's real estate market. Despite mixed results, Hawaii's housing market remained resilient in the nine months ended September 30, 2026. According to the Honolulu Board of Realtors, sales of Oahu single-family homes rose 6.2%, while Oahu condominium sales fell 8.1 % for the nine months ended September 30, 2026, compared to the same period of 2025. The median sale price of Oahu single-family homes stayed relatively flat at $1.2 million in the nine months ended September 30, 2026, compared to $1.1 million in the same period of 2025. The median sale price of Oahu condominiums increased by 2.0% to $515,000 in the nine months ended September 30, 2026, compared to $505,000 in the same period of 2025.

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Tourism Trends

According to preliminary data from the DBEDT, 6.69 million visitors arrived in the Hawaiian Islands during the eight months ended August 31, 2026, an increase of 1.8% from 6.57 million visitors during the same period of 2025. Visitor arrivals from Japan are modestly improving with a 0.8% increase year-over-year. Visitor spending totaled $15.21 billion in the eight months ended August 31, 2026, up 4.1% from $14.62 billion in the same period of 2025.

While tourism has performed reasonably well through the start of the year, UHERO's September 2026 report anticipates tourism levels to face headwinds with surging fuel costs and the impact of multiple storms. Tourism from international markets continues to face challenges due to tariff disputes, exchange rate movements, and cross-border tensions.

Interest Rate Environment

Changes in monetary policy, including interest rate adjustments, can significantly influence interest income on loans and investment securities, interest expense on deposits and borrowings, loan origination and deposit growth, and the fair value of assets and liabilities, among other areas.

Throughout the first eight months of 2026, the FOMC maintained the target range for the federal funds rate at 3.50% to 3.75%. While economic activity continued to expand at a solid pace, inflation remained above the Federal Reserve's target and uncertainty surrounding the economic outlook persisted. At its September 16, 2026 meeting, the FOMC increased the target range for the federal funds rate by 25 bps to 3.75% to 4.00%, citing elevated inflation, resilient domestic spending, strong productivity growth, robust capital investment, and a stable labor market. The Committee also indicated that additional rate increases may be warranted depending on future economic conditions and inflation trends.

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 and nine months ended September 30, 2026 and 2025 is presented below. Net interest margin is calculated as annualized net interest income, adjusted to a taxable-equivalent basis using a federal statutory tax rate of 21%, expressed as a percentage of average interest-earning assets.
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(Dollars in thousands)Three Months Ended September 30,
20262025Variance
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$272,554 3.72 %$2,558 $167,247 4.41 %$1,857 $105,307 (0.69)%$701 
Investment securities:
Taxable (1)
1,376,837 2.98 10,277 1,348,314 2.90 9,776 28,523 0.08 501 
Tax-exempt (1) (2)
134,512 2.56 867 138,470 2.59 898 (3,958)(0.03)(31)
Total investment securities1,511,349 2.94 11,144 1,486,784 2.87 10,674 24,565 0.07 470 
Loans, including loans held for sale (3)
5,297,112 5.01 66,695 5,332,656 5.01 67,222 (35,544)— (527)
FRB and FHLB stock24,792 6.66 413 25,066 6.30 395 (274)0.36 18 
Total interest earning assets7,105,807 4.52 80,810 7,011,753 4.55 80,148 94,054 (0.03)662 
Noninterest-earning assets357,837 329,528 28,309 
Total assets$7,463,644 $7,341,281 $122,363 
Liabilities and Equity
Interest-bearing liabilities:
Interest-bearing demand deposits$1,444,639 0.21 %$765 $1,358,837 0.14 %$490 $85,802 0.07 %$275 
Savings and money market deposits2,406,350 1.32 8,009 2,293,452 1.54 8,898 112,898 (0.22)(889)
Time deposits up to $250,000404,823 2.05 2,096 437,192 2.28 2,509 (32,369)(0.23)(413)
Time deposits over $250,000565,681 2.95 4,212 586,251 3.32 4,901 (20,570)(0.37)(689)
Total interest-bearing deposits4,821,493 1.24 15,082 4,675,732 1.43 16,798 145,761 (0.19)(1,716)
FHLB advances and other short-term borrowings54 4.20 1 — — — 54 4.20 1 
Long-term debt76,547 5.55 1,072 131,493 5.61 1,860 (54,946)(0.06)(788)
Total interest-bearing liabilities4,898,094 1.31 16,155 4,807,225 1.54 18,658 90,869 (0.23)(2,503)
Noninterest-bearing deposits1,841,557 1,833,960 7,597 
Other liabilities127,846 123,565 4,281 
Total liabilities6,867,497 6,764,750 102,747 
Total equity596,147 576,531 19,616 
Total liabilities and equity$7,463,644 $7,341,281 $122,363 
Net interest income (taxable-equivalent)64,655 61,490 3,165 
Taxable-equivalent adjustment (2)
(182)(189)7 
Net interest income (GAAP)$64,473 $61,301 $3,172 
Interest rate spread3.21 %3.01 %0.20 %
Net interest margin (taxable-equivalent) (4)
3.62 %3.49 %0.13 %
(1)  At amortized cost.
(2) Interest income and resultant yield information for tax-exempt investment securities is expressed on a taxable-equivalent basis using a federal statutory tax rate of 21%.
(3)  Includes nonaccrual loans.
(4)  Annualized net interest income and expense in the NIM calculation are based on the day count interest payment conventions at the interest-earning asset or interest-bearing liability level (i.e. 30/360, actual/actual, actual/360).
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(Dollars in thousands)Nine Months Ended September 30,
20262025Variance
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$267,004 3.70 %$7,389 $169,066 4.42 %$5,595 $97,938 (0.72)%$1,794 
Investment securities:
Taxable (1)
1,352,766 2.88 29,219 1,367,968 2.87 29,448 (15,202)0.01 (229)
Tax-exempt (1) (2)
134,995 2.56 2,596 139,050 2.58 2,691 (4,055)(0.02)(95)
Total investment securities1,487,761 2.85 31,815 1,507,018 2.84 32,139 (19,257)0.01 (324)
Loans, including loans held for sale (3)
5,288,952 4.97 196,571 5,317,481 4.95 197,009 (28,529)0.02 (438)
FRB and FHLB stock24,887 6.34 1,183 23,392 6.31 1,107 1,495 0.03 76 
Total interest earning assets7,068,604 4.48 236,958 7,016,957 4.49 235,850 51,647 (0.01)1,108 
Noninterest-earning assets362,827 330,938 31,889 
Total assets$7,431,431 $7,347,895 $83,536 
Liabilities and Equity
Interest-bearing liabilities:
Interest-bearing demand deposits$1,431,951 0.19 %$2,044 $1,357,095 0.14 %$1,385 $74,856 0.05 %$659 
Savings and money market deposits2,381,708 1.29 23,065 2,304,708 1.52 26,174 77,000 (0.23)(3,109)
Time deposits up to $250,000421,967 2.13 6,717 444,726 2.37 7,887 (22,759)(0.24)(1,170)
Time deposits over $250,000561,642 3.03 12,744 597,876 3.41 15,246 (36,234)(0.38)(2,502)
Total interest-bearing deposits4,797,268 1.24 44,570 4,704,405 1.44 50,692 92,863 (0.20)(6,122)
FHLB advances and other short-term borrowings18 4.20 1 — — — 18 4.20 1 
Long-term debt76,547 5.55 3,177 138,298 5.60 5,797 (61,751)(0.05)(2,620)
Total interest-bearing liabilities4,873,833 1.31 47,748 4,842,703 1.56 56,489 31,130 (0.25)(8,741)
Noninterest-bearing deposits1,831,764 1,820,158 11,606 
Other liabilities129,179 124,363 4,816 
Total liabilities6,834,776 6,787,224 47,552 
Total equity596,655 560,671 35,984 
Total liabilities and equity$7,431,431 $7,347,895 $83,536 
Net interest income (taxable-equivalent)189,210 179,361 9,849 
Taxable-equivalent adjustment (2)
(545)(565)20 
Net interest income (GAAP)$188,665 $178,796 $9,869 
Interest rate spread3.17 %2.93 %0.24 %
Net interest margin (taxable-equivalent) (4)
3.57 %3.41 %0.16 %
(1)  At amortized cost.
(2) Includes taxable-equivalent adjustment using a federal statutory tax rate of 21%.
(3)  Includes nonaccrual loans.
(4)  Annualized net interest income and expense in the NIM calculation are based on the day count interest payment conventions at the interest-earning asset or interest-bearing liability level (i.e. 30/360, actual/actual, actual/360).

Net interest margin was 3.62% for the third quarter of 2026, an increase of 13 bps from 3.49% for the same quarter of 2025. Net interest margin was 3.57% for the nine months ended September 30, 2026, an increase of 16 bps from 3.41% in the same period of 2025.

The increase in net interest margin ("NIM") for the three months ended September 30, 2026 was primarily attributable to lower funding costs of 23 bps, reflecting declines in rates paid on interest-bearing deposits of 19 bps and lower interest expense on
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long-term debt. Deposit costs benefited from the repricing of interest-bearing deposit accounts and maturing time deposits at lower rates compared to the prior year period. In addition, the payoff of long-term debt and lower rates on the remaining balances reduced borrowing costs. While earning-asset yields remained relatively stable compared to the prior year, the reduction in funding costs more than offset the modest decline in asset yields, resulting in an expansion of net interest margin.

The increase in NIM for the nine months ended September 30, 2026 was also primarily driven by lower funding costs of 25 bps, reflecting declines in rates paid on interest-bearing deposits of 20 bps and reduced interest expense on long-term debt. Deposit repricing throughout 2026 allowed the Company to lower rates on certain deposit products as higher-cost balances matured or repriced, while the payoff of long-term debt further reduced interest expense. Earning-asset yields were generally stable compared to the prior year period as the increases in average yields earned on investment securities of 1 bp and loans of 2 bp was partially offset by the 72 bp decline in average yields earned on interest-bearing deposits in other financial institutions. Therefore the improvement in NIM was driven predominantly by the reduction in the overall cost of funds.

Rate-Volume Analysis

For each category of interest-earning assets and interest-bearing liabilities, changes in interest income or expense are analyzed based on two factors: (i) changes in average balances (volume) and (ii) changes in weighted average interest rates (rate). The change in volume is calculated by multiplying the change in average balance by the prior period's average yield or rate. The change in rate is calculated by multiplying the change in average yield or rate by current period's average balance. Any residual change in interest income or expense not solely attributable to volume or rate is allocated proportionately between the two factors.

Three Months Ended September 30, 2026
Compared To September 30, 2025		Nine Months Ended September 30, 2026
Compared To September 30, 2025
Increase (Decrease) Due to:Increase (Decrease) Due to:
(Dollars in thousands)VolumeRateNet ChangeVolumeRateNet Change
Interest earning assets:
Interest-bearing deposits in other financial institutions$1,168 $(467)$701 $3,239 $(1,445)$1,794 
Investment securities:
Taxable (1)
215 286 501 (329)100 (229)
Tax-exempt (1) (2)
(22)(9)(31)(76)(19)(95)
Total investment securities193 277 470 (405)81 (324)
Loans, including loans held for sale (3)
(527)— (527)(1,157)719 (438)
FRB and FHLB stock(4)22 18 70 6 76 
Total interest earning assets830 (168)662 1,747 (639)1,108 
Interest-bearing liabilities:
Interest-bearing demand deposits29 246 275 85 574 659 
Savings and money market deposits435 (1,324)(889)899 (4,008)(3,109)
Time deposits up to $250,000(183)(230)(413)(407)(763)(1,170)
Time deposits over $250,000(170)(519)(689)(917)(1,585)(2,502)
Total interest-bearing deposits111 (1,827)(1,716)(340)(5,782)(6,122)
FHLB advances and other short-term borrowings— 1 1 — 1 1 
Long-term debt(777)(11)(788)(2,591)(29)(2,620)
Total interest-bearing liabilities(666)(1,837)(2,503)(2,931)(5,810)(8,741)
Net interest income (taxable-equivalent)$1,496 $1,669 $3,165 $4,678 $5,171 $9,849 
(1)  At amortized cost.
(2) Interest income and resultant yield information for tax-exempt investment securities is expressed on a taxable-equivalent basis using a federal statutory tax rate of 21%.
(3) Includes nonaccrual loans.

Net interest income (expressed on a taxable-equivalent basis) was $64.7 million for the third quarter of 2026, an increase of $3.2 million, or 5.1% from $61.5 million for the same quarter of 2025. Net interest income (expressed on a taxable-equivalent basis) was $189.2 million for the nine months ended September 30, 2026, an increase of $9.8 million or 5.5% from
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$179.4 million for the same period of 2025. The increase for the third quarter of 2026 was primarily driven by the higher average balance on interest-bearing deposits in other financial institutions, and the higher average balance and yield earned on investment securities, combined with the lower average rate paid on interest-bearing deposits and the lower average balance and rate paid on long-term debt. These positive variances were partially offset by the decrease in the average rate earned on interest-bearing deposits in other financial institutions, combined with the decline in the average loan balance.

The increase for the nine months ended September 30, 2026 was primarily driven by the increase in average interest-bearing deposits in other financial institutions, combined with the lower average rate paid on interest-bearing deposits and lower average balance and rate paid on long-term debt. These positive variances were partially offset by the decrease in the average yield earned on interest-bearing deposits in other financial institutions, combined with the lower average investment securities and loan balances.

Other Operating Income

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

Three Months Ended September 30,
(Dollars in thousands)20262025$ Change% Change
Other operating income:
Mortgage banking income$548 $958 $(410)-42.8 %
Service charges on deposit accounts2,450 2,330 120 5.2 
Other service charges and fees6,516 6,472 44 0.7 
Income from fiduciary activities1,614 1,547 67 4.3 
Income from bank-owned life insurance584 1,879 (1,295)-68.9 
Net loss on sales of investment securities— (30)30 -100.0 
Other:
Equity in earnings of unconsolidated entities(17)32 (49)-153.1 
Income recovered on previously charged-off loans9 37 (28)-75.7 
Other recoveries31 27 4 14.8 
Unrealized gains on loans held for sale(5)— (5)N.M.
Commissions on sale of checks155 75 80 106.7 
Other472 180 292 162.2 
Total other operating income$12,357 $13,507 $(1,150)-8.5 
Note: Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period.

Total other operating income for the third quarter of 2026 was $12.4 million, which decreased by $1.2 million, or 8.5%, from $13.5 million in same quarter of 2025. The decrease was primarily due to a decrease in income from bank-owned life insurance ("BOLI") of $1.3 million. The Company has certain company-owned life insurance policies used to hedge market risks associated with its deferred compensation plans, which are tied to the equity markets, therefore, the Company has also recognized offsetting decreases in deferred compensation expense in other operating expenses.

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Nine Months Ended September 30,
(Dollars in thousands)20262025$ Change% Change
Other operating income:
Mortgage banking income$1,890 $2,299 $(409)-17.8 %
Service charges on deposit accounts6,999 6,601 398 6.0 
Other service charges and fees18,635 18,195 440 2.4 
Income from fiduciary activities4,617 4,672 (55)-1.2 
Income from bank-owned life insurance3,982 4,636 (654)-14.1 
Net loss on sales of investment securities— (30)30 -100.0 
Other:
Equity in earnings of unconsolidated entities22 65 (43)-66.2 
Income recovered on previously charged-off loans93 130 (37)-28.5 
Other recoveries78 80 (2)-2.5 
Unrealized gains on loans held for sale2 78 (76)-97.4 
Commissions on sale of checks454 231 223 96.5 
Other1,779 659 1,120 170.0 
Total other operating income$38,551 $37,616 $935 2.5 
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.

Total other operating income for the nine months ended September 30, 2026 was $38.6 million, which increased by $0.9 million, or 2.5%, from $37.6 million for the same period of 2025. The increase was primarily due to increases in debit card program extension consideration (included in other operating income-other) of $1.2 million, service charges on deposits accounts of $0.4 million, and other service charges and fees of $0.4 million, partially offset by decreases in BOLI income of $0.7 million, and mortgage banking income of $0.4 million.

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Other Operating Expense

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

Three Months Ended September 30,
(Dollars in thousands)20262025$ Change% Change
Other operating expense:
Salaries and employee benefits$24,148 $24,749 $(601)-2.4 %
Net occupancy4,671 4,598 73 1.6 
Computer software5,025 5,151 (126)-2.4 
Legal and professional services2,825 2,669 156 5.8 
Equipment822 867 (45)-5.2 
Advertising813 730 83 11.4 
Communication983 791 192 24.3 
Other:
SERP expense108 113 (5)-4.4 
Foreclosed asset expense2 — 2 N.M.
Charitable contributions171 155 16 10.3 
FDIC insurance assessment880 790 90 11.4 
Miscellaneous loan expenses308 160 148 92.5 
ATM and debit card expenses991 1,048 (57)-5.4 
Armored car expenses459 468 (9)-1.9 
Entertainment and promotions440 461 (21)-4.6 
Stationery and supplies181 153 28 18.3 
Directors' fees and expenses312 409 (97)-23.7 
Directors' deferred compensation plan expense(283)397 (680)-171.3 
Facility consolidation costs— 1,516 (1,516)-100.0 
Loss (gain) on disposal of fixed assets— 3 (3)-100.0 
Other1,914 1,781 133 7.5 
Total other operating expense$44,770 $47,009 $(2,239)-4.8 
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.

Total other operating expense for the third quarter of 2026 was $44.8 million, which decreased by $2.2 million, or 4.8%, from $47.0 million for the same quarter of 2025, primarily driven by a one-time expense of $1.5 million related to the operations center consolidation in the third quarter of 2025, combined with lower directors' deferred compensation plan expense of $0.7 million and lower salaries and employee benefits of $0.6 million. The lower salaries and employee benefits and directors' deferred compensation plan expense was primarily due to lower deferred compensation expense related to equity market performance.

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Nine Months Ended September 30,
(Dollars in thousands)20262025$ Change% Change
Other operating expense:
Salaries and employee benefits$72,605 $69,264 $3,341 4.8 %
Net occupancy13,292 13,243 49 0.4 
Computer software15,022 15,185 (163)-1.1 
Legal and professional services7,816 8,340 (524)-6.3 
Equipment2,451 2,899 (448)-15.5 
Advertising2,572 2,449 123 5.0 
Communication2,646 2,725 (79)-2.9 
Other:
SERP expense323 341 (18)-5.3 
Foreclosed asset expense3 — 3 N.M.
Charitable contributions596 478 118 24.7 
FDIC insurance assessment2,654 2,485 169 6.8 
Miscellaneous loan expenses916 809 107 13.2 
ATM and debit card expenses2,538 2,742 (204)-7.4 
Armored car expenses1,304 1,357 (53)-3.9 
Entertainment and promotions1,431 1,295 136 10.5 
Stationery and supplies595 531 64 12.1 
Directors' fees and expenses934 1,277 (343)-26.9 
Directors' deferred compensation plan expense822 390 432 110.8 
Facility consolidation costs— 1,516 (1,516)-100.0 
Loss (gain) on disposal of fixed assets— 3 (3)-100.0 
Other6,096 5,698 398 7.0 
Total other operating expense$134,616 $133,027 $1,589 1.2 
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.

Total other operating expense for the nine months ended September 30, 2026 was $134.6 million, which increased by $1.6 million, or 1.2%, from $133.0 million for the same period of 2025. The increase was primarily driven by higher salaries and employee benefits of $3.3 million, partially offset by a one-time expense of $1.5 million related to the operations center consolidation in the third quarter of 2025, and decreases in legal and professional services of $0.5 million, equipment expenses of $0.4 million, and directors' fees and expense of $0.3 million. The higher salaries and employee benefits were primarily due to merit increases and higher commissions.

Income Taxes

The Company recorded income tax expense of $7.4 million for the third quarter of 2026, compared to $5.1 million for the same quarter of 2025. For the nine months ended September 30, 2026, the Company recorded income tax expense of $19.7 million, compared to $15.5 million for the same period of 2025. The increases in income tax expense were primarily attributable to higher pre-tax income.

The effective tax rate ("ETR") for the third quarter of 2026 was 24.50%, compared to 21.44% for the same quarter of 2025. For the nine months ended September 30, 2026, the ETR was 23.40%, compared to 22.07% for the same period of 2025. The increases in the Company's effective tax rate were primarily attributable to higher pre-tax income and lower tax-exempt income.

The Company's net deferred tax asset ("DTA"), net of valuation allowance, totaled $31.9 million as of September 30, 2026, compared to $23.6 million as of December 31, 2025. These amounts were included in other assets on the Company's consolidated balance sheets. The increase in net DTA was primarily driven by the decrease in the fair value of the available-for-sale ("AFS") investment portfolio due to the rise in market interest rates.

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The valuation allowance on the Company's net DTA totaled $3.4 million and $3.4 million as of September 30, 2026 and June 30, 2026, respectively. The valuation allowance on our net DTA relates to net apportioned net operating loss ("NOL") carryforwards for California state income tax purposes as the state has suspended the use of NOL carryforwards for the tax years 2024 through 2026.

Financial Condition

Total assets were $7.45 billion as of September 30, 2026, an increase of $40.4 million, or 0.5%, from $7.41 billion as of December 31, 2025. The increase was primarily driven by increases in investment securities of $30.8 million, loans of $24.0 million, and net DTA (included in other assets) of $8.3 million.

Investment Securities

Investment securities totaled $1.34 billion as of September 30, 2026, an increase of $30.8 million, or 2.4%, from $1.31 billion as of December 31, 2025. The increase in the investment securities portfolio reflected purchases of $162.6 million and amortization of unrecognized losses on investment securities transferred to held-to-maturity ("HTM") of $5.0 million, partially offset by principal runoff and net accretion of discount totaling $101.0 million, and a $35.8 million decrease in the market valuation of the AFS portfolio.

The average taxable-equivalent yield earned on investment securities was 2.94% in the third quarter of 2026, compared to 2.87% in the same quarter of 2025. For the nine months ended September 30, 2026, the average taxable-equivalent yield earned on investment securities was 2.85%, compared to 2.84% in the same period of 2025. The increase in the average yield earned on investment securities was primarily due to higher yields earned on new investment purchases, partially offset by lower income recognized from the Company’s interest rate swap.

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Loans

The Company strategically supplements its Hawaii loan portfolio by selectively pursuing commercial, construction, commercial real estate, and consumer loan opportunities on the U.S. Mainland. This approach supports growth, enhances geographic, asset class and rate type diversification, generally provides higher yields, while maintaining the Company's disciplined credit standards and underwriting practices.

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

(Dollars in thousands)September 30,
2026		December 31,
2025
Commercial and industrial:
Hawaii$454,989 $453,619 
U.S. Mainland123,585 140,973 
Total commercial and industrial578,574 594,592 
Construction:
Hawaii97,939 153,392 
U.S. Mainland119,205 59,799 
Total construction217,144 213,191 
Residential mortgage:
Hawaii1,802,348 1,839,191 
Total residential mortgage1,802,348 1,839,191 
Home equity:
Hawaii568,114 600,082 
Total home equity568,114 600,082 
Commercial mortgage:
Hawaii1,213,867 1,202,078 
U.S. Mainland499,147 392,355 
Total commercial mortgage1,713,014 1,594,433 
Consumer:
Hawaii207,728 219,573 
U.S. Mainland226,148 228,034 
Total consumer433,876 447,607 
Loans, net of deferred fees and costs:
Hawaii (1)4,344,985 4,467,935 
U.S. Mainland (2)968,085 821,161 
Total loans, net of deferred fees and costs$5,313,070 $5,289,096 

(1) Hawaii loans include Guam loans, which represent less than one percent of total Hawaii loans.
(2) For secured loans, classification as U.S. Mainland is made based on where the collateral is located. For unsecured loans, classification as U.S. Mainland is made based on the location of the borrower.

Loans, net of deferred costs, totaled $5.31 billion as of September 30, 2026, an increase of $24.0 million, or 0.5%, from $5.29 billion as of December 31, 2025. The increase was primarily driven by an increase in commercial mortgage loans of $118.6 million, partially offset by decreases in residential mortgage loans of $36.8 million, home equity loans of $32.0 million, commercial and industrial loans of $16.0 million, and consumer loans of $13.7 million.

The Hawaii loan portfolio decreased by $123.0 million, or 2.8%, from December 31, 2025. The decrease was primarily due to decreases in construction loans of $55.5 million, residential mortgage loans of $36.8 million, home equity loans of $32.0
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million, and consumer loans of $11.8 million. These decreases were partially offset by increases in commercial mortgage loans of $11.8 million and commercial and industrial loans of $1.4 million.

The U.S. Mainland loan portfolio increased by $146.9 million, or 17.9%, from December 31, 2025. The increase was primarily driven by increases in commercial mortgage loans of $106.8 million and construction loans of $59.4 million, partially offset by decreases in commercial and industrial loans of $17.4 million and consumer loans of $1.9 million. During the nine months ended September 30, 2026, the Company purchased $70.5 million in U.S. Mainland consumer automobile loans, which were largely offset by portfolio runoff.

The average yield earned on loans was 5.01% in the third quarter of 2026, relatively consistent from the same quarter of 2025. For the nine months ended September 30, 2026, the average yield earned on loans was 4.97%, compared to 4.95% in the same period of 2025. The increase in the average yield earned in the nine months ended September 30, 2026 was primarily due to higher new production loan yields compared to runoff yields.
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Maturity Distribution and Sensitivities of Loans to Changes in Interest Rates

The following table sets forth the maturity distribution and sensitivities of the loan portfolio to changes in interest rates at September 30, 2026. Maturities are based on contractual maturity dates and do not factor in principal amortization.

Maturing
(Dollars in thousands)One Year
or Less		Over One
Through
Five Years		Over Five
Through
Fifteen Years		Over 
Fifteen
Years		TotalPercentage
Commercial and industrial:
With fixed interest rates$7,020 $149,728 $92,786 $— $249,534 43.1 %
With variable interest rates31,563 214,517 21,479 61,481 329,040 56.9 %
Total commercial and industrial38,583 364,245 114,265 61,481 578,574 100.0 %
Construction:
With fixed interest rates2,418 47,735 16,997 — $67,150 30.9 %
With variable interest rates48,758 77,791 22,683 762 149,994 69.1 %
Total construction51,176 125,526 39,680 762 217,144 100.0 %
Residential mortgage:
With fixed interest rates201 8,328 82,147 1,357,505 $1,448,181 80.3 %
With variable interest rates2 380 6,732 347,053 354,167 19.7 %
Total residential mortgage203 8,708 88,879 1,704,558 1,802,348 100.0 %
Home equity:
With fixed interest rates7,646 3,288 17,281 37,020 $65,235 11.5 %
With variable interest rates3,850 3,791 1,113 494,125 502,879 88.5 %
Total home equity11,496 7,079 18,394 531,145 568,114 100.0 %
Commercial mortgage:
With fixed interest rates83,683 373,630 278,374 — $735,687 42.9 %
With variable interest rates209,564 527,668 240,095 — 977,327 57.1 %
Total commercial mortgage293,247 901,298 518,469 — 1,713,014 100.0 %
Consumer:
With fixed interest rates16,445 237,049 84,504 56,166 $394,164 90.8 %
With variable interest rates8,045 4,075 — 27,592 39,712 9.2 %
Total consumer24,490 241,124 84,504 83,758 433,876 100.0 %
Loans:
With fixed interest rates$117,413 $819,758 $572,089 $1,450,691 $2,959,951 55.7 %
With variable interest rates301,782 828,222 292,102 931,013 2,353,119 44.3 %
Total loans$419,195 $1,647,980 $864,191 $2,381,704 $5,313,070 100.0 %

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Nonperforming Assets and Accruing Loans 90 Days or More Past Due

The following table presents nonperforming assets ("NPAs") and accruing loans 90 days or more past due as of the dates presented:

(Dollars in thousands)September 30,
2026		December 31,
2025		$ Change% Change
Nonperforming Assets
Nonaccrual loans:
Commercial and industrial$138 $591 $(453)(76.6)%
Residential mortgage9,620 10,572 (952)(9.0)
Home equity2,673 2,608 65 2.5 
Consumer606 615 (9)(1.5)
Total nonaccrual loans13,037 14,386 (1,349)(9.4)
Other real estate owned ("OREO"):
Residential mortgage973 — 973 N.M.
Total OREO973 — 973 N.M.
Total NPAs14,010 14,386 (376)(2.6)
Accruing Loans 90 Days or More Past Due
Residential mortgage— 664 (664)(100.0)
Home equity— 485 (485)(100.0)
Consumer521 403 118 29.3 
Total accruing loans 90 days or more past due521 1,552 (1,031)(66.4)
Total NPAs and accruing loans 90 days or more past due$14,531 $15,938 $(1,407)(8.8)
Ratio of nonaccrual loans to total loans0.25 %0.27 %(0.02)%
Ratio of NPAs to total assets0.19 %0.19 %— %
Ratio of NPAs and accruing loans 90 days or more past due to total loans and OREO0.27 %0.30 %(0.03)%
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, 2025$14,386 
Additions8,432 
Reductions:
Payments(1,729)
Return to accrual status(3,603)
Charge-offs, valuation adjustments and other reductions(3,476)
Total reductions(8,808)
Balance at September 30, 2026$14,010 

Nonperforming assets totaled $14.0 million, or 0.19% of total assets as of September 30, 2026, compared to $14.4 million, or 0.19% of total assets as of December 31, 2025.

Criticized loans increased by $25.4 million from December 31, 2025 to $96.6 million, or 1.8% of total loans, as of September 30, 2026. Within criticized loans, special mention loans increased by $2.1 million to $5.7 million, or 0.1% of total loans and classified loans increased by $23.3 million to $90.8 million, or 1.7% of total loans. The increase in classified and criticized loans during the nine months ended September 30, 2026 was primarily driven by the downgrade of a commercial
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lending relationship due to borrower-specific factors. The relationship consisted of loans with an aggregate outstanding balance of $20.7 million. The increase was attributable to the unique circumstances of the borrower and we believe was not reflective of broad-based deterioration in overall portfolio credit quality. The loans continue to perform and remain well-collateralized, and management continues to closely monitor the credits and related collateral values.

The Company's ratio of classified assets and other real estate owned to Tier 1 capital plus the ACL was 11.49% as of September 30, 2026, which increased from 8.56% as of December 31, 2025.

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 September 30,Nine Months Ended September 30,
(Dollars in thousands)2026202520262025
Allowance for Credit Losses ("ACL") on Loans:
Balance at beginning of period$60,581 $59,611 $59,621 $59,182 
Provision for credit losses on loans1,929 3,440 7,957 11,155 
Charge-offs:
Commercial and industrial(885)(1,071)(3,294)(4,509)
Residential mortgage— — (23)— 
Consumer(2,666)(2,824)(7,250)(8,665)
Total charge-offs(3,551)(3,895)(10,567)(13,174)
Recoveries:
Commercial and industrial284 204 657 570 
Construction— — 2 3 
Residential mortgage9 8 27 25 
Home equity3 9 15 21 
Consumer586 1,016 2,129 2,611 
Total recoveries882 1,237 2,830 3,230 
Net charge-offs(2,669)(2,658)(7,737)(9,944)
Balance at end of period$59,841 $60,393 $59,841 $60,393 
Average loans, net of deferred fees and costs$5,297,112 $5,332,656 $5,288,952 $5,317,481 
Ratio of annualized net charge-offs to average loans0.20 %0.20 %0.20 %0.25 %
Ratio of ACL to total loans1.13 %1.13 %1.13 %1.13 %
Ratio of ACL to nonaccrual loans459 %422 %459 %422 %

The ACL as a percentage of total loans was 1.13% as of September 30, 2026, compared to 1.13% as of December 31, 2025 and 1.13% as of September 30, 2025.

The following table presents the allocation of the ACL by loan class as of the dates indicated. The Company applies specific allocations to individually evaluated loans and general allocations to loan classes based on management's assessment of credit risk and estimated loss rates.

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September 30, 2026December 31, 2025
(Dollars in thousands)ACL on Loans% of ACL by Loan ClassLoan Class as a % of Total LoansACL on Loans% of ACL by Loan ClassLoan Class as a % of Total Loans
Commercial and industrial$7,684 12.8 %10.9 %$7,982 13.4 %11.2 %
Construction4,097 6.8 4.1 3,815 6.4 4.0 
Residential mortgage13,091 21.9 33.9 14,219 23.8 34.9 
Home equity1,089 1.8 10.7 1,242 2.1 11.3 
Commercial mortgage21,113 35.3 32.2 19,544 32.8 30.1 
Consumer12,767 21.4 8.2 12,819 21.5 8.5 
Total$59,841 100.0 %100.0 %$59,621 100.0 %100.0 %

The following table presents the ratio of annualized net charge-offs (recoveries) by loan class to average loans for the periods presented:

Three Months Ended September 30,Nine Months Ended September 30,
2026202520262025
Commercial and industrial0.05 %0.07 %0.07 %0.10 %
Consumer0.15 0.13 0.13 0.15 
Total0.20 %0.20 %0.20 %0.25 %

Deposits

The Company's deposit portfolio is well-diversified and reflects a long-standing commitment to relationship-based banking. As of September 30, 2026, approximately 54% of deposit customers have maintained accounts with the Bank for over 10 years, underscoring the stability and loyalty of the customer base.

While the Company's deposit-gathering efforts are primarily focused in Hawaii, its strategy also extends beyond local markets. Through strategic partnerships with financial institutions in Japan and Korea, the Bank continues to attract U.S. dollar deposits from international sources. These relationships support deposit growth and diversification while aligning with the Company's prudent risk management practices.

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

(Dollars in thousands)September 30,
2026		December 31,
2025		$ Change% Change
Noninterest-bearing demand deposits$1,897,421 $1,891,198 $6,223 0.3 %
Interest-bearing demand deposits1,423,298 1,388,107 35,191 2.5 
Savings and money market deposits2,398,449 2,346,522 51,927 2.2 
Time deposits up to $250,000389,305 433,629 (44,324)(10.2)
Core deposits6,108,473 6,059,456 49,017 0.8 
Other time deposits greater than $250,000438,230 412,188 26,042 6.3 
Government time deposits117,159 138,120 (20,961)(15.2)
Total time deposits greater than $250,000555,389 550,308 5,081 0.9 
Total deposits$6,663,862 $6,609,764 $54,098 0.8 

Total deposits were $6.66 billion as of September 30, 2026, an increase of $54.1 million, or 0.8%, from $6.61 billion as of December 31, 2025. The Company did not hold any wholesale, brokered, or listing service deposits as of September 30, 2026.

Core deposits, which we define as demand deposits, savings and money market deposits, and time deposits up to $250,000, totaled $6.11 billion as of September 30, 2026, an increase of $49.0 million, from $6.06 billion as of December 31, 2025. Core deposits remained relatively consistent and represented 91.7% of total deposits as of September 30, 2026 and December 31, 2025.

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The average cost of total deposits was 90 bps in the third quarter of 2026, compared to 102 bps in the same quarter of 2025. For the nine months ended September 30, 2026, the average cost of total deposits was 90 bps, compared to 104 bps in the same period of 2025.

All deposits are insured up to applicable limits by the Deposit Insurance Fund of the FDIC. Estimated uninsured deposits totaled $2.86 billion, or 43% of total deposits, as reported in the Company's Federal Financial Institutions Examination Council ("FFIEC") Call Report as of September 30, 2026, compared to $2.78 billion, or 42% of total deposits as of December 31, 2025.

Fully collateralized deposits totaled approximately $298.6 million as of September 30, 2026, compared to $281.0 million as of December 31, 2025. Excluding fully collateralized deposits, estimated uninsured deposits totaled $2.56 billion, or 38% of total deposits as of September 30, 2026, compared to $2.49 billion, or 38% of total deposits as of December 31, 2025.

The following table presents the remaining maturity of time deposits in excess of the FDIC insurance limit of $250,000 as of September 30, 2026:

(Dollars in thousands)September 30, 2026
Remaining maturity:
Three months or less$246,387 
Over three through twelve months296,943 
Over one year through three years12,059 
Total$555,389 

Capital Resources

The Company conducts ongoing assessments of its capital adequacy, evaluating projected sources and uses of capital in conjunction with the size and quality of its assets, anticipated business performance, changes in monetary and fiscal policy, and regulatory capital requirements. As part of this process, the Board of Directors regularly reviews the Company's capital position—including the call and maturity dates of existing capital instruments—to determine whether additional capital should be raised (via debt or equity) or whether capital may be returned to shareholders through dividends and/or share repurchases.

Common Equity

Total shareholders' equity was $581.4 million as of September 30, 2026, compared to $592.6 million as of December 31, 2025. The change in total shareholders' equity was primarily attributable to net income of $64.3 million for the nine months ended September 30, 2026, partially offset by the repurchase of $33.0 million in common stock under the Company's stock repurchase program, cash dividends paid of $22.8 million, and other comprehensive loss of $20.5 million resulting from a decrease in the fair value of the available for sale investment portfolio due to the rise in market interest rates.

The ratio of total shareholders' equity to total assets was 7.80% as of September 30, 2026, compared to 8.00% as of December 31, 2025. Book value per share was $22.79 as of September 30, 2026, compared to $22.47 as of December 31, 2025.

Holding Company Capital Resources

Under the Dodd-Frank Act, CPF is required to serve as a source of financial strength to the Bank. CPF is responsible for meeting its own obligations, including payments on its junior subordinated debentures that fund trust preferred securities.

CPF relies on dividends from the Bank to meet its obligations. On a stand-alone basis, CPF had an available cash balance of $7.0 million as of September 30, 2026, compared to $5.5 million as of December 31, 2025.

As a Hawaii state-chartered bank, the Bank may only pay dividends to the extent it has Statutory Retained Earnings, as defined under Hawaii banking law, which differs from GAAP retained earnings. The Bank had Statutory Retained Earnings of $243.5 million as of September 30, 2026, compared to $234.7 million as of December 31, 2025.

Dividends are subject to the discretion of the Board of Directors and may be restricted by federal and Hawaii state laws, regulatory guidance from the FRB, and covenants set forth in various agreements the Company is a party to, including
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covenants set forth in our junior subordinated debentures. There can be no assurance that dividends will continue at the current rate or at all.

Share Repurchases

On January 27, 2026, the Company's Board of Directors authorized a share repurchase plan (the "2026 Repurchase Plan"), permitting the repurchase of up to $55.0 million of the Company's common stock. Repurchases may be made from time to time in the open market or through privately negotiated transactions. The 2026 Repurchase Plan replaced and superseded in its entirety the share repurchase program previously approved by the Company's Board of Directors.

During the nine months ended September 30, 2026, the Company repurchased 937,364 shares of common stock at an aggregate cost of $33.0 million under the 2026 Repurchase Plan. As of September 30, 2026, $22.0 million remained available for repurchase under the plan. There can be no assurance that share repurchases will continue at the current rate or at all.

Trust Preferred Securities

As of September 30, 2026, the Company maintained two statutory trusts, CPB Capital Trust IV ("Trust IV") and CPB Statutory Trust V ("Trust V"), which issued a combined $50.0 million in floating rate trust preferred securities. These securities, along with the underlying junior subordinated debentures and the common securities issued by the trusts, 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.

The Company provides a full and unconditional guarantee of each trust's obligations related to its trust preferred securities. Subject to certain exceptions and limitations, the Company may defer interest payments on the subordinated debentures for up to 20 consecutive quarters without default or penalty. As of September 30, 2026, the Company was current on all required interest payments and had not exercised its right to defer interest payments on the subordinated debentures.

Regulatory Capital Ratios

The Company and the Bank are subject to regulatory capital requirements administered by federal banking agencies. These requirements include both quantitative measures, based on assets, liabilities, and certain off-balance-sheet exposures calculated under regulatory accounting principles, and qualitative assessments by regulators. For banks, capital adequacy is also governed by prompt corrective action regulations. Failure to meet minimum capital requirements may result in regulatory enforcement actions.

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 regulatory capital requirements for the Company and the Bank and the effect of forthcoming changes in required regulatory capital ratios, see the discussion in the "Business — Supervision and Regulation" section of the Company's 2025 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. As of September 30, 2026 and December 31, 2025, the leverage capital, tier 1 risk-based capital, total risk-based capital, and CET1 risk-based capital ratios for both the Company and the Bank exceeded the thresholds required for a "well-capitalized" designation under applicable regulations.

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ActualMinimum Required
for Capital Adequacy
Purposes		Minimum Required
to be
"Well Capitalized"
(Dollars in thousands)AmountRatioAmount
Ratio (1)
AmountRatio
Central Pacific Financial Corp.
September 30, 2026
Leverage capital$739,253 9.7 %$304,280 4.0 %N/AN/A
CET1 risk-based capital689,253 12.7 244,745 4.5 N/AN/A
Tier 1 risk-based capital739,253 13.6 326,327 6.0 N/AN/A
Total risk-based capital805,204 14.8 435,102 8.0 N/AN/A
December 31, 2025
Leverage capital$729,850 9.8 %$297,858 4.0 %N/AN/A
CET1 risk-based capital679,850 12.7 241,149 4.5 N/AN/A
Tier 1 risk-based capital729,850 13.6 321,531 6.0 N/AN/A
Total risk-based capital794,911 14.8 428,708 8.0 N/AN/A
Central Pacific Bank
September 30, 2026
Leverage capital$729,845 9.6 %$304,034 4.0 %$380,043 5.0 %
CET1 risk-based capital729,845 13.4 244,477 4.5 353,133 6.5 
Tier 1 risk-based capital729,845 13.4 325,969 6.0 434,626 8.0 
Total risk-based capital795,796 14.6 434,626 8.0 543,282 10.0 
December 31, 2025
Leverage capital$720,980 9.7 %$297,503 4.0 %$371,879 5.0 %
CET1 risk-based capital720,980 13.5 240,630 4.5 347,577 6.5 
Tier 1 risk-based capital720,980 13.5 320,840 6.0 427,787 8.0 
Total risk-based capital786,041 14.7 427,787 8.0 534,734 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 September 30, 2026 and December 31, 2025, the Company and the Bank's risk-based capital exceeded the required CCB.

Market Risk

Market risk represents the potential for loss in financial instruments arising from adverse changes in market rates and prices, including interest rates, foreign exchange rates, commodity prices, and equity prices. The Company's primary market risk exposure is interest rate risk, which arises 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

The Company's earnings and capital are sensitive to interest rate fluctuations. Interest rate risk is inherent in the Company's core activities, including loan origination, deposit gathering, investment portfolio management, and other interest-bearing funding sources. Asset/liability management seeks to align the maturities and repricing characteristics of rate-sensitive assets and liabilities to achieve financial objectives while managing risk.

The Company's Asset/Liability Management Policy is designed to optimize the risk-adjusted return to shareholders while maintaining consistently acceptable levels of liquidity, interest rate risk and capital adequacy. The Asset/Liability Management Committee ("ALCO") oversees interest rate risk utilizing a detailed and dynamic earnings and capital simulation model that evaluates earnings and capital under various interest rate scenarios and balance sheet forecasts.

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Earnings sensitivity is typically measured by estimated changes in net interest income ("NII") under different rate scenarios. Capital sensitivity is typically 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 presents the Company's 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. 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 results indicate that the Company's balance sheet is relatively well-positioned against movements in interest rates and remains within ALCO Policy risk limits that have been approved by the Board of Directors.

September 30, 2026December 31, 2025
Estimated Net Interest Income SensitivityEstimated Net Interest Income Sensitivity
Rate ChangeGradualInstantaneousGradualInstantaneous
+300 bps3.73 %6.77 %2.58 %4.33 %
+200 bps2.51 %4.54 %1.60 %2.93 %
+100 bps1.29 %2.30 %0.60 %1.49 %
-100 bps(0.59)%(1.85)%(0.83)%(1.06)%
-200 bps(1.49)%(4.05)%(1.54)%(2.57)%
-300 bps(2.60)%(7.28)%(2.35)%(4.51)%

Liquidity and Borrowing Arrangements

The Company's objective in managing liquidity is to maintain a prudent balance between sources and uses of funds in order to economically meet the cash requirements of customers for loans and deposit withdrawals, while also supporting lending and investment opportunities as they arise. Liquidity is monitored daily in relation to changes in loan and deposit balances to ensure optimal utilization, maintenance of adequate levels of readily marketable assets, and access to reliable short-term funding sources.

To support this objective, the Company performs regular liquidity stress testing under a range of scenarios to evaluate its ability to withstand potential liquidity stress events. Forecasts of Company cash flows are updated and analyzed periodically, and more frequently during periods of elevated liquidity risk.

Historically, core deposits have provided us a stable and low-cost funding base, although they remain subject to competitive pressures in the Company's market. A significant portion of deposits are granular, long-tenured, and relationship-based. In
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addition to core deposits, the Company also has access to a variety of other short-term and long-term funding sources, including proceeds from maturities of our loans and investment securities, as well as secondary funding sources available to meet our liquidity needs, such as the FHLB, secured repurchase agreements, and the Federal Reserve discount window.

As of September 30, 2026, the Company had $359.4 million in cash on its balance sheet and approximately $2.69 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, 2025. There have been no material changes in our cash requirements from known contractual and other obligations since December 31, 2025.

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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 reporting period, and in accordance with 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 design and effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act). Based on this 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 were 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) during the period covered by this report that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
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PART II.   OTHER INFORMATION

Item 1. Legal Proceedings

See Note 18 - Contingent Liabilities and Other Commitments to the consolidated financial statements in Part I of this Form 10-Q, incorporated herein by reference.

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, 2025, as filed with the SEC on February 27, 2026.

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

Issuer Purchases of Equity Securities

On January 27, 2026, the Company's Board of Directors authorized a share repurchase plan (the "2026 Repurchase Plan"), permitting the repurchase of up to $55.0 million of the Company's common stock. Repurchases may be made from time to time in the open market or through privately negotiated transactions. The 2026 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 September 30, 2026, the Company repurchased 294,110 shares of common stock, at a cost of $11.2 million or $38.18 per share, under the Company's 2026 Repurchase Plan.

As of September 30, 2026, $22.0 million in share repurchase authorization remained available for repurchase under the Company's 2026 Repurchase Plan. The Company makes no assurance regarding the timing or extent of future repurchases under this 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
July 1-31, 202659,413 $38.87 58,986 $30,913,099 
August 1-31, 2026125,500 38.49 125,500 26,082,142 
September 1-30, 2026109,624 37.45 109,624 21,976,788 
Total294,537 38.18 294,110 21,976,788 

(1) During the three months ended September 30, 2026, 427 shares were acquired from employees in connection with income tax withholding obligations related to the vesting of restricted stock or performance stock units. These purchases were not included within the Company's publicly announced share repurchase program.

Item 5. Other Information

Rule 10b5-1 Trading Arrangements

During the three months ended September 30, 2026, none of the Company's directors or officers (as defined under Rule 16a-1(f)) adopted, modified or terminated any trading arrangements under Rule 10b5-1 or non-Rule 10b5-1 trading arrangements (as defined in Item 408 of Regulation S-K) involving the purchase or sale of the Company's common stock.

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Item 6. Exhibits

Exhibit No.Document
3.1
3.2
31.1
31.2
32.1
32.2
101.INSInline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document *
101.SCHInline XBRL Taxonomy Extension Schema Document *
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document *
101.LABInline XBRL Taxonomy Extension Label Linkbase Document *
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document *
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document *
104Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document (included in Exhibit 101)
*Filed herewith.
**Furnished herewith.

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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:October 28, 2026/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)

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