Central Pacific Financial Corp New

Good afternoon, ladies and gentlemen. Thank you for standing by and welcome to the Central Pacific Financial Corp. Fourth Quarter 2022 Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. This call is being recorded and will be available for replay shortly after its completion on the company's website at www.cp.cp.bank. I'd like to turn the call over to Mr. David Morimoto, Senior Executive Vice President, Chief Financial Officer. Please go ahead.

Thank you, Hannah. And thank you all for joining us as we review the financial results for the fourth quarter of 2022 for Central Pacific Financial Corp. With me this morning are Arnold Martinez, our new President and Chief Executive Officer, and Anna Hu, Executive Vice President and Chief Credit Officer. We have prepared a supplemental slide presentation that provides additional details on our release and is available in the investor relations section of our website at cpb.bank. During the course of today's call, management may make forward-looking statements. While we believe these statements are based on reasonable assumptions, they involve risks that may cause actual results to differ materially from those projected. For a complete discussion of the risks related to our forward-looking statements, please refer to slide two of our presentation. And now, I'll turn the call over to our President and CEO, Arnold Martinez.

Thank you, David. Aloha and good morning, everyone. We appreciate your interest in Central Pacific Financial Corp. As we normally do, I'll start with an update on the Hawaii market and a summary of our strong fourth quarter results. Then I'll turn it over to the team to provide additional detail and insights on our financial and credit metrics, as well as other key updates. The Hawaii tourism sector continues to perform well, with visitor arrivals holding at about 90% of pre-pandemic levels. the majority of visitors are from the U.S. mainland. Visitors from Japan are about 20% of pre-pandemic levels, and we are optimistic that the Japan counts will continue to trend up as the country is now fully reopened and the yen value has improved recently. The Japan government also upgraded its 2023 growth projections in December, based on expectations for higher business expenditure, substantial wage hikes, and robust domestic demand. Japan may avoid the global growth slowdown, which will translate to greater visitors to Hawaii, helping offset a potential slowdown in domestic visitors. Hawaii visitor spending is strong, totaling $1.5 billion in November. an increase of 13.7% compared to the same month in 2019. Hotels in Hawaii continue to perform well, with total statewide hotel occupancy at 71% and an average daily rate of $440 in December, up 4% from a year ago. Hawaii's employment and housing sectors remain solid, Our statewide seasonally adjusted unemployment rate was at 3.3% in November 2022 and is forecasted by the University of Hawaii Economic Research Organization to be fairly stable in 2023. Housing prices in Hawaii remains very strong, with the total Oahu median single-family home price at $1.1 million in 2022 which is up 11.6% from the previous year. Reflecting a national trend, home sales have cooled in 2022 due to rising mortgage rates. The number of single-family home sales was down 23% in 2022 compared to a year ago. We view this as more of a moderation in the markets. and believe the Hawaii housing market remains healthy with continued strong demand and low inventory. This combined with the fact that tourism is expected to remain strong and the Hawaii economy is also supported in a big way by a huge and growing military presence, it is our strong belief that Hawaii is less likely to experience a material downturn compared to most other U.S. markets. Overall, we remain optimistic about the Hawaii market and believe CPF will continue to be successful as we remain focused on our strategic pillars, including homeownership, small business, digital adoption, and Japan market development. Moving to our financial results, we ended 2022 with solid loan and deposit growth, an increase in net interest income and strong expense management, which resulted in an improved bottom line. Our total loan portfolio increased by 133 million or 2.5% sequential quarter. For the full year 2022, the loan portfolio grew by 454 million or 8.9%. The growth was diversified across all loan types as we continue to focus on prudent and appropriately priced asset growth. We have a healthy loan pipeline and anticipate continued strong loan growth in 2023 in all loan categories except mainland unsecured consumer. In Q4, we began to let our mainland unsecured consumer loan portfolio runoff until the national economic outlook improves. With that said, we expect runoff in our unsecured consumer book will moderate overall loan growth in 2023, which we expect to be in the mid single digit percent range. During the fourth quarter, total deposits increased by 180 million or 2.7% from the prior quarter as we were successful in acquiring significant time deposits, which enabled us to reduce our borrowings and manage our funding costs. While deposit rates have increased somewhat, the Hawaiian market continues to be rational on deposit pricing. CPB's strong and stable core deposit base enables us to keep deposit repricing betas low. consistent with past tightening cycles. Going into 2023, we have already started to implement strategies to not only retain deposits, but to garner a larger share of core deposits to fund our future asset needs. Finally, I'm personally very excited to start 2023 in my new role as president and CEO. I anticipate a smooth transition with our talented and experienced leadership team. Lastly, I could not be more proud of our exceptional group of employees who remain steadfast in our mission to help meet the needs of our customers and the broader community. I'll now turn the call over to David Morimoto, our Chief Financial Officer. David. Thank you, Arnold.