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Central Pacific Financial Corp (NYSE: CPF) |
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Description of Central Pacific Financial's Business Segments
Central Pacific Financial Corp (CPFC) provides a diverse range of financial products and services tailored to meet the needs of residential and commercial customers, primarily within the state of Hawaii. Here's an exhaustive overview of the segments, products, and services the company offers:
1. Residential Mortgage Lending
Overview:
Central Pacific Financial Corp's residential mortgage lending division offers a variety of mortgage products designed to assist individuals in purchasing or refinancing their homes. The loans are mainly fixed-rate and adjustable-rate mortgages (ARMs) secured by single-family, owner-occupied residences in Hawaii.
Key Features:
- Types of Loans: Fixed-rate mortgages, adjustable-rate mortgages (ARMs), home equity lines of credit (HELOC), and home equity loans.
- Loan-to-Value Ratio (LTV): Generally, the LTV ratio is not more than 80%. However, higher ratios may be allowed if accompanied by mortgage insurance.
- Average Loan Size: The average loan size is approximately $0.4 million, facilitating substantial financing for home purchases.
- Collateral: The loans are secured by residential properties that possess marketable value.
- Credit Risk Management: CPFC acknowledges that changes in interest rates, economic recessions, and various market factors could impact collateral value and borrower financial stability, thus affecting credit risk levels.
- Secondary Market Sales: A significant portion of first mortgage loan originations is sold in the secondary market, which provides liquidity and enables the bank to manage its capital effectively.
Commercial Lending and Leasing
Overview:
The commercial lending and leasing segment provides financial solutions for small and middle-market businesses, as well as professionals operating in Hawaii.
Key Features:
- Products Offered: This includes term loans, lines of credit, and equipment leases tailored to suit the financial requirements of businesses.
- Repayment Sources: The borrower's operational cash flow is typically the primary source of repayment. Additionally, the bank's underwriting practices often require collateral, such as real estate and other business assets.
- Risk Mitigation: The bank seeks personal guarantees from business owners whenever possible to further reduce credit losses and manage risk effectively.
Commercial Mortgage Lending
Overview:
CPFC's commercial mortgage lending provides financing options for entities acquiring, constructing, or refinancing commercial real estate.
Key Features:
- Types of Properties Financed: Loans can be secured by various types of commercial properties, including multi-family residential buildings, industrial spaces, warehouses, general office buildings, retail centers, healthcare facilities, and religious assemblies.
- Underwriting Criteria: The underwriting process typically requires that the net cash flow from the property is sufficient to cover debt service obligations while retaining adequate reserves.
- Collateral Liquidation: There is also consideration for the liquidation of the collateral as a secondary repayment source in the event of borrower default.
Construction Lending
Overview:
Construction lending supports the financing of both residential and commercial construction projects, allowing developers and builders to secure the necessary funds to complete their projects.
Key Features:
- Types of Loans: Financing may cover new construction or substantial renovations of existing properties, addressing the needs of various types of builders.
- Disbursement Process: Funds are typically disbursed in stages as construction milestones are reached, which mitigates risk for the bank and ensures that financing is used appropriately.
Consumer Lending
Overview:
The consumer lending division offers a variety of loan products designed to meet the personal financing needs of individuals.
Key Features:
- Types of Loans: This category includes unsecured personal loans and secured loans, often backed by personal assets like automobiles.
- Average Loan Size: The average loan size is relatively small, making these products accessible to a higher number of consumers.
- Purpose of Loans: Loans may be utilized for various purposes, including debt consolidation, education expenses, and other personal financial needs.
In summary, Central Pacific Financial Corp offers a comprehensive suite of financial products and services across residential and commercial lending, construction financing, and consumer loans, addressing the diverse needs of its clientele while managing credit risk and promoting financial stability in its operations.
Composition of Central Pacific Financial Corp Revenues by
Segments |
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| Mortgage banking income |
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 1.29 % |
of total Revenue |
| Service charges on deposit accounts |
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3.4 % |
of total Revenue |
| Other service charges and fees |
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9.33 % |
of total Revenue |
| Income from fiduciary activities |
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2.27 % |
of total Revenue |
| Income from bank-owned life insurance |
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2.98 % |
of total Revenue |
| Other |
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0.71 % |
of total Revenue |
Q3 three months ended (Sep 30 2024)
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| Revenues by Business Segments |
Revenues
(in millions $) |
%
(of total Revenues) |
| Total |
63.75 |
100 % |
| Mortgage banking income |
0.82 |
1.29 % |
| Service charges on deposit accounts |
2.17 |
3.4 % |
| Other service charges and fees |
5.95 |
9.33 % |
| Income from fiduciary activities |
1.45 |
2.27 % |
| Income from bank-owned life insurance |
1.90 |
2.98 % |
| Other |
0.45 |
0.71 % |
Q3 three months ended (Sep 30 2024)
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| Revenue Growth rates by Segment |
Y/Y Revenue
% |
Q/Q Revenue
% |
| Total |
11.65 % |
3.15 % |
| Mortgage banking income |
7.45 % |
- |
| Service charges on deposit accounts |
-1.19 % |
- |
| Other service charges and fees |
14.3 % |
- |
| Income from fiduciary activities |
17.26 % |
- |
| Income from bank-owned life insurance |
400.53 % |
- |
| Other |
11.27 % |
- |
Q3 three months ended (Sep 30 2024)
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| Income by Business Segments |
Income
(in millions $) |
%
(Profit Margin) |
| Total |
13.31 |
20.87 % |
Q3 three months ended (Sep 30 2024)
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| Income Growth rates by Segment |
Y/Y Income
% |
Q/Q Income
% |
| Total |
1.25 % |
-15.88 % |
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