Central Pacific Financial Corp. – Value Analysis (NYSE:CPF) : December 8, 2017

Capitalcube gives Central Pacific Financial Corp. a score of 43.

Our analysis is based on comparing Central Pacific Financial Corp. with the following peers – East West Bancorp, Inc., CVB Financial Corp., Bank of Hawaii Corporation, Community West Bancshares, Central Valley Community Bancorp, Pacific Premier Bancorp, Inc., Banner Corporation, Community Bancorp., SVB Financial Group and Sierra Bancorp (EWBC-US, CVBF-US, BOH-US, CWBC-US, CVCY-US, PPBI-US, BANR-US, CMTV-US, SIVB-US and BSRR-US).

Fundamental Overview

Central Pacific Financial Corp. has a fundamental score of 43 and has a relative valuation of NEUTRAL.

Fundamental Score

Company Overview

  • It’s current Price/Book of 1.84 is about median in its peer group.
  • The market expects CPF-US to grow at about the same rate as the peers and to maintain the median returns it currently generates.
  • CPF-US‘s relative capital efficiency and net profit margins are both around the median level.
  • Changes in annual revenues are in line with its chosen peers but lags in terms of earnings suggesting that the company is less cost conscious and may be spending for growth.
  • Over the last five years, CPF-US‘s return on equity has declined from above median to around median among its peers, indicating declining relative operating performance.
  • While CPF-US‘s revenues growth has been below the peer median in the last few years, the market still gives the stock a P/E ratio that is around peer median and seems to see the company as a long-term strategic bet.
  • The company’s equity capital investment program suggests it is under-investing in a business that is producing peer median returns.
  • CPF-US has the financial and operating capacity to borrow quickly.

Drivers of Margin

  • Margins do not suggest any relative benefit from a pricing or an operating cost advantage.
  • The company’s net interest income (net interest income/total revenues) of 81.03% is around peer median suggesting that CPF-US‘s lending operations does not benefit from any differentiating pricing advantage. In addition, CPF-US‘s pre-tax margin of 37.49% is also around the peer median suggesting no operating cost advantage relative to peers.
  • The company’s proportion of fee based income (i.e. non interest income/total revenues) of 18.97% is around peer median. In addition, CPF-US‘s proportion of overhead costs (i.e. non interest expense/total revenues) of 66.98x is also around peer median — suggesting no cost advantage on fee-based overhead operations.
Drivers of Margins

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Differentiated; High Cost, Commodity; High Cost, Commodity; Low Cost

Company Profile

Central Pacific Financial Corp. is a bank holding company, which engages in the provision of commercial banking services through its wholly owned subsidiary, Central Pacific Bank. It operates through the following segments: Banking Operations, Treasury, and All Others. The Banking Operations segment includes construction and real estate development lending, commercial lending, residential mortgage lending and servicing, indirect auto lending, trust services, and retail brokerage services. The Treasury segment involves in managing company’s investment securities portfolio and wholesale funding activities. The All Others segment consists electronic banking, data processing, and management of bank owned properties. The company was founded on February 1, 1982 and is headquartered in Honolulu, HI.