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Central Pacific Financial Corp: Improving Financial Performance, Attractive Hawaii Market, But Is The Valuation Justified?

Central Pacific Financial Corp. (CPF) is certainly showing signs of improvement in terms of profitability, loan growth and asset quality; but to what extent can this progress be sustained, and is the bank's pricey valuation justified? The most positive development has been the bank's strong organic loan and deposit growth. Loan growth in the year to December 31, 2014 was 14.1%, given the strength of the real estate market in Hawaii. The state economy is heavily reliant on tourism; and right now, it is booming. Looking forward, the projections for visitor arrivals are very optimistic, due to increasing demand from the US and key international economies, especially Japan and South Korea.

Central Pacific Financial Corp. is a regional bank holding company providing a broad range of financial products and services to customers in Hawaii. Central Pacific Bank, its main subsidiary, operates a network of 36 branches and has the fourth… Read More …