CENTRAL PACIFIC FINANCIAL CORP (CPF)

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 and 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 position, credit losses, net interest margin or 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 plans, use of capital resources, products or services, and regulatory developments or actions; (iii) statements of future economic performance including anticipated performance results from our business initiatives; and (iv) any statements of the 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," and other similar expressions are intended to identify forward-looking statements, although such terminology is not the exclusive means of doing so.

While we believe that our forward-looking statements and their underlying assumptions are reasonably based, such statements are inherently subject to risks and uncertainties that may cause actual results to differ materially from expectations. Factors that may lead to such differences include, 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, and other cost-cutting or fiscal 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, including the Dodd-Frank Act, 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 efforts of governmental and regulatory exams and orders, as well as the costs of ongoing or potential compliance efforts;

•the effect of accounting standard changes adopted by regulatory agencies, 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

•increased competition among financial institutions, and other financial service providers;

•market volatility and monetary fluctuations;

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•declines in our market capitalization or changes in the price of the Company’s common stock;

•the effects and cost of acquisitions, dispositions, or strategic transactions we may make or evaluate;

•political instability, acts of war or terrorism, or other geopolitical conflicts;

•shifts in consumer spending, borrowings and savings behaviors;

•technological changes and developments;

•cybersecurity incidents, data privacy breaches, or fraud involving us or third-party vendors;

•deficiencies in our internal controls over financial reporting or disclosure controls and procedures, and our ability to remediate them;

•our ability to achieve efficiency ratio improvement goals;

•our ability to attract and retain key personnel;

•changes in our personnel, organization, compensation, and benefit plans;

•risks related to the United States fiscal debt, deficit and budget uncertainties; and

•our success at managing the risks involved in 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 March 31, 2026, Central Pacific Bank operated 27 branches and 55 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 commitment to creating opportunity and serving our community continues in the present day as we strive to deliver exceptional customer service and tailored financial products to meet the unique needs of our customers and the communities we serve. This legacy continues to shape our mission to deliver exceptional customer service and tailored financial products that meet our customers' needs, 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 and homeowners. 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.

•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

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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 contribute meaningfully to non-interest 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 March 31, 2026 and December 31, 2025. This policy requires significant judgment and involves inherent complexity.

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ITEM 7.                                                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management's discussion and analysis of financial condition and results of operations should be read in conjunction with the accompanying Consolidated Financial Statements under "Part II, Item 8. Financial Statements and Supplementary Data."

Forward-Looking Statements and Factors that Could Affect Future Results

Certain statements contained in this annual report on Form 10-K 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 and 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 position, credit losses, net interest margin, or 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 plans, use of capital resources, products or services, and regulatory developments or actions; (iii) statements of future economic performance including anticipated performance results from our business initiatives; and (iv) any statements of the 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," "goal," "will," "should," "may," and other similar expressions, are intended to identify forward-looking statements, although such terminology is not the exclusive means of doing so.

While we believe that our forward-looking statements and their underlying assumptions are reasonably based, such statements are inherently subject to risks and uncertainties that may cause actual results to differ materially from expectations. Factors that may lead to such differences include, 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, and other cost-cutting or fiscal 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, 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, including the Dodd-Frank Act, 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 efforts of governmental and regulatory exams and orders, as well as the costs of ongoing or potential compliance efforts;

•the effect of accounting standard changes adopted by regulatory agencies, the Public Company Accounting Oversight Board ("PCAOB"), or the Financial Accounting Standards Board ("FASB"), and the cost and resources associated with implementation;

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•changes in trade, tariff, monetary, or fiscal policies and laws, including actions by the Board of Governors of the Federal Reserve System

•increased competition among financial institutions, 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, or strategic transactions we may make or evaluate;

•political instability, acts of war or terrorism, or other geopolitical conflicts;

•shifts in consumer spending, borrowings and savings behaviors;

•technological changes and developments;

•cybersecurity incidents, data privacy breaches, or fraud involving us or third-party vendors;

•deficiencies in our internal controls over financial reporting or disclosure controls and procedures, and our ability to remediate them;

•our ability to achieve efficiency ratio improvement goals;

•our ability to attract and retain key personnel;

•changes in our personnel, organization, compensation, and benefit plans;

•risks related to the United States fiscal debt, deficit and budget uncertainties; and

•our success at managing the risks involved in the foregoing items.

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 as described in "Part I, Item 1A. Risk Factors" of this report. 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.

Introduction

We are a bank holding company that, through our banking subsidiary, Central Pacific Bank, offers full service commercial banking primarily in the State of Hawaii.

We strive to provide exceptional customer service and products that meet our customers' needs. Our products and services consist primarily of the following:

•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 and homeowners. 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 diversification into U.S. Mainland markets.

•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 non-interest revenue.

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

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Executive Overview

We believe we delivered solid financial performance while managing and mitigating risks that arose in 2025.

•We recorded net income of $77.5 million, or $2.86 per diluted common share in 2025, compared to $53.4 million, or $1.97 per diluted common share in 2024.

•Results in 2025 were impacted by $1.5 million in pre-tax expenses related to the consolidation of the Company's former operations center into its main headquarters ("Operations Center Consolidation") in the third quarter of 2025. Results in 2024 were impacted by a pre-tax loss on sales of investment securities of $9.9 million related to an investment securities portfolio repositioning ("Repositioning Loss") and pre-tax expenses related to our evaluation and assessment of a strategic opportunity of $3.1 million ("Strategic Expense").

•Excluding the impact of the Operations Center Consolidation, non-GAAP adjusted net income was $78.6 million, or $2.91 per diluted common share in 2025. (See Tables 1-6 for reconciliations of the adjusted non-GAAP financial measures.) Excluding the impact of the Repositioning Loss and Strategic Expense, non-GAAP adjusted net income was $63.4 million, or $2.34 per diluted common share in 2024. (See Tables 1-6 for reconciliations of the adjusted non-GAAP financial measures.)

•We recorded return on average assets ("ROA") and return on average shareholders' equity ("ROE") ratios of 1.06% and 13.62%, respectively, in 2025, compared to ROA and ROE ratios of 0.72% and 10.25%, respectively, in 2024. Excluding the impact of the Operations Center Consolidation in 2025 and Repositioning Loss and Strategic Expense in 2024, adjusted ROA and ROE ratios (non-GAAP) was 1.07% and 13.81%, respectively, in 2025, compared to adjusted ROA and ROE ratios (non-GAAP) of 0.86% and 12.10%, respectively, in 2024. (See Table 3 - Adjusted Return on Average Assets and Adjusted Return on Average Shareholders' Equity for a reconciliation of the non-GAAP adjusted ROA and ROE.)

•Asset quality remains strong as our nonperforming assets totaled $14.4 million, or 0.19% of total assets at December 31, 2025, compared to $11.0 million, or 0.15% of total assets at December 31, 2024.

•Our loan portfolio declined by $43.8 million, or 0.8% in 2025, primarily due to run-off of our home equity loan portfolio of $76.9 million, consumer loan portfolio of $62.9 million, and residential mortgage loan portfolio of $53.3 million, partially offset by increases in our commercial mortgage loan portfolio of $93.8 million and our construction loan portfolio of $68.0 million.

•Total deposits declined by $34.2 million, or 0.5% in 2025, primarily due to the run-off of high-cost time deposits greater than $250,000 of $53.5 million. Our core deposit portfolio grew by $19.3 million, or 0.3%.

•Our capital position and consistent profitability allowed us to pay cash dividends of $1.09 per share in 2025. In addition, in 2025 we repurchased an aggregate of 788,261 shares of common stock under our share repurchase program at an aggregate cost of $23.3 million, or an average of $29.60 per share.

Business Environment

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 broader macroeconomic trends, real estate, and tourism. A favorable business climate in Hawaii is generally characterized by expanding gross state product, low unemployment, and rising personal income; while an unfavorable business climate reflects the opposite.

Labor Market and Economic Indicators

The Department of Labor and Industrial Relations reported that Hawaii's seasonally adjusted annual unemployment rate was 2.2% in the month of December 2025, a decline from 3.0% in December 2024 and well below the national seasonally adjusted unemployment rate of 4.4%. The State of Hawaii's Department of Business, Economic Development and Tourism ("DBEDT") projects Hawaii's seasonally adjusted annual unemployment rate to average 3.0% in 2026.

DBEDT estimates that real personal income grew by approximately 1.7% in 2025, while real gross state product grew by approximately 1.6% for 2025. DBEDT projects real personal income to grow by 1.6% and real gross state product to grow by 1.5% for 2026.

According to the University of Hawaii Economic Research Organization ("UHERO") December 2025 forecast, Hawaii is expected to be impacted by weakening U.S. and global conditions, declining tourism, particularly from international markets, and stalled job growth. Inflation is anticipated to rise due to tariff impacts, while construction remains the primary source of economic strength. Real personal income and real gross state product is forecast to remain flat in 2026. These projections

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assume continued high tariffs, federal spending cuts, and no immediate U.S. recession, though downside risks remain elevated due to policy uncertainty and global economic fragility.

Real Estate Market

Real estate lending, particularly residential mortgage 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 2025. According to the Honolulu Board of Realtors, the median price for a single-family home on Oahu was $1,139,000 for the year ended December 31, 2025, representing an increase of 3.5% from the median resale price of $1,100,000 for the year ended December 31, 2024. The median resale price for condominiums on Oahu was $507,250 for the year ended December 31, 2025, representing a decrease of 1.5% from the median resale price of $515,000 for the year ended December 31, 2024. Oahu unit sales volume increased by 3.5% for single-family homes, and decreased by 1.1% for condominiums in 2025 from 2024.

If the residential and commercial real estate markets we have exposure to deteriorate, our results of operations could be negatively impacted. See the "Overview of Results of Operations—Concentrations of Credit Risk" section for a further discussion on how a deteriorating real estate market, combined with the concentration risk within our portfolio, could have a significant negative impact on our asset quality and credit losses.

Tourism Trends

In 2025, Hawaii’s tourism industry continued its post‑pandemic recalibration, with visitor volumes stabilizing while visitor spending increased. According to the Hawaii Tourism Authority ("HTA"), total visitor arrivals declined modestly to approximately 9.6 million in 2025, down 0.6% from the 9.7 million visitors in 2024, reflecting softening demand in certain international markets and capacity constraints, particularly on Oahu. Despite the modest decline in arrivals, overall visitor demand remained resilient, led primarily by the U.S. Mainland market, which accounted for the majority of air arrivals and remained relatively flat year over year.

Importantly, total visitor spending reached a record high of $21.75 billion in 2025, representing an increase of approximately 5.7% from the $20.58 billion in 2024, driven by higher per‑visitor expenditures rather than growth in headcount. Average daily visitor spending rose to a record $273 per person, reflecting higher lodging rates, increased spending on food and beverage, and continued preference for higher‑end accommodations and experiences. This shift toward a higher‑spending visitor partially offset the impact of lower arrival volumes and underscores a continued evolution toward a value‑focused tourism model.

International travel showed selective improvement. Visitor arrivals from Japan increased approximately 3% year over year to about 732,000, signaling early signs of recovery in Hawaii’s most critical international market, although volumes remain well below pre‑pandemic levels. In contrast, arrivals from Canada and other international markets remained soft, weighing on overall growth.

Looking ahead to 2026, UHERO, in it's December 2025 forecast report, projects a period of moderation for Hawaii’s tourism sector. Total visitor arrivals by air are expected to decline by approximately 1.3% to 9.5 million in 2026, reflecting continued weakness in international markets, rising travel costs, and broader macroeconomic headwinds associated with a mild economic recession. Correspondingly, visitor spending is forecast to decline by approximately 2.4% to $20.33 billion in 2026, as slower arrival volumes and easing pricing power outweigh recent gains in per‑visitor spending.

Despite this near‑term softness, UHERO anticipates that the tourism downturn is cyclical rather than structural, with conditions expected to stabilize in 2026 and gradually improve in 2027 and 2028, supported by recovering international demand, particularly from Japan, continued Maui recovery, and sustained investment in major construction and infrastructure projects statewide.

Interest Rates and Monetary Policy

Changes in monetary policy, including interest rate adjustments, can significantly influence:

1.Interest income on loans and securities,

2.Interest expense on deposits and borrowings,

3.Loan origination and deposit growth,

4.Fair value of assets and liabilities, among other areas.

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To combat inflation, the FRB aggressively increased interest rates beginning in early 2022, when the Federal Funds Rate target range was 0.00% to 0.25%, up to a 22-year high, 5.25% to 5.50% by mid-2023. The rate remained unchanged until September 2024, when the Federal Open Market Committee ("FOMC") initiated a series of rate cuts, lowering the target range to 4.25% to 4.50% by year-end 2024.

In September 2025, the FOMC implemented its first rate cut of the year, reducing the target range by 25 basis points ("bps") to 4.00% to 4.25%. This decision was driven by signs of a weakening labor market and moderated economic growth, despite inflation remaining above the Fed’s 2% target. During the fourth quarter of 2025, the FOMC cut rates twice by 25 bps to a target rate of 3.50% to 3.75% at the end of 2025. The FOMC also signaled the possibility of one more cut in 2026 as they aim to balance employment and inflation goals.

Other Economic Considerations

Beyond monetary policy, other factors, including inflationary pressures, labor shortages, regulatory changes, geopolitical conflicts, supply chain disruptions, and potential bank failures, could adversely impact the economy and our financial results. These conditions may affect cash flow, loan demand, deposit growth, credit quality, noninterest income, and expenses.

Recent Industry Developments

Beginning in March 2023, the banking industry experienced significant volatility following several high-profile regional bank failures. These events resulted in industry-wide concerns regarding liquidity, deposit outflows, unrealized or unrecognized losses on investment securities, and overall consumer confidence in the banking sector. In response, the Company implemented a series of proactive measures during the first half of 2023, including enhanced client outreach and liquidity contingency planning. These actions focused on maximizing funding sources and increasing liquidity monitoring to mitigate potential risks.

Industry conditions stabilized in 2024 and 2025, and we believe the Company maintained a strong balance sheet and liquidity position throughout this period. As of December 31, 2025, the Company held $378.7 million in cash and approximately $2.52 billion in additional liquidity sources, including available borrowing capacity and unpledged investment securities. Total available sources of liquidity represented approximately 116% of uninsured and uncollateralized deposits as of December 31, 2025. We believe the Company's deposit base remains well-diversified and long-tenured, with approximately 62% of total deposits insured by the FDIC or otherwise collateralized as of December 31, 2025.

The Company’s capital also remained strong, with leverage, Common Equity Tier 1 capital, Tier 1 risk-based capital, and total risk-based capital ratios of 9.8%, 12.7%, 13.6%, and 14.8%, respectively, as of December 31, 2025, all exceeding the regulatory standards for "well-capitalized" institutions.

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 judgments, estimates, and assumptions that affect the reported amounts of assets, liabilities, income, and expenses, as well as related disclosures. Certain accounting policies inherently involve significant judgement and estimation due to their complexity and the uncertainty of future events. Actual results may differ materially from those estimates, and changes in assumptions or circumstances after the balance sheet date could result in material differences in future periods.

Accounting estimates are considered critical when alternative estimates could reasonably have been used or when changes in those estimates are reasonably likely to occur and would materially impact the Consolidated Financial Statements. Management has discussed the development and selection of the critical accounting policy and estimate described below with the Audit Committee of the Board of Directors, and the Audit Committee has reviewed the related disclosures. We believe the most critical accounting policy in preparing our Consolidated Financial Statements is the determination of the allowance for credit losses on loans.

Allowance for Credit Losses on Loans

Management considers the policies related to the allowance for credit losses ("ACL") on loans to be the most critical to the financial statement presentation. The ACL on loans is determined in accordance with Accounting Standards Codification (“ASC”) 326, "Financial Instruments – Credit Losses", and reflects management’s estimate of expected credit losses over the life of loans in the portfolio as of the balance sheet date. The ACL is established through provisions for credit losses recorded in

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current earnings. Loan balances are charged off against the allowance for credit losses when management determines the loan is uncollectable. Subsequent recoveries of amounts previously charged off are credited to the allowance.

The ACL is measured on a collective basis for loans with similar risk characteristics. We stratify the loan portfolio into homogeneous groups and estimate expected credit losses based on the net amount expected to be collected over the life of the loans. Our methodology incorporates relevant information about past events, current conditions, and reasonable and supportable forecasts. For additional details on the risk factors considered by management in establishing the ACL, refer to Note 1 - Summary of Significant Accounting Policies in the accompanying notes to the Consolidated Financial Statements.

Overview of Results of Operations

2025 vs. 2024 Comparison

In 2025, we recognized net income of $77.5 million, or fully diluted earnings per share ("EPS") of $2.86, compared to net income of $53.4 million, or EPS of $1.97, in 2024. Our ROA and ROE for 2025 was 1.06% and 13.62%, respectively, compared to 0.72% and 10.25%, respectively, in 2024.

We recorded a provision for credit losses of $15.7 million in 2025, compared to a provision of $9.8 million in 2024. The higher provision for credit losses was primarily due to movements in loan balances by segment, partially offset by improvements in the economic forecast, combined with an overall loan balance decline during the year.

Net interest income increased by $29.2 million from 2024 to 2025, primarily driven by higher average yields earned on loans and investment securities, combined with lower average rates paid on interest-bearing deposits and the payoff of the Company's subordinated notes.

Other operating income increased by $13.1 million from 2024 to 2025. The increase in other operating income was primarily due to a $9.9 million loss on sale of investment securities related to a portfolio repositioning completed in the fourth quarter of 2024, compared to a loss on sale of investment securities of less than $0.1 million in 2025. In addition, we recorded higher other service charges and fees, which increased by $1.2 million, largely due to higher investment services fees of $0.7 million and ATM and debit card fees of $0.6 million, and higher income from bank-owned life insurance ("BOLI"), which increased by $0.8 million. See Table 9 - Components of Other Operating Income for more information.

Other operating expense increased by $6.1 million from 2024 to 2025. The increase was primarily driven by higher salaries and employee benefits of $7.8 million, computer software expense of $2.6 million, legal and professional services of $1.4 million, and $1.5 million in expenses related to the consolidation of the Company's former operations center into its main headquarters. The higher salaries and employee benefits was largely attributable to higher base salaries and incentive accruals. These increases were partially offset by $3.1 million in expenses related to the evaluation of a strategic opportunity in 2024, an impairment charge on intangible assets of $1.3 million in 2024, and higher directors' deferred compensation plan expense of $0.9 million in 2024. Significant fluctuations in directors' deferred compensation plan expenses are primarily due to stock market volatility. See Table 10 - Components of Other Operating Expense for more information.

2024 vs. 2023 Comparison

In 2024, we reported net income of $53.4 million, or EPS of $1.97, compared to $58.7 million, or EPS of $2.17, in 2023. ROA and ROE were 0.72% and 10.25%, respectively, in 2024, compared to 0.78% and 12.38%, respectively, in 2023.

We recorded a provision for credit losses of $9.8 million in 2024, compared to $15.7 million in 2023. The decrease was primarily driven by improvements in the economic outlook and changes in loan portfolio composition, combined with an overall decline in loan balance in 2024.

Net interest income increased by $1.7 million from 2023 to 2024, primarily due to higher average yields earned on loans and investment securities, partially offset by higher average rates paid on interest-bearing deposits.

Other operating income decreased by $7.9 million from 2023 to 2024. The decrease was primarily due to a $9.9 million loss on sale of investment securities related to a portfolio repositioning completed in the fourth quarter of 2024, compared to a $2.1 million loss primarily attributable to a similar repositioning completed in 2023. Additionally, the Company recognized a $5.1 million gain on the sale of a real estate office property in 2023. These decreases were partially offset by higher other service charges and fees of $2.0 million and higher income from BOLI of $1.7 million in 2024, The increase in BOLI income was primarily attributable to stock market volatility and higher death benefit income, partially offset by higher deferred

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compensation expense included in salaries and employee benefits and other operating expense. See Table 9 - Components of Other Operating Income for more information.

Other operating expense increased by $8.4 million from 2023 to 2024. The increase was primarily due to higher salaries and employee benefits of $3.9 million, $3.1 million in expenses related to the evaluation of a strategic opportunity in 2024, an impairment charge on intangible assets of $1.3 million in 2024, and higher directors' deferred compensation plan expenses of $1.2 million. Fluctuations in directors' deferred compensation plan expenses are primarily driven by stock market volatility. These increases were partially offset by a $2.3 million non-recurring charge related to the early termination of a branch lease in 2023. See Table 10 - Components of Other Operating Expense for more information.

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 are non-recurring, non-operational, or not indicative of ongoing results. The Company 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. 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 entitled measures reported by other companies. The following reconciling adjustments from GAAP to non-GAAP adjusted financial measures are limited to:

1.net pre-tax expenses of $1.5 million related to the consolidation of the Company's former operations center into its main headquarters in the third quarter of 2025,

2.pre-tax loss on sales of investment securities related to an investment portfolio repositioning of $9.9 million and $1.9 million in the fourth quarter of 2024 and fourth quarter of 2023, respectively,

3.pre-tax expenses related to the evaluation and assessment of a strategic opportunity of $3.1 million in the third quarter of 2024,

4.pre-tax gain on sale of a real estate office property of $5.1 million in the fourth quarter of 2023, and

5.pre-tax branch lease termination expense of $2.3 million in the fourth quarter of 2023.

Management does not consider these transactions to be representative of the Company's core operating performance. The related income tax effects were calculated using an assumed effective tax rate of 23%.

Table 1. Non-GAAP Financial Measures

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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:

Table 2. Adjusted Net Income and Diluted Earnings per Share

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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:

Table 3. Adjusted Return on Average Assets and Adjusted Return on Average Shareholders' Equity

Pre-Provision Net Revenue ("PPNR"), is a non-GAAP financial measure that excludes provision for credit losses and income tax expense from net income. The Company believes that PPNR is a useful tool for evaluating its ability to generate earnings from operations before accounting for credit costs. The following table presents a reconciliation of the Company's non-GAAP PPNR and adjusted PPNR for the periods presented, excluding the reconciling adjustments discussed above:

Table 4. Adjusted Pre-Provision Net Revenue

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 useful supplemental metric that enhances understanding of its business performance and operating efficiency. However, this ratio should not be viewed as a substitute for GAAP results and may not be comparable to similarly titled measures reported by other companies. The following table presents the Company's efficiency ratio and adjusted efficiency ratio for the periods presented, excluding the reconciling adjustments discussed above:

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Table 5. Adjusted Efficiency Ratio

The Company's efficiency ratio improved to 61.05% in 2025, compared to 68.91% in 2024 and 63.95% in 2023. The improvement in our efficiency ratio in 2025 compared to 2024, was primarily driven by the aforementioned increases in net interest income and other operating income, which more than offset the increase in other operating expense.

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, excluding the reconciling adjustments discussed above:

Table 6. Adjusted Tangible Common Equity Ratio

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Net Interest Income

The following table presents average balances of interest-earning assets and interest-bearing liabilities, along with the related yields and rates. Net interest income, when annualized and expressed as a percentage of average interest-earning assets, is referred to as "net interest margin." Interest income, which includes loan fees, and resultant yield information, is presented on a taxable-equivalent basis using a federal statutory tax rate of 21%.

Table 8 - Analysis of Changes in Net Interest Income (Taxable-Equivalent) provides a breakdown of changes in net interest income between periods. For each category of interest-earning assets and interest-bearing liabilities, changes are analyzed based on: (i) volume, calculated as the change in average balance, multiplied by the prior period's average yield or rate; and

(ii) rate, calculated as the change in average yield or rate, multiplied by the current period's average balance.

Any change in interest income not solely attributable to volume or rate is allocated proportionately between the two factors.

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Table 7. Average Balances, Interest Income and Expense, Yields, and Rates (Taxable-Equivalent)

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Table 8. Analysis of Changes in Net Interest Income (Taxable-Equivalent)

The banking and financial services industry in Hawaii is highly competitive. Net interest income remains our primary source of earnings and is derived from the difference between interest income earned on loans, investment securities and other interest-earning assets, and the interest expense we pay on deposits, borrowings, and other interest-bearing liabilities.

On a taxable-equivalent basis, net interest income totaled $241.6 million in 2025, which increased by $29.2 million, or 13.8%, from $212.4 million in 2024, which increased by $1.6 million, or 0.8%, from $210.8 million in 2023. The increase in 2025 was primarily due to higher average yields earned on loans and investment securities, which increased interest income, combined with lower average interest-bearing deposit balances and lower average rates paid on interest-bearing deposits, which reduced interest expense. In addition, interest expense of long-term debt decreased, primarily due to lower average rates paid and repayment of $25.0 million in FHLB long-term advances and $55.0 million in subordinated notes in the first quarter of 2025 and fourth quarter of 2025, respectively. These positive variances were partially offset by a decline in average loan balances which reduced interest income, combined with declines in the average balance and average yield earned on interest-bearing deposits in other financial institutions, which also reduced interest income.

Investment Portfolio Repositioning

In the fourth quarter of 2024, the Company executed an investment portfolio repositioning of its available-for-sale ("AFS") investment securities portfolio. The Company sold 24 lower-yielding AFS investment securities with a book value of $106.5 million, and received proceeds of $96.6 million, which resulted in gross realized losses of $9.9 million. No gross gains were realized on the sale. The specific identification method was used to determine the cost of securities sold. The securities sold had a weighted average yield of 2.1% and a weighted average duration of 3.6 years. With the proceeds, the Company purchased higher-yielding AFS investment securities totaling $101.6 million with a weighted average yield of 4.9% and a weighted average duration of 4.1 years.

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In the fourth quarter of 2023, the Company executed a similar investment portfolio repositioning of its AFS investment securities portfolio. The Company sold 17 AFS investment securities with a book value of $30.0 million, weighted average yield of 3.25%, weighted average duration of 3.4 years, and received proceeds of $28.1 million, which resulted in gross realized losses of $1.9 million. No gross gains were realized on the sale. The specific identification method was used to determine the cost of securities sold. With the proceeds, the Company purchased higher-yielding AFS investment securities totaling $28.3 million with a weighted average yield of 5.68% and a weighted average duration of 2.5 years.

Interest Rate Swap

In the first quarter of 2022, the Company entered into a forward starting interest rate swap on certain municipal debt securities with a notional amount of $115.5 million. Under the terms of the swap, the Company pays the counterparty a fixed rate of 2.095%, and receives a floating rate based on the Federal Funds effective rate. The swap became effective on March 31, 2024 and matures on March 31, 2029.

In 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 as of December 31, 2025. All other terms of the interest rate swap remained unchanged.

In 2025 and 2024, the Company recorded $2.7 million and $2.6 million, respectively, of interest income on taxable investment securities related to the swap.

Interest Income

On a taxable-equivalent basis, interest income totaled $314.9 million in 2025 which increased by $8.1 million, or 2.7%, from the $306.8 million in 2024, which increased by $23.3 million, or 8.2%, from $283.4 million in 2023.

The increase in taxable-equivalent interest income in 2025 from 2024 was primarily due to an increase in the average yields earned on loans and investment securities of 14 basis points ("bps") and 37 bps, respectively, resulting in higher interest income of approximately $7.5 million and $5.5 million, respectively. The increase in the average yield earned on investment securities was partially attributable to the portfolio repositioning completed in the fourth quarter of 2024. In addition, the $17.1 million increase in average FRB and FHLB stock and the $18.5 million increase in average investment securities resulted in higher interest income of approximately $1.3 million and $0.5 million, respectively. These increases were partially offset by decreases in the average balance and average yield earned on interest-bearing deposits in other financial institutions of $55.8 million and 95 bps, respectively, resulting in a decrease in interest income of approximately $4.5 million, and a decrease in average loans of $37.8 million, resulting in lower interest income of approximately $1.8 million.

The increase in taxable-equivalent interest income in 2024 from 2023 was primarily due to increases in the average yields earned on loans and investment securities of 40 bps and 33 bps, respectively, resulting in higher interest income of approximately $21.5 million and $4.9 million, respectively. The increase in the average yield earned on investment securities was partially attributable to income of $2.6 million from the aforementioned interest rate swap that became effective on March 31, 2024. In addition, increases in the average balance and average yield earned on interest-bearing deposits in other financial institutions resulted in higher interest income of approximately $4.4 million. These increases were partially offset by decreases in the average loans and investment securities balances of $150.5 million and $39.1 million, respectively, resulting in lower interest income of approximately $6.6 million and $0.8 million, respectively.

Interest Expense

In 2025, interest expense was $73.3 million which represented a decrease of $21.1 million, or 22.3%, compared to $94.4 million in 2024, which was an increase of $21.7 million, or 29.9%, compared to $72.7 million in 2023.

Following rate cuts beginning in September 2024, the average rate paid on interest-bearing deposits of 1.41% in 2025 decreased by 38 bps from 2024, resulting in a decrease in interest expense of approximately $12.9 million. Average interest-bearing deposits decreased by $83.0 million, resulting in a decrease in interest expense of approximately $6.3 million. Decreases in the average balance and average rate paid on long-term debt of $28.5 million and 22 bps, respectively, resulted in a total decrease in interest expense of approximately $1.9 million. FHLB long-term advances of $25.0 million at 4.62% and subordinated notes of $55.0 million at 4.75% were repaid in the first quarter of 2025 and fourth quarter of 2025, respectively.

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The average rate paid on interest-bearing deposits of 1.79% in 2024 increased by 47 bps from 2023, resulting in an increase in interest expense of approximately $23.3 million. Increases in the average balance and average rate paid on long-term debt of $7.3 million and 1 bps, respectively, resulted in a total increase in interest expense of approximately $0.4 million.

Net Interest Margin

Our net interest margin was 3.45%, 3.01% and 2.94% in 2025, 2024 and 2023, respectively. The increase in our net interest margin in 2025 from 2024 was primarily due to the increases in the average yields earned on loans and investment securities, combined with decreases in the average rates paid on interest-bearing deposits and long-term debt.

The decrease in our net interest margin in 2024 from 2023 was primarily due to the increases in the average yields earned on loans and investment securities, partially offset by increases in the average rates paid on interest-bearing deposits and long-term debt.

Other Operating Income

The following table presents components of other operating income and the total as a percentage of average assets for the periods presented:

Table 9. Components of Other Operating Income

Total other operating income of $51.8 million in 2025 increased by $13.1 million, or 33.8%, from the $38.7 million earned in 2024, which decreased by $7.9 million, or 17.0%, from the $46.7 million earned in 2023.

The increase in other operating income in 2025 from 2024 was primarily due to a loss on sale of investment securities of $9.9 million related to an investment portfolio repositioning completed in the fourth quarter of 2024, compared to a loss on sale of investment securities of less than $0.1 million in 2025. In addition, the Company recorded higher other service charges and

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fees, which increased by $1.2 million, largely due to higher investment services fees of $0.7 million and ATM and debit card fees of $0.6 million, and higher income from BOLI, which increased by $0.8 million, primarily attributable to higher death benefit income.

The decrease in other operating income in 2024 from 2023 was primarily due to a loss on sale of investment securities of $9.9 million related to an investment portfolio repositioning completed in the fourth quarter of 2024, compared to a loss on sale of investment securities of $2.1 million primarily due to an investment portfolio repositioning completed in the fourth quarter of 2023 and a gain on sale of a real estate office property of $5.1 million completed in the fourth quarter of 2023. These decreases were partially offset by higher other service charges and fees of $2.0 million and higher income from BOLI of $1.7 million. Significant variances in income from BOLI are primarily attributable to volatility in the equity markets and higher death benefit income. The Company has certain company-owned life insurance policies (included in income from BOLI) used to hedge its deferred compensation plans, which are tied to the equity markets and had gains in 2024 and 2023, therefore, the Company has also recognized offsetting increases in deferred compensation expense in other operating expenses in 2024 and 2023.

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Other Operating Expense

The following table presents components of other operating expense and the total as a percentage of average assets for the periods presented:

Table 10. Components of Other Operating Expense

Total other operating expense of $178.7 million in 2025 increased by $6.1 million, or 3.5%, from total operating expense of $172.6 million in 2024, which increased by $8.4 million, or 5.1%, compared to 2023.

The increase in total other operating expense in 2025, compared to 2024, was primarily due to higher salaries and employee benefits of $7.8 million, computer software expense of $2.6 million, and legal and professional services of $1.4 million. The higher salaries and employee benefits was largely attributable to higher base salaries and incentive accruals. In addition, the Company recognized $1.5 million in expenses related to the consolidation of the Company's former Operations Center into its main headquarters in 2025. These increases were partially offset by $3.1 million in expenses related to the evaluation of a strategic opportunity in 2024, lower amortization and impairment of intangible assets of $1.5 million, and lower directors' deferred compensation plan expenses of $0.9 million. Significant fluctuations in directors' deferred compensation plan expenses are primarily due to stock market volatility.

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The increase in total other operating expense in 2024, compared to 2023, was primarily due to expenses related to a strategic opportunity in 2024 of $3.1 million, higher salaries and employee benefits of $3.9 million, amortization and impairment of intangible assets of $1.4 million, and higher directors' deferred compensation plan expenses of $1.2 million. These increases were partially offset by a non-recurring charge of $2.3 million related to the early termination of a branch lease in 2023. Significant fluctuations in directors' deferred compensation plan expenses are primarily due to volatility in the equity markets.

Income Taxes

In 2025, the Company recorded income tax expense of $20.8 million, compared to $14.6 million in 2024, and $18.2 million in 2023. The effective tax rate was 21.2% in 2025 compared to 21.5% in 2024 and 23.6% in 2023.

The increase in income tax expense in 2025 from 2024 was primarily due to higher pre-tax income. The decrease in the effective tax rate in 2025 from 2024 was primarily driven by the recognition of higher tax credits and higher tax-exempt income.

The decrease in income tax expense in 2024 from 2023 was primarily due to lower pre-tax income. The decrease in the effective tax rate in 2024 from 2023 was primarily attributable to higher tax-exempt income from BOLI as a percentage of pretax income, combined with additional tax credits recognized and tax return-to-provision adjustments in 2024.

As of December 31, 2025, the valuation allowance on our net deferred tax assets ("DTA") totaled $3.4 million, which related to our DTA from 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. Net of this valuation allowance, the Company's net DTA totaled $23.6 million as of December 31, 2025, compared to a net DTA of $17.8 million as of December 31, 2024, and is included in other assets in the Company's consolidated balance sheets.

On August 16, 2022, the Inflation Reduction Act ("IRA") of 2022 was signed into law to implement new tax provisions and provide various incentives and tax credits. The IRA created a 15% corporate alternative minimum tax and an excise tax of 1% on stock repurchases from publicly traded U.S. corporations, among other changes. As of December 31, 2025, the Company determined that neither this Act nor changes to income tax laws or regulations in other jurisdictions had a significant impact on income tax expense. As of December 31, 2025, the Company estimates that it will owe and therefore has accrued approximately $0.2 million in excise tax on the Company's stock repurchases in 2025.

Investment Portfolio

The following table presents the amounts and distribution of investment securities held as of the dates presented:

Table 11. Distribution of Investment Securities

Investment securities totaled $1.31 billion at December 31, 2025, which decreased by $24.0 million, or 1.8%, from the $1.33 billion held at December 31, 2024, which increased by $55.0 million, or 4.3%, from the $1.28 billion at year-end 2023.

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The decrease in the investment securities portfolio reflects principal runoff, maturities and calls totaling $115.9 million, partially offset by purchases of investment securities of $50.6 million, amortization of unrealized losses on investment securities transferred to held-to-maturity of $6.8 million, a market valuation increase on the AFS portfolio of $34.8 million, and amortization and accretion of premiums and discounts of $1.3 million.

The fluctuations in market valuation on the AFS portfolio continues to be driven by changes in market interest rates. To mitigate the potential future impact to capital through AOCI, in 2022, the Company transferred 81 investment securities that were classified as AFS to HTM. The investment securities had an amortized cost basis of $762.7 million and a fair market value of $673.2 million. On the dates of transfer, these securities had total net unrealized losses of $89.5 million. There was no impact to net income as a result of the reclassifications.

Maturity Distribution of Investment Portfolio

The following table presents the maturity distribution of the investment portfolio and weighted-average yields by investment type and maturity grouping at December 31, 2025.

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Table 12. Maturity Distribution of Investment Portfolio

(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%.

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The weighted-average yield of the investment portfolio was 2.66% as of December 31, 2025, which increased by 4 bps from 2.62% as of December 31, 2024.

Financial Condition

Total assets were $7.41 billion at December 31, 2025 which decreased by $62.9 million, or 0.8%, from the $7.47 billion at December 31, 2024. Total liabilities were $6.82 billion at December 31, 2025 which decreased by $117.1 million, or 1.7%, from the $6.93 billion at December 31, 2024. The decreases in total assets and total liabilities in 2025 were primarily due to declines in loans and deposits in 2025.

Loan Portfolio

Our lending activities are focused on commercial and industrial loans, commercial mortgages, and construction loans to small and medium-sized companies, business professionals, and real estate investors and developers, as well as residential mortgages, home equity and consumer loans to home-buyers and individuals. Our strategy for generating commercial loans has traditionally relied upon teams of commercial real estate and commercial banking officers who are responsible for client prospecting and business development.

To manage credit risk (i.e., the ability of borrowers to repay their loan obligations), management analyzes the borrower's financial condition, repayment source, collateral and other factors that could impact credit quality, such as national and local economic conditions and industry conditions related to respective borrowers. The general underwriting guidelines require analysis and documentation to include among other things, overall creditworthiness of borrower, guarantor support, use of funds, loan term, minimum equity, loan-to-value standards, repayment terms, sources of repayment, covenants, pricing, collateral, insurance, and documentation standards. All loan requests considered by the Company must have a clearly defined, legitimate purpose and a determinable primary source of repayment along with a secondary source of repayment. All loans should be supported by appropriate documentation including, current financial statements, credit reports, collateral information, asset verification, tax returns, title reports, and appraisals (where appropriate).

We score consumer and small business loans using underwriting matrices ("Scorecards") developed based on the results of an analysis from a reputable national credit scoring company commissioned by our Bank. The Scorecards use the attributes that were determined to most highly correlate with probability of repayment. Those attributes include, but are not limited to the following: (i) credit score, (ii) credit limit amount, and (iii) debt-to-income ratio.

Loans, net of deferred fees and costs, totaled $5.29 billion at December 31, 2025, which decreased by $43.8 million, or 0.8%, from the $5.33 billion at December 31, 2024, which decreased by $106.1 million, or 2.0%, from the $5.44 billion held at December 31, 2023. The decrease in total loans included net decreases in the following loan portfolios: home equity of $76.9 million, or 11.4%, consumer of $62.9 million, or 12.3%, residential mortgage of $53.3 million, or 2.8%, and commercial and industrial of $12.3 million, or 2.0%. These decreases were offset by net increases in commercial mortgage of $93.8 million, or 6.2% and construction of $68.0 million, or 46.8%. In 2025, we did not foreclose on any loans. In addition, we recorded loan charge-offs of $16.7 million.

The following table presents outstanding loans, net of deferred fees and costs, by class as of the dates presented:

Table 13. Loans by Class

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

Table 14. Loans by Geographic Distribution

(1) Hawaii loans include Guam loans, which represent less 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.

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

Hawaii loans totaled $4.47 billion, and accounted for 84% of the total loan portfolio as of December 31, 2025. The remaining $821.2 million, or 16% of the total loan portfolio, is made up loans on the U.S. Mainland.

Commercial and Industrial

Loans in this class consist primarily of term loans and lines of credit to small and middle-market businesses and professionals. The borrower's business is typically regarded as the principal source of repayment, although our underwriting policy and practice generally requires additional sources of collateral, including real estate and other business assets, as well as personal guarantees where possible to mitigate risk. Risk of credit losses could be greater in this loan class relative to secured loans where a greater percentage of the loan amount is usually covered by collateral. Nonetheless, any collateral or personal guarantees obtained on commercial loans can mitigate the increased risk and help to reduce credit losses.

Our approach to commercial lending involves teams of lending and cash management personnel who focus on relationship development including loans, deposits and other bank services to new and existing commercial clients.

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In 2025, our commercial and industrial loan portfolio decreased by $12.3 million, compared to an increase of $31.2 million in 2024. In 2025, the Company reclassified $58.3 million in Hawaii consumer loans to the Hawaii commercial and industrial loan class. This reclassification was based on the loans' structure and characteristics, which more closely aligned with commercial and industrial lending criteria.

Hawaii commercial and industrial loans totaled $453.6 million at December 31, 2025, compared to $430.2 million at December 31, 2024. U.S. Mainland commercial and industrial loans totaled $141.0 million at December 31, 2025, compared to $176.8 million at December 31, 2024.

Real Estate—Construction

Construction loans include both residential and commercial development projects. Each construction project is evaluated for economic viability. Construction loans pose higher credit risks than secured loans. In addition to the financial strength of the borrower, construction loans have the added element of completion risk, which is the risk that the project will not be completed on time and within budget, resulting in additional costs that could affect the economic viability of the project and market risk at the time construction is complete.

The construction loan portfolio increased by $68.0 million in 2025 compared to a $40.3 million decrease in 2024. These fluctuations are driven by the start and completion of construction projects and are consistent with a normal construction cycle.

Hawaii construction loans totaled $153.4 million at December 31, 2025, compared to $145.2 million at December 31, 2024. U.S. Mainland construction loans totaled $59.8 million at December 31, 2025, compared to $29 thousand at December 31, 2024.

Interest Reserves

Our policies require interest reserves for construction loans, including loans to build commercial buildings, residential developments (both large tract projects and individual houses), and multi-family projects.

The outstanding principal balance of loans with interest reserves was $181.1 million at December 31, 2025, compared to $102.2 million in the prior year, while remaining interest reserves was $23.6 million, or 13.0% of the outstanding principal balance of loans with interest reserves at December 31, 2025, compared to $9.7 million, or 9.5% of the outstanding principal balance of loans with interest reserves at December 31, 2024.

Interest reserves allow the Company to advance funds to borrowers to make scheduled payments during the construction period. These advances typically are capitalized and added to the borrower's outstanding loan balance, although we have the right to demand payment under certain circumstances. Our policy is to determine if interest reserve amounts are appropriately included in each project's construction budget and are adequate to cover the expected duration of the construction period.

The amount, terms, and conditions of the interest reserve are established when a loan is originated, although we generally have the option to demand payment if the credit profile of the borrower changes. We evaluate the viability and appropriateness of the construction project based on the project's complexity and feasibility, the timeline, as well as the creditworthiness of the borrowers, sponsors and/or guarantors, and the value of the collateral.

In the event that unfavorable circumstances alter the original project schedule (e.g., cost overruns, project delays, etc.), our policy is to evaluate whether or not it is appropriate to maintain interest capitalization or demand payment of interest in cash and we will work with the borrower to explore various restructuring options, which may include obtaining additional equity and/or requiring additional collateral. We may also require borrowers to directly pay scheduled interest payments.

Our process for assessing whether construction projects are moving as planned are detailed in our lending policies and guidelines. Prior to approving a loan, the Company and borrower generally agree on a construction budget, a proforma monthly disbursement schedule, and sales/leaseback assumptions. As each project progresses, the projections are measured against actual disbursements and sales/lease results to determine if the project is on schedule and performing as planned.

The specific monitoring requirements for each loan vary depending on the size and complexity of the project and the experience and financial strength of the borrower, sponsor and/or guarantor. At a minimum, to ensure that loan proceeds are properly disbursed and to assess whether it is appropriate to capitalize interest or demand cash payment of interest, our monitoring process generally includes:

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•Physical inspection of the project to ensure work has progressed to the stage for which payment is being requested;

•Verification that the work completed is in conformance with plans and specifications and items for which disbursement is requested are within budget; and

•Determination that there continues to be satisfactory project progress.

In certain rare circumstances, we may decide to extend, renew, and/or restructure the terms of a construction loan due to cost overruns or project delays and restructuring can result in additional funds being advanced or an extension of the maturity date of the loan. Prior to the loan being restructured, our policy is to perform a detailed analysis to ensure that the economics of the project remain feasible and that the risks to the Company are within acceptable lending guidelines.

Real Estate—Mortgage

The following table sets forth information with respect to the composition of the Real Estate—Mortgage loan portfolio as of the dates indicated.

Table 15. Mortgage Loan Portfolio Composition

Residential

Residential mortgage loans include fixed-rate and adjustable-rate loans primarily secured by single-family owner-occupied primary residences in Hawaii. Maximum loan-to-value ratios of 80% are typically required for fixed-rate and adjustable-rate loans secured by single-family owner-occupied residences, although higher levels are permitted with accompanying mortgage insurance. First mortgage loans secured by residential properties generally carry a moderate level of credit risk. With an average loan origination size of approximately $0.6 million, marketable collateral and a stable Hawaii residential real estate market, credit losses on residential mortgage loans have historically been minimal. However, economic conditions including unemployment levels, future changes in interest rates and other market factors can impact the marketability and value of collateral and thus the level of credit risk inherent in the portfolio.

Closed-end residential mortgage loan balances as of December 31, 2025 totaled $1.84 billion, decreasing by $53.3 million, or 2.8%, from the $1.89 billion held at year-end 2024, which decreased by $35.3 million, or 1.8%, from the $1.93 billion held at year-end 2023. The decrease in closed-end residential mortgage loan balances in 2025 was primarily due to lower origination activity primarily attributable to the high interest rate environment which began in 2022. All closed-end residential mortgage loans were concentrated in Hawaii.

Residential mortgage loans held for sale at December 31, 2025 totaled $1.1 million, a decrease of $4.6 million, or 80.9%, from the December 31, 2024 balance of $5.7 million, which increased by $3.9 million, or 218.4%, from the December 31, 2023 balance of $1.8 million. We did not securitize any residential mortgage loans in 2025, 2024 and 2023.

Home Equity

Home equity lines of credit ("HELOCs"), which typically carry floating or fixed interest rates, are underwritten using a qualifying payment which assumes the line is fully drawn and is amortizing as if it was in the repayment period. Underwriting criteria include a minimum FICO score, maximum debt-to-income ratio ("DTI"), and maximum combined loan-to-value ratio

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("CLTV"). HELOCs are monitored based on default, delinquency, end of draw period, and maturity. All HELOCs originated since early 2011 have a ten-year draw period followed by a 20-year repayment period during which the principal balance will be fully amortized.

HELOC balances as of December 31, 2025 totaled $600.1 million, decreasing by $76.9 million, or 11.4%, from the $677.0 million held at December 31, 2024, which decreased by $59.5 million, or 8.1%, from the $736.5 million held at December 31, 2023. All HELOCs were concentrated in Hawaii.

Commercial Mortgage

Real estate mortgage loans secured by commercial properties represent a sizable portion of our loan portfolio. Our policy requires that loans be made for sound purposes, have a definite source and/or plan of repayment established at inception, and be backed up by reliable secondary sources of repayment and satisfactory collateral with good marketability. Loans secured by commercial property carry a greater risk than loans secured by residential property due to operating income risk. Operating income risk is the risk that the borrower will be unable to generate sufficient cash flow from the operation of the property. The commercial real estate market and interest rate conditions through economic cycles will impact risk levels.

Commercial mortgage balances as of December 31, 2025 totaled $1.59 billion, increasing by $93.8 million, or 6.2%, from the $1.50 billion held at December 31, 2024, which increased by $117.8 million, or 8.5%, from the $1.38 billion held at December 31, 2023. The increase in commercial mortgage balances in 2025 was primarily due to increased demand from both new and existing customers.

Hawaii commercial real estate loans totaled $1.20 billion at December 31, 2025, compared to $1.20 billion at December 31, 2024. U.S. Mainland commercial real estate loans totaled $392.4 million at December 31, 2025, compared to $298.7 million at December 31, 2024.

Consumer Loans

The following table sets forth the major components of our consumer loan portfolio as of the dates indicated.

Table 16. Consumer Loan Portfolio Composition

For consumer loans, credit risk is managed on a pooled basis. Considerations include an evaluation of the quality, character and inherent risks in the loan portfolio, current and projected economic conditions and past loan loss experience. Consumer loans represent a moderate credit risk. Loans in this class are either unsecured or secured by personal assets such as automobiles. The average loan size is generally small and risk is diversified among many borrowers. Our policy is to utilize credit-scoring systems for most of our consumer loans, which offer the ability to manage credit exposure based on our risk tolerance and loss experience. From time to time, we will tactically deploy funds, which are not utilized in our current short-term core lending markets, by purchasing certain consumer loan portfolios.

Consumer loans totaled $447.6 million at December 31, 2025, decreasing by $62.9 million, or 12.3%, from December 31, 2024 of $510.5 million, which decreased by $120.0 million, or 19.0%, compared to the $630.5 million held at December 31, 2023.

At December 31, 2025, automobile loans, primarily indirect dealer loans and loans purchased from third-party originators, comprised 62.1% of consumer loans outstanding. Total automobile loans of $278.1 million at December 31, 2025 increased by $35.4 million, or 14.6%, from December 31, 2024 of $242.6 million, which decreased by $40.3 million, or 14.3%, from $283.0 million at December 31, 2023.

In 2025, we purchased $99.6 million in U.S. Mainland automobile loans, which included a $2.1 million premium over the $97.5 million outstanding balance. In 2024, we purchased U.S. Mainland automobile loans totaling $49.4 million, which

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included a $1.9 million premium over the $47.6 million outstanding balance. In 2023, we purchased U.S. Mainland automobile loans totaling $15.7 million, which included a $0.6 million premium over the $15.2 million outstanding balance.

Purchased unsecured consumer and home improvement loans of $96.0 million at December 31, 2025 decreased by $42.2 million, or 30.5%, from December 31, 2024 of $138.2 million, which decreased by $75.2 million, or 35.2%, from $213.4 million at December 31, 2023.

In 2025 and 2024, we did not purchase any U.S. Mainland unsecured consumer loans. In 2023, we purchased U.S. Mainland unsecured consumer loans under forward flow purchase agreements with outstanding balances totaling $3.9 million at par.

Other revolving credit plans include extensions of credit to individuals and totaled $39.2 million at December 31, 2025, which decreased by $55.0 million, or 58.4%, from December 31, 2024 of $94.2 million, which decreased by $6.0 million, or 6.0%, from $100.3 million at December 31, 2023. The decline from December 31, 2024 to December 31, 2025 was primarily due to the reclassification of $58.3 million in other revolving credit plans to the commercial and industrial loan class. This reclassification was based on the loans' structure and characteristics, which more closely aligned with commercial and industrial lending criteria.

Other consumer loans of $34.3 million at December 31, 2025 decreased by $1.2 million, or 3.4%, from December 31, 2024 of $35.5 million, which increased by $1.6 million, or 4.7%, from $33.9 million at December 31, 2023.

Concentrations of Credit Risk

As of December 31, 2025, approximately $4.25 billion, or 80.3% of loans outstanding were secured by real estate, including construction loans, residential mortgage loans, home equity loans, and commercial mortgage loans. As of December 31, 2024, t approximately $4.22 billion, or 79.0% of loans outstanding were secured by real estate, including construction loans, residential mortgage loans, home equity loans, and commercial mortgage loans.

The majority of our loans are made to companies and individuals with headquarters in, or residing in, the State of Hawaii. Consistent with our focus of being a Hawaii-based bank, 84% of our loan portfolio was concentrated in the Hawaii market, while 16% was concentrated in the U.S. Mainland as of December 31, 2025. As of December 31, 2024, 87% of our loan portfolio was concentrated in the Hawaii market, and 13% was concentrated on the U.S. Mainland.

Our foreign credit exposure as of December 31, 2025 and December 31, 2024 was minimal and did not exceed 1% of total assets.

Maturity Distribution and Sensitivities of Loans to Changes in Interest Rates

Commercial loans and commercial mortgage loans with variable interest rates are underwritten at the current market interest rate. For commercial loans and commercial real estate loans with an initial fixed-rate period that are not fully amortizing, underwriting is also based on the current market interest rate. At the end of the fixed-rate period and/or maturity, the projected loan balance at that time is underwritten using an interest rate equal to the current market interest rate plus 2% per annum.

For variable-rate residential mortgage loans with initial fixed-rate periods of five years or less, qualifying payments are calculated using the greater of (a) the note rate plus 2% per annum, or (b) the fully indexed rate. For variable-rate loans with a fixed-rate period of longer than five years, qualifying payments are based on the greater of the note rate or the fully indexed rate.

The qualifying payment for HELOCs is based on the fully indexed rate plus the required principal and interest payment during the repayment period, assuming the line is fully drawn. For consumer lines of credit, qualifying payments are calculated using a percentage of the credit limit that exceeds the actual required payment based on the fully indexed interest rate.

The following table presents the maturity distribution and sensitivities of the loan portfolio to changes in interest rates at December 31, 2025. Maturities are based on contractual maturity dates and do not factor in principal amortization. This differs from the assumptions used in the net interest income sensitivity analysis included in Table 25 - Net Interest Income Sensitivity.

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Table 17. Maturity Distribution and Sensitivities of Loans to Changes in Interest Rates