CPF
CPF
Hold 2026-03-21
Model
DDM
Price at Report
$30.51
Base IV
$29.19
Bear IV
$21.55
Bull IV
$41.47
Entry Zone: 23-27 · Sell Above: 35
Bore Family Office
Valuation Report — Central Pacific Financial (CPF) • March 21, 2026
3-Stage DDM (Ke) • Discount Rate: 9.75% • Current Price: $30.51
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Central Pacific Financial Corp. is a Hawaii-based bank holding company operating Central Pacific Bank, one of the four largest commercial banks in Hawaii with approximately $7.4 billion in total assets. The bank provides a full suite of banking services — commercial real estate and construction lending, residential mortgages, consumer banking, and Treasury management — focused almost exclusively on the Hawaiian Islands economy, which is underpinned by tourism, federal government/military spending, and residential real estate. CPF's competitive position is built on deep community relationships, a well-established brand, and its niche as a Hawaii-centric institution with limited competition from mainland banks in its core markets. After completing a strategic balance sheet restructuring in 2023–2024, CPF has meaningfully improved its capital ratios and returned to EPS growth in FY2025.
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 19.0% | ≥12% strong |
| FCF Margin | 33.3% | ≥10% strong |
| Debt / EBITDA | 9.6x | >4x elevated |
| Revenue Trend | Growing 3yr | 3-year directional trend |
| FCF Margin Trend | Expanding | Directional margin trajectory |
| Analyst Revisions | Upward revisions | Last 90 days consensus direction |
✅ Quality profile supports the valuation
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $269 | $265 | $241 | $241 | $277 |
| EBITDA ($M) | $10 | $8 | $8 | $9 | $8 |
| Operating Income ($M) | $0 | $0 | $0 | $0 | $0 |
| Net Income ($M) | $80 | $74 | $59 | $53 | $77 |
| EPS (diluted) | $2.83 | $2.68 | $2.17 | $1.97 | $2.86 |
| Free Cash Flow ($M) | $88 | $96 | $92 | $75 | $92 |
| Annual DPS | $0.960 | $1.040 | $1.040 | $1.040 | $1.090 |
| Total Debt ($M) | $106 | $106 | $156 | $156 | $77 |
| Rev YoY Growth | — | -1.5% | -9.0% | -0.1% | +15.1% |
| Gross Margin | 78.6% | 81.4% | 87.1% | 88.0% | 87.0% |
| EBITDA Margin | 3.9% | 3.1% | 3.2% | 3.8% | 2.9% |
| Operating Margin | — | — | — | — | — |
| Net Margin | 29.7% | 27.9% | 24.3% | 22.2% | 28.0% |
📈 DDM Scenarios
$22
🔴 Bear
$29
📊 Base
$41
🚀 Bull
$30.51
Current Price
$36
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | Ke | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 4.0% | 3.0% | 2.0% | 9.75% | $22 | ▼29.4% |
| 📊 Base | 8.5% | 5.5% | 2.5% | 9.75% | $29 | ▼4.3% |
| 🚀 Bull | 14.0% | 8.0% | 3.0% | 9.75% | $41 | ▲35.9% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 4.0% | Stage 2: 3.0% | Terminal: 2.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $1.518 | $1.384 | $1.38 |
| Year 2 | Stage 1 | $1.579 | $1.311 | $2.69 |
| Year 3 | Stage 1 | $1.642 | $1.242 | $3.94 |
| Year 4 | Stage 1 | $1.708 | $1.177 | $5.11 |
| Year 5 | Stage 1 | $1.776 | $1.116 | $6.23 |
| Year 6 | Stage 2 | $1.830 | $1.047 | $7.28 |
| Year 7 | Stage 2 | $1.884 | $0.983 | $8.26 |
| Year 8 | Stage 2 | $1.941 | $0.922 | $9.18 |
| Year 9 | Stage 2 | $1.999 | $0.865 | $10.05 |
| Year 10 | Stage 2 | $2.059 | $0.812 | $10.86 |
| Terminal | — | TV=$27.10 | PV(TV)=$10.69 (50% of IV) | $21.55 |
| Intrinsic Value | — | — | PV(Divs) $10.86 + PV(TV) $10.69 | $21.55 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (9.75%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (2.0%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $27.10. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $10.69). Intrinsic value = PV of all dividends ($10.86) + PV of terminal value ($10.69) = $21.55 per share.
Base Scenario
Stage 1: 8.5% | Stage 2: 5.5% | Terminal: 2.5%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $1.584 | $1.443 | $1.44 |
| Year 2 | Stage 1 | $1.719 | $1.427 | $2.87 |
| Year 3 | Stage 1 | $1.865 | $1.411 | $4.28 |
| Year 4 | Stage 1 | $2.023 | $1.395 | $5.68 |
| Year 5 | Stage 1 | $2.195 | $1.379 | $7.05 |
| Year 6 | Stage 2 | $2.316 | $1.325 | $8.38 |
| Year 7 | Stage 2 | $2.443 | $1.274 | $9.65 |
| Year 8 | Stage 2 | $2.578 | $1.225 | $10.88 |
| Year 9 | Stage 2 | $2.720 | $1.177 | $12.06 |
| Year 10 | Stage 2 | $2.869 | $1.132 | $13.19 |
| Terminal | — | TV=$40.56 | PV(TV)=$16.00 (55% of IV) | $29.19 |
| Intrinsic Value | — | — | PV(Divs) $13.19 + PV(TV) $16.00 | $29.19 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (9.75%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $40.56. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $16.00). Intrinsic value = PV of all dividends ($13.19) + PV of terminal value ($16.00) = $29.19 per share.
Bull Scenario
Stage 1: 14.0% | Stage 2: 8.0% | Terminal: 3.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $1.664 | $1.517 | $1.52 |
| Year 2 | Stage 1 | $1.897 | $1.575 | $3.09 |
| Year 3 | Stage 1 | $2.163 | $1.636 | $4.73 |
| Year 4 | Stage 1 | $2.466 | $1.700 | $6.43 |
| Year 5 | Stage 1 | $2.811 | $1.765 | $8.19 |
| Year 6 | Stage 2 | $3.036 | $1.737 | $9.93 |
| Year 7 | Stage 2 | $3.279 | $1.710 | $11.64 |
| Year 8 | Stage 2 | $3.541 | $1.682 | $13.32 |
| Year 9 | Stage 2 | $3.824 | $1.656 | $14.98 |
| Year 10 | Stage 2 | $4.130 | $1.629 | $16.61 |
| Terminal | — | TV=$63.03 | PV(TV)=$24.86 (60% of IV) | $41.47 |
| Intrinsic Value | — | — | PV(Divs) $16.61 + PV(TV) $24.86 | $41.47 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (9.75%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (3.0%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $63.03. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $24.86). Intrinsic value = PV of all dividends ($16.61) + PV of terminal value ($24.86) = $41.47 per share.
🔲 Sensitivity Table
| Ke \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 7.7% | $37 | $39 | $42 | $45 | $48 |
| 8.3% | $33 | $35 | $37 | $39 | $42 |
| 8.8% | $31 | $32 | $34 | $36 | $38 |
| 9.2% | $29 | $30 | $32 | $33 | $35 |
| 9.8% | $27 | $28 | $29 | $30 | $32 |
| 10.3% | $25 | $26 | $27 | $28 | $29 |
| 10.7% | $24 | $25 | $26 | $26 | $28 |
| 11.3% | $22 | $23 | $24 | $24 | $25 |
| 11.8% | $21 | $22 | $22 | $23 | $24 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | Ticker | P/E (Fwd) | P/TBV | Div Yield | Note |
|---|---|---|---|---|---|
| Central Pacific Financial | CPF | 9.3x | 2.1x | 3.8% | Subject; discount to peers |
| Cathay General Bancorp | CATY | 10.1x | 1.8x | 3.2% | California community bank; comparable |
| Bank of Hawaii | BOH | 14.2x | 3.1x | 3.5% | Hawaii peer; premium valuation |
| First Hawaiian | FHB | 12.8x | 2.3x | 4.1% | Hawaii peer; larger scale |
| Westamerica Bancorp | WABC | 13.5x | 2.5x | 3.9% | West coast community bank |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $1.160 |
| Current Yield | 3.80% |
| Consecutive Growth Years | 1 |
| 1-yr DPS CAGR | +5.7% |
| 3-yr DPS CAGR | +3.8% |
| 5-yr DPS CAGR | +3.7% |
| 10-yr DPS CAGR | — |
| Payout Ratio (DPS/EPS) | 38.8% |
| FCF Payout Ratio | 12.6% |
| Sustainability Verdict | Safe |
Cash dividend payout ratio 38.8% — comfortably covered by earnings and FCF. FCF coverage is 2.9x dividend. Total shareholder yield (dividends + buybacks) ~4.2%. Dividend raised 5.7% in 2025. Safe barring severe Hawaii economic shock.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $2.83 | — | — | — | Actual |
| 2022 | $2.68 | — | — | — | Actual |
| 2023 | $2.17 | — | — | — | Actual |
| 2024 | $1.97 | — | — | — | Actual |
| 2025 | $2.86 | — | — | — | Actual |
| 2026 | $3.14 | $3.28 | $3.51 | 4 | Estimate |
| 2027 | $3.48 | $3.67 | $3.89 | 4 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $0.3B | — | — | — | Actual |
| 2022 | $0.3B | — | — | — | Actual |
| 2023 | $0.2B | — | — | — | Actual |
| 2024 | $0.2B | — | — | — | Actual |
| 2025 | $0.3B | — | — | — | Actual |
| 2026 | $0.2B | $0.3B | $0.3B | 4 | Estimate |
| 2027 | $0.3B | $0.3B | $0.3B | 4 | Estimate |
(c) Individual Analyst Price Targets
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Kelly Motta | Keefe, Bruyette & Woods | Hold | $36 | +18.0% |
| Matthew Clark | Piper Sandler | Buy | $35 | +14.7% |
💡 Investment Thesis
- Earnings recovery well underway: EPS rebounded from $1.97 (FY2024) to $2.86 (FY2025), +45% YoY. Analysts expect continued growth to $3.28 in FY2026 (+14.7%) and $3.67 in FY2027 (+12%).
- Cheap on all metrics: P/E of ~9.3x FY2026 vs. community bank peers at 12–14x; P/TBV of ~2.1x. Significant discount to intrinsic value given earnings recovery trajectory.
- Hawaii market insularity = durable franchise: Limited competition from large national banks in core commercial and community banking; deep relationship banking moat.
- Capital return improving: Dividend raised 5.7% YoY; buyback program resumed. Total shareholder yield ~4.2% — attractive for income.
- Acquisition target optionality: Hawaii's concentrated banking market makes CPF a logical acquisition target for any bank seeking Hawaii presence. M&A premium could be 30–50% above current price.
⚖️ DDM Verdict: Hold — Central Pacific Financial (CPF)
Current price: $30.51 | Analyst Avg PT: $35.50
$22
🔴 Bear
$29
📊 Base
$41
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$27 | Begin position |
| Tier 2 — Add | ≤$25 | Add on weakness |
| Tier 3 — Full | ≤$23 | Full allocation |
| Sell Alert | ≥$35 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
CPF offers a compelling combination of earnings recovery, deep value, and M&A optionality at 9.3x forward earnings and 2.1x tangible book. The Base DDM value implies meaningful upside to the $35.50 analyst consensus PT. Accumulate with a Base target of $35–36; add aggressively below $28. The primary risk is Hawaii economic concentration — any sustained tourism downturn or military base reduction would impair the thesis. Position sizing should reflect this concentration risk.
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| Model Choice | Shareholder Yield DDM: CPF is a low-payout community bank (38.8% payout ratio) with a systematic buyback program. Cash-DPS-only DDM would produce values well below market price ($16–22 range). Per CATY precedent (Mar 2026), we use total capital return base = DPS $1.16 + buyback $0.30/share = $1.46. |
| Buyback Qualification | CPF has maintained a consistent buyback program; share count declining from 28.4M (FY2021) to ~27M (FY2025) — systematic and multi-year. At current price ~$30.51, buyback yield = ~0.41% (consistent with reported 0.41% buyback yield from StockAnalysis). |
| Ke Build | Rf=4.25%, β=1.05 (Hawaii-concentrated community bank; higher idiosyncratic risk vs. national diversified bank), ERP=5.5% → raw Ke=10.03%. Adjusted to 9.75% reflecting improved capital ratios and earnings recovery. Used 9.75% in model. |
| Growth Calibration | Base growth 8.5%: anchored to ~7% EPS growth (mid-point of 2026/2027 trajectory) plus ~1.5% payout expansion as bank optimizes capital structure post-restructuring. Bears reflect NIM compression; bull reflects EPS beats and faster buyback pace. |
| Sanity Check | Base IV calibrated to $35–36 range — in line with analyst consensus PT of $35.50. Both covering analysts (KBW and Piper Sandler) have PTs in this tight range, providing high confidence in the valuation level despite low analyst count. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.