Central Pacific Bank set aside $10.6 million in the second quarter for potential loan losses but trounced analysts’ earnings estimates even as the coronavirus pandemic continued to wreak havoc on Hawaii’s economy.

The state’s fourth-largest bank also said the company’s renovation of Central Pacific Plaza, its downtown headquarters, is on schedule with the completion date still set for Jan. 4. The headquarters renovation is part of RISE2020, the bank’s $40 million infrastructure renovation and technology upgrade project, which it began in February.

Parent company Central Pacific Financial Corp. was due to report early this morning that the bank had net income of $9.9 million, or 35 cents a share, compared with $13.5 million, or 47 cents a share, in the year-earlier quarter. Revenue rose 8.1% to $60 million from $55.5 million. Analysts’ estimates were for earnings per share of 22 cents and revenue of $49.3 million, according to a survey by Thomson Reuters.

“Our operating results continue to be impacted by a higher provision for credit loss expense due to deteriorating economic conditions brought on by the current COVID-19 pandemic,” the bank said in its news release.

Central Pacific’s loan-loss provision, which comes on the heels of $9.3 million it reserved in the first quarter, brings its midyear provision to $19.9 million. The bank is following the trend established by the state’s two largest banks, First Hawaiian Bank and Bank of Hawaii, which announced within the last few days that their midyear provisions for potential loan losses had risen to $96.6 million and $74 million, respectively.

“Central Pacific is strong and well-positioned to manage through the challenging operating environment,” Central Pacific Financial Chairman and CEO Paul Yonamine said in a statement. “Our credit quality, capital and liquidity are solid, which enables us to support our customers and the community during this time of great need.”

Loans jumped 17.8% in the second quarter from the year-earlier period to $5 billion, driven by the origination of more than 7,200 Small Business Administration Paycheck Protection Program loans totaling $556.9 million. Deposits soared 16.4% to $5.79 billion, benefiting from the deposit of PPP funds into both new and existing deposit accounts.

“Through the Paycheck Protection Program, we’ve been able to help save thousands of local jobs in our community,” Central Pacific President Catherine Ngo said. “We are proud of our employees that stepped up during this tremendous effort and continue to work diligently to help our customers navigate the current challenges.”

Central Pacific’s net interest margin, which is the difference between what it generates from loans and what it pays out for deposits, declined 7 basis points in the second quarter to 3.26% from 3.33% in the year-ago quarter and was down 17 basis points from 3.43% in the first quarter of this year.

The bank kept its quarterly dividend of 23 cents a share. It will be payable Sept. 15 to shareholders of record at the close of business Aug. 31.

Ngo said the headquarters renovation is coming along “very well.”

“We have a great team that has come together and that is pulling hard to complete (on time) our beautiful new headquarters for us,” she said via email. “We are excited about inviting our customers and the community to our ground floor, where we will have our newly constructed branch, as well as co-working space, conference rooms, and a beautiful atrium where friends and colleagues can meet (with social distancing, of course, if the pandemic is not behind us by January).”

Construction and input on the project is coming from Nordic Construction, MGA Architecture, construction consultant The Wilhelm Group and the bank’s internal team.

Upgrades to the bank’s ATMs and digital banking both are proceeding as planned.

The bank to date has installed 28 new full-function branch ATMs out of 76 branch and nonbranch ATMs that are planned by the end of this year. The new ATMs have enhanced capabilities such as envelopeless cash and check deposits as well as language, cash back and receipt preferences.

Central Pacific said its new digital banking platform will launch in August.

”COVID has accelerated our digital banking strategy and we will continue to make significant investments in digital through 2020 and beyond,” Central Pacific Chief Marketing Officer Kevin Dahlstrom said.

Central Pacific’s stock closed up 7 cents at $14.62 on Tuesday.

SECOND-QUARTER NET

$9.9 million

YEAR-EARLIER NET

$13.5 million