EX-99.1 2 exhibit99-1erq22019.htm EXHIBIT 99.1 Exhibit

Central Pacific Financial Corp. Reports Second Quarter 2019 Results;
Launches RISE2020 Initiative
Page 1


Exhibit 99.1
ex99logoa23.jpg
 
 
 
 
FOR IMMEDIATE RELEASE
 
 
 
 
Investor Contact:
Ian Tanaka
Media Contact:
Wayne Kirihara
 
VP, Treasury Manager
 
EVP, Chief Marketing Officer
 
(808) 544-3646
 
(808) 544-3687
 
ian.tanaka@centralpacificbank.com
 
wayne.kirihara@centralpacificbank.com
 
NEWS RELEASE
 
 
 
 
 

CENTRAL PACIFIC FINANCIAL CORP. REPORTS SECOND QUARTER 2019 RESULTS;
LAUNCHES RISE2020 INITIATIVE


•
Net income of $13.5 million, or fully diluted EPS of $0.47 for the second quarter.

•
ROA of 0.92% and ROE of 10.73% for the second quarter.

•
Total loans increased by $145.5 million, or 3.5% sequentially, and $365.5 million, or 9.4% year-over-year.

•
Core deposits increased by $38.5 million, or 0.9% sequentially, and $102.8 million, or 2.6% year-over-year.

•
Asset quality remains strong as nonperforming assets declined to $1.3 million, or 0.02% of total assets.

•
Launched RISE2020, a multifaceted initiative to enhance customer experience, drive stronger long-term growth and profitability and improve shareholder returns. Targeting a 15% return on average shareholders' equity and a 57% efficiency ratio by the end of 2022.


HONOLULU, HI, July 24, 2019 – Central Pacific Financial Corp. (NYSE: CPF) (the "Company"), parent company of Central Pacific Bank, today reported net income in the second quarter of 2019 of $13.5 million, or diluted earnings per share ("EPS") of $0.47, compared to net income in the second quarter of 2018 of $14.2 million, or EPS of $0.48, and net income in the first quarter of 2019 of $16.0 million, or EPS of $0.55. Net income in the six months ended June 30, 2019 totaled $29.6 million, or EPS of $1.03, compared to net income in the six months ended June 30, 2018 of $28.5 million, or EPS of $0.95.

"The second quarter results were highlighted by solid loan and core deposit growth and excellent asset quality. In our 65th Anniversary year, we are excited to launch RISE2020, a company-wide initiative that we believe will take Central Pacific Bank to a new level of customer experience and financial performance,” said Paul Yonamine, Chairman and Chief Executive Officer.

"RISE2020 includes a number of initiatives and investments to build a better bank to meet the changing needs of our customers,” said Catherine Ngo, President.




Central Pacific Financial Corp. Reports Second Quarter 2019 Results;
Launches RISE2020 Initiative
Page 2


RISE2020 includes initiatives in the following key areas of opportunity: Digital Banking, Revenue Enhancements, Branch Transformation and Operational Excellence. RISE2020 will provide Central Pacific Bank with best-in class products and services in several strategic areas. The Company anticipates investing roughly $40 million in RISE2020 and expects the initiative to lead to enhanced profitability that will result in a 15% return on average shareholders' equity and a 57% efficiency ratio by the end of 2022. The second quarter of 2019 included roughly $1.0 million of RISE2020-related expense. The Company will share more on RISE2020 on today’s conference call and in future quarters.

On July 23, 2019, the Company's Board of Directors declared a quarterly cash dividend of $0.23 per share on its outstanding common shares. The dividend will be payable on September 16, 2019 to shareholders of record at the close of business on August 30, 2019.

In June 2019, the Company’s Board of Directors authorized the repurchase of up to $30 million of its common stock from time to time in the open market or in privately negotiated transactions, pursuant to a newly authorized share repurchase program (the "Repurchase Plan"). The Repurchase Plan replaces and supersedes in its entirety the share repurchase program previously approved by the Company's Board of Directors, which had $6.8 million in remaining repurchase authority. During the second quarter of 2019, the Company repurchased 213,700 shares of common stock, at a total of $6.2 million, or an average cost per share of $29.22. During the six months ended June 30, 2019, the Company repurchased 490,700 shares of common stock, or approximately 1.7% of its common stock outstanding as of December 31, 2018. Total cost of the shares repurchased during the six months ended June 30, 2019 was $14.0 million, or an average cost per share of $28.43. The Company's remaining repurchase authority under the Repurchase Plan at June 30, 2019 is $29.9 million. During the six months ended June 30, 2019, the Company returned $26.6 million in capital to its shareholders through cash dividends and share repurchases.

Earnings Highlights
Net interest income for the second quarter of 2019 was $45.4 million, compared to $42.7 million in the year-ago quarter and $45.1 million in the previous quarter. Net interest margin for the second quarter of 2019 was 3.33%, compared to 3.20% in the year-ago quarter and 3.34% in the previous quarter. The increases in net interest income from the year-ago and sequential quarters were primarily due to growth in the loan portfolio, combined with higher yields earned on the loan portfolio in the second quarter of 2019. In addition, the Company recorded non-recurring interest recoveries of $0.5 million and $0.3 million in the second and first quarters of 2019, respectively. These increases were partially offset by lower interest and dividends on investment securities due to the planned runoff of our investment securities portfolio, combined with higher deposit and borrowing costs from the year-ago and sequential quarters.

Other operating income for the second quarter of 2019 totaled $10.1 million, compared to $9.6 million in the year-ago quarter and $11.7 million in the previous quarter. The increase from the year-ago quarter was primarily due to higher income from bank-owned life insurance of $0.4 million and higher commissions and fees on investment services of $0.3 million (included in other service charges and fees), partially offset by higher amortization of mortgage servicing rights of $0.2 million (included in mortgage banking income). The increase in income from bank-owned life insurance from the year-ago quarter was primarily attributable to death benefit income of $0.1 million recorded in the current quarter, combined with fluctuations in the equity markets. The decrease from the previous quarter was primarily due to the conversion of MasterCard Class B common stock received during their initial public offering to Class A common stock and immediate sale of the converted shares resulting in a gain of $2.6 million (included in other) in the previous quarter, partially offset by higher commissions and fees on investment services of $0.5 million (included in other service charges and fees) in the current quarter.

Other operating expense for the second quarter of 2019 totaled $36.1 million, which increased from $33.6 million in the year-ago quarter and increased from $34.3 million in the previous quarter. The increase from the year-ago quarter was primarily due to higher salaries and employee benefits of $1.8 million, higher entertainment and promotions expense of $0.7 million (included in other) and higher computer software expense of $0.3 million. These negative variances were partially offset by lower amortization of core deposit premium of $0.7 million, as the intangible asset was fully amortized as of September 30, 2018. The increase from the previous quarter was primarily due to higher salaries and employee benefits of $0.7 million, combined with higher entertainment and promotions expense of $0.8 million (included in other). The higher salaries and employee benefits compared to the year-ago and previous quarters was partially attributable to the addition of positions in strategic areas and higher commissions, combined with annual merit increases effective in the second quarter of 2019. The higher entertainment and promotions expense compared to the year-ago and previous quarters was primarily attributable to expenses related to a recent core deposit gathering campaign.

The efficiency ratio for the second quarter of 2019 was 65.09%, compared to 64.26% in the year-ago quarter and 60.49% in the previous quarter. The efficiency ratio in the previous quarter was positively impacted by the aforementioned MasterCard stock gain.




Central Pacific Financial Corp. Reports Second Quarter 2019 Results;
Launches RISE2020 Initiative
Page 3


In the second quarter of 2019, the Company recorded income tax expense of $4.4 million, compared to $3.9 million in the year-ago quarter and $5.1 million in the previous quarter. The effective tax rate for the second quarter of 2019 was 24.6%, compared to 21.7% in the year-ago quarter and 24.2% in the previous quarter. Income tax expense in the year-ago quarter included a one-time estimated income tax benefit of $0.6 million related to a tax accounting method change strategy that allows the deduction for certain expenses to be accelerated for income tax purposes.
 
Balance Sheet Highlights
Total assets at June 30, 2019 of $5.92 billion increased by $238.5 million, or 4.2% from June 30, 2018, and increased by $78.7 million, or 1.3% from March 31, 2019.
 
Total loans at June 30, 2019 of $4.25 billion increased by $365.5 million, or 9.4%, and $145.5 million, or 3.5% from June 30, 2018 and March 31, 2019, respectively. The year-over-year and sequential quarter increases in total loans were driven by broad-based growth in all loan categories.
 
Total deposits at June 30, 2019 of $4.98 billion remained relatively unchanged from June 30, 2018, and increased by $28.7 million, or 0.6% from March 31, 2019.  The sequential quarter increase in total deposits was primarily attributable to an increase in interest-bearing demand deposits of $37.4 million, savings and money market deposits of $11.0 million and other time deposits greater than $250,000 of $17.6 million, partially offset by a decrease in government time deposits of $25.7 million. Core deposits, which include demand deposits, savings and money market deposits, and time deposits less than $100,000, totaled $4.10 billion at June 30, 2019.  This represents an increase of $102.8 million, or 2.6% from June 30, 2018, and $38.5 million, or 0.9% from March 31, 2019. The Company's loan-to-deposit ratio was 85.3% at June 30, 2019, compared to 78.0% at June 30, 2018 and 82.9% at March 31, 2019.

Asset Quality
Nonperforming assets at June 30, 2019 declined to $1.3 million, or 0.02% of total assets, compared to $3.5 million, or 0.06% of total assets at June 30, 2018, and $3.3 million, or 0.06% of total assets at March 31, 2019.

Loans delinquent for 90 days or more still accruing interest totaled $0.3 million at June 30, 2019, compared to $0.6 million and $0.2 million at June 30, 2018 and March 31, 2019, respectively.

Net charge-offs in the second quarter of 2019 totaled $0.4 million, compared to net charge-offs of $1.6 million in the year-ago quarter, and net charge-offs of $1.9 million in the previous quarter.

In the second quarter of 2019, the Company recorded a provision for loan and lease losses of $1.4 million, compared to a provision of $0.5 million in the year-ago quarter and a provision of $1.3 million in the previous quarter. The increases in the provision from the year-ago and sequential quarters were primarily due to growth in our loan portfolio. The allowance for loan and lease losses, as a percentage of total loans and leases at June 30, 2019 was 1.14%, compared to 1.24% at June 30, 2018 and 1.15% at March 31, 2019.
 
Capital
Total shareholders' equity was $515.7 million at June 30, 2019, compared to $480.7 million and $502.6 million at June 30, 2018 and March 31, 2019, respectively.

The Company maintained its strong capital position and its capital ratios continue to exceed the levels required to be considered a "well-capitalized" institution for regulatory purposes under Basel III. At June 30, 2019, the Company's leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ratios were 9.5%, 12.7%, 13.9%, and 11.6%, respectively, compared to 9.5%, 13.0%, 14.1%, and 11.8%, respectively, at March 31, 2019.

Non-GAAP Financial Measures
This press release contains certain references to financial measures that have been adjusted to exclude certain expenses and other specified items.  These financial measures differ from comparable measures calculated and presented in accordance with accounting principles generally accepted in the United States of America ("GAAP") in that they exclude unusual or non-recurring charges, losses, credits or gains.  This press release identifies the specific items excluded from the comparable GAAP financial measure in the calculation of each non-GAAP financial measure. Management believes that financial presentations excluding the impact of these items provide useful supplemental information that is important to a proper understanding of the Company's core business results by investors.  These presentations should not be viewed as a substitute for results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP financial measures presented by other companies.



Central Pacific Financial Corp. Reports Second Quarter 2019 Results;
Launches RISE2020 Initiative
Page 4


 
Conference Call
The Company's management will host a conference call today at 1:00 p.m. Eastern Time (7:00 a.m. Hawaii Time) to discuss the quarterly results. Individuals are encouraged to listen to the live webcast of the presentation by visiting the investor relations page of the Company's website at http://ir.centralpacificbank.com. Alternatively, investors may participate in the live call by dialing 1-877-505-7644. A playback of the call will be available through August 24, 2019 by dialing 1-877-344-7529 (passcode: 10133440) and on the Company's website. Information which may be discussed in the conference call regarding RISE2020 is provided on the investor relations page of the Company's website at http://ir.centralpacificbank.com.

About Central Pacific Financial Corp.
Central Pacific Financial Corp. is a Hawaii-based bank holding company with approximately $5.9 billion in assets.  Central Pacific Bank, its primary subsidiary, operates 35 branches and 78 ATMs in the state of Hawaii, as of June 30, 2019.  For additional information, please visit the Company's website at http://www.centralpacificbank.com.

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Forward-Looking Statements
This document may contain forward-looking statements concerning projections of revenues, income/loss, earnings/loss per share, capital expenditures, dividends, capital structure, or other financial items, plans and objectives of management for future operations, future economic performance including anticipated performance results from our RISE2020 initiative, or any of the assumptions underlying or relating to any of the foregoing.  Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts, and may include the words "believes," "plans," "expects," "anticipates," "forecasts," "intends," "hopes," "targeting," "should," "estimates," or words of similar meaning.  While the Company believes that our forward-looking statements and the assumptions underlying them are reasonably based, such statements and assumptions are by their nature subject to risks and uncertainties, and thus could later prove to be inaccurate or incorrect.  Accordingly, actual results could materially differ from projections for a variety of reasons, to include, but not limited to:  the effect of, and our failure to comply with any regulatory orders or actions we are or may become subject to; oversupply of inventory and adverse conditions in the Hawaii and California real estate markets and any weakness in the construction industry;  adverse changes in the financial performance and/or condition of our borrowers and, as a result, increased loan delinquency rates,  deterioration in asset quality, and losses in our loan portfolio; our ability to successfully implement our RISE2020 initiative; the impact of local, national, and international economies and events (including political events, acts of war or terrorism, natural disasters such as wildfires, volcanoes, tsunamis and earthquakes) on the Company's business and operations and on tourism, the military and other major industries operating within the Hawaii market and any other markets in which the Company does business; deterioration or malaise in economic conditions, including destabilizing factors in the financial industry and deterioration of the real estate market, as well as the impact from any declining levels of consumer and business confidence in the state of the economy in general and in financial institutions in particular;  the impact of regulatory action on the Company and Central Pacific Bank and legislation affecting the financial services industry; failure to maintain effective internal control over financial reporting or disclosure controls and procedures; changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, other regulatory reform, and any related rules and regulations on our business operations and competitiveness; the costs and effects of legal and regulatory developments, including legal proceedings or regulatory or other governmental inquiries and proceedings and the resolution thereof, and the results of regulatory examinations or reviews;  the effects of the Tax Cuts and Jobs Act; the effects of and changes in trade, monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System; inflation, interest rate, securities market and monetary fluctuations;  negative trends in our market capitalization and adverse



Central Pacific Financial Corp. Reports Second Quarter 2019 Results;
Launches RISE2020 Initiative
Page 5


changes in the price of the Company's common shares; changes in consumer spending, borrowings and savings habits; technological changes and developments; changes in the competitive environment among financial holding companies and other financial service providers, including fintech businesses; the effect of changes in accounting policies and practices, including changes as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters; changes in our capital position; our ability to attract and retain skilled directors, executives and employees; changes in our organization, compensation and benefit plans; and our success at managing the risks involved in any of the foregoing items. For further information on factors that could cause actual results to materially differ from projections, please see the Company's publicly available Securities and Exchange Commission filings, including the Company's Form 10-K for the last fiscal year and, in particular, the discussion of "Risk Factors" set forth therein. The Company does not update any of its forward-looking statements except as required by law.



CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
 
Financial Highlights
 
(Unaudited)
TABLE 1
 
 
 
Three Months Ended
 
Six Months Ended
(Dollars in thousands,
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
June 30,
except for per share amounts)
 
2019
 
2019
 
2018
 
2018
 
2018
 
2019
 
2018
CONDENSED INCOME STATEMENT
 
 

 
 

 
 
 
 
 
 

 
 

 
 

Net interest income
 
$
45,378

 
$
45,113

 
$
44,679

 
$
43,325

 
$
42,672

 
$
90,491

 
$
84,994

Provision (credit) for loan and lease losses
 
1,404

 
1,283

 
(1,386
)
 
(59
)
 
532

 
2,687

 
321

Net interest income after provision (credit) for loan and lease losses
 
43,974

 
43,830

 
46,065

 
43,384

 
42,140

 
87,804

 
84,673

Total other operating income
 
10,094

 
11,673

 
9,400

 
10,820

 
9,630

 
21,767

 
18,584

Total other operating expense 
 
36,107

 
34,348

 
33,642

 
34,025

 
33,611

 
70,455

 
67,015

Income before taxes 
 
17,961

 
21,155

 
21,823

 
20,179

 
18,159

 
39,116

 
36,242

Income tax expense 
 
4,427

 
5,118

 
6,031

 
4,986

 
3,935

 
9,545

 
7,741

Net income
 
13,534

 
16,037

 
15,792

 
15,193

 
14,224

 
29,571

 
28,501

Basic earnings per common share
 
$
0.47

 
$
0.56

 
$
0.54

 
$
0.52

 
$
0.48

 
$
1.03

 
$
0.96

Diluted earnings per common share
 
0.47

 
0.55

 
0.54

 
0.52

 
0.48

 
1.03

 
0.95

Dividends declared per common share
 
0.23

 
0.21

 
0.21

 
0.21

 
0.21

 
0.44

 
0.40

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PERFORMANCE RATIOS
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Return on average assets (ROA) [1]
 
0.92
%
 
1.10
%
 
1.10
%
 
1.06
%
 
1.00
%
 
1.01
%
 
1.01
%
Return on average shareholders’ equity (ROE) [1]
 
10.73

 
12.97

 
12.90

 
12.54

 
11.83

 
11.84

 
11.72

Return on average tangible shareholders’ equity (ROTE) [1]
 
10.73

 
12.97

 
12.90

 
12.55

 
11.85

 
11.84

 
11.75

Average shareholders’ equity to average assets
 
8.62

 
8.51

 
8.53

 
8.49

 
8.49

 
8.57

 
8.61

Efficiency ratio [2]
 
65.09

 
60.49

 
62.21

 
62.84

 
64.26

 
62.76

 
64.70

Net interest margin (NIM) [1]
 
3.33

 
3.34

 
3.28

 
3.20

 
3.20

 
3.33

 
3.20

Dividend payout ratio [3]
 
48.94

 
38.18

 
38.89

 
40.38

 
43.75

 
42.72

 
42.11

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SELECTED AVERAGE BALANCES
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Average loans and leases, including loans held for sale
 
$
4,171,558

 
$
4,083,791

 
$
4,022,376

 
$
3,941,511

 
$
3,836,739

 
$
4,127,917

 
$
3,813,169

Average interest-earning assets
 
5,485,977

 
5,464,377

 
5,451,052

 
5,418,924

 
5,376,115

 
5,475,237

 
5,355,311

Average assets
 
5,856,465

 
5,809,931

 
5,739,228

 
5,709,825

 
5,663,697

 
5,833,326

 
5,651,021

Average deposits
 
4,977,781

 
4,978,470

 
4,938,560

 
5,063,061

 
5,041,164

 
4,978,124

 
5,020,750

Average interest-bearing liabilities
 
3,897,619

 
3,821,528

 
3,769,920

 
3,802,028

 
3,776,053

 
3,859,784

 
3,761,115

Average shareholders’ equity
 
504,749

 
494,635

 
489,510

 
484,737

 
480,985

 
499,720

 
486,554

Average tangible shareholders' equity
 
504,749

 
494,635

 
489,510

 
484,391

 
479,959

 
499,720

 
485,177


CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
 
Financial Highlights
 
(Unaudited)
TABLE 1 (CONTINUED)
 
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
(dollars in thousands)
 
2019
 
2019
 
2018
 
2018
 
2018
REGULATORY CAPITAL
 
 
 
 
 
 
 
 
 
 
Central Pacific Financial Corp.
 
 
 
 
 
 
 
 
 
 
Leverage capital
 
$
556,403

 
$
554,148

 
$
570,260

 
$
590,627

 
$
586,799

Tier 1 risk-based capital
 
556,403

 
554,148

 
570,260

 
590,627

 
586,799

Total risk-based capital
 
606,567

 
602,824

 
619,419

 
639,157

 
636,755

Common equity tier 1 capital
 
506,403

 
504,148

 
500,260

 
500,627

 
496,799

Central Pacific Bank
 
 
 
 
 
 
 
 
 
 
Leverage capital
 
544,480

 
539,390

 
533,166

 
571,949

 
569,128

Tier 1 risk-based capital
 
544,480

 
539,390

 
533,166

 
571,949

 
569,128

Total risk-based capital
 
594,644

 
588,066

 
582,325

 
620,479

 
619,084

Common equity tier 1 capital
 
544,480

 
539,390

 
533,166

 
571,949

 
569,128

 
 
 
 
 
 
 
 
 
 
 
REGULATORY CAPITAL RATIOS
 
 
 
 
 
 
 
 
 
 
Central Pacific Financial Corp.
 
 
 
 
 
 
 
 
 
 
Leverage capital ratio
 
9.5
%
 
9.5
%
 
9.9
%
 
10.3
%
 
10.3
%
Tier 1 risk-based capital ratio
 
12.7

 
13.0

 
13.5

 
14.2

 
14.4

Total risk-based capital ratio
 
13.9

 
14.1

 
14.7

 
15.4

 
15.7

Common equity tier 1 capital ratio
 
11.6

 
11.8

 
11.9

 
12.0

 
12.2

Central Pacific Bank
 
 
 
 
 
 
 
 
 
 
Leverage capital ratio
 
9.3

 
9.3

 
9.3

 
10.0

 
10.0

Tier 1 risk-based capital ratio
 
12.5

 
12.7

 
12.7

 
13.8

 
14.0

Total risk-based capital ratio
 
13.6

 
13.8

 
13.8

 
15.0

 
15.3

Common equity tier 1 capital ratio
 
12.5

 
12.7

 
12.7

 
13.8

 
14.0

 
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
(dollars in thousands, except for per share amounts)
 
2019
 
2019
 
2018
 
2018
 
2018
BALANCE SHEET
 
 

 
 

 
 
 
 
 
 

Loans and leases
 
$
4,247,113

 
$
4,101,571

 
$
4,078,366

 
$
3,978,027

 
$
3,881,581

Total assets
 
5,920,006

 
5,841,352

 
5,807,026

 
5,728,640

 
5,681,519

Total deposits
 
4,976,849

 
4,948,128

 
4,946,490

 
5,003,680

 
4,979,099

Long-term debt
 
101,547

 
101,547

 
122,166

 
92,785

 
92,785

Total shareholders’ equity
 
515,695

 
502,638

 
491,725

 
478,151

 
480,668

Total shareholders’ equity to total assets
 
8.71
%
 
8.60
%
 
8.47
%
 
8.35
%
 
8.46
%
Tangible common equity to tangible assets [4]
 
8.71
%
 
8.60
%
 
8.47
%
 
8.35
%
 
8.45
%
 
 
 
 
 
 
 
 
 
 
 
ASSET QUALITY
 
 

 
 

 
 

 
 

 
 

Allowance for loan and lease losses
 
$
48,267

 
$
47,267

 
$
47,916

 
$
46,826

 
$
48,181

Non-performing assets
 
1,258

 
3,338

 
2,737

 
3,026

 
3,509

Allowance to loans and leases outstanding
 
1.14
%
 
1.15
%
 
1.17
%
 
1.18
%
 
1.24
%
Allowance to non-performing assets
 
3,836.80
%
 
1,416.03
%
 
1,750.68
%
 
1,547.46
%
 
1,373.07
%
 
 
 
 
 
 
 
 
 
 
 
PER SHARE OF COMMON STOCK OUTSTANDING
 
 

 
 

 
 

 
 

 
 

Book value per common share
 
$
18.05

 
$
17.50

 
$
16.97

 
$
16.34

 
$
16.30

Tangible book value per common share
 
18.05

 
17.50

 
16.97

 
16.34

 
16.28

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
[1] ROA, ROE and ROTE are annualized based on a 30/360 day convention. Annualized net interest income and expense in the NIM calculation are based on the day count interest payment conventions at the interest-earning asset or interest-bearing liability level (i.e. 30/360, actual/actual).
[2] Efficiency ratio is defined as total operating expense divided by total revenue (net interest income and total other operating income).
[3] Dividend payout ratio is defined as dividends declared per share divided by diluted earnings per share.
[4] The tangible common equity ratio is a non-GAAP measure which should be read in conjunction with the Company’s GAAP financial information. Comparison of our ratio with those of other companies may not be possible because other companies may calculate the ratio differently. See Reconciliation of Non-GAAP Financial Measures in Table 2.
 



CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
 
Reconciliation of Non-GAAP Financial Measures
 
(Unaudited)
TABLE 2
 
The following table sets forth a reconciliation of our tangible common equity ratio for each of the dates indicated:

 
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
(Dollars in thousands)
 
2019
 
2019
 
2018
 
2018
 
2018
Tangible Common Equity Ratio:
 
 

 
 

 
 
 
 
 
 

Total shareholders’ equity
 
$
515,695

 
$
502,638

 
$
491,725

 
$
478,151

 
$
480,668

Less: Other intangible assets
 
—

 
—

 
—

 
—

 
(669
)
Tangible common equity
 
$
515,695

 
$
502,638

 
$
491,725

 
$
478,151

 
$
479,999

 
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
5,920,006

 
$
5,841,352

 
$
5,807,026

 
$
5,728,640

 
$
5,681,519

Less: Other intangible assets
 
—

 
—

 
—

 
—

 
(669
)
Tangible assets
 
$
5,920,006

 
$
5,841,352

 
$
5,807,026

 
$
5,728,640

 
$
5,680,850

 
 
 
 
 
 
 
 
 
 
 
Tangible common equity to tangible assets
 
8.71
%
 
8.60
%
 
8.47
%
 
8.35
%
 
8.45
%




CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
 
Consolidated Balance Sheets
 
(Unaudited)
TABLE 3
 
 
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
(Dollars in thousands, except share data)
 
2019
 
2019
 
2018
 
2018
 
2018
ASSETS
 
 

 
 

 
 
 
 
 
 

Cash and due from financial institutions
 
$
83,534

 
$
90,869

 
$
80,569

 
$
82,668

 
$
75,547

Interest-bearing deposits in other financial institutions
 
15,173

 
7,310

 
21,617

 
7,051

 
13,948

Investment securities:
 
 
 
 
 
 

 
 

 
 
Available-for-sale debt securities, at fair value
 
1,254,743

 
1,319,450

 
1,205,478

 
1,233,002

 
1,279,969

Held-to-maturity debt securities, at amortized cost; fair value of: none at June 30, 2019, none at March 31, 2019, $144,272 at December 31, 2018, $146,466 at September 30, 2018, and $152,330 at June 30, 2018
 
—

 
—

 
148,508

 
152,852

 
158,156

Equity securities, at fair value
 
1,034

 
910

 
826

 
885

 
844

Total investment securities
 
1,255,777

 
1,320,360

 
1,354,812

 
1,386,739

 
1,438,969

Loans held for sale
 
6,848

 
3,539

 
6,647

 
4,460

 
9,096

Loans and leases
 
4,247,113

 
4,101,571

 
4,078,366

 
3,978,027

 
3,881,581

Less allowance for loan and lease losses
 
48,267

 
47,267

 
47,916

 
46,826

 
48,181

Loans and leases, net of allowance for loan and lease losses
 
4,198,846

 
4,054,304

 
4,030,450

 
3,931,201

 
3,833,400

Premises and equipment, net
 
43,600

 
44,527

 
45,285

 
46,184

 
47,004

Accrued interest receivable
 
17,260

 
17,082

 
17,000

 
16,755

 
16,606

Investment in unconsolidated subsidiaries
 
17,247

 
16,054

 
14,008

 
15,283

 
9,362

Other real estate owned
 
276

 
276

 
414

 
414

 
595

Mortgage servicing rights
 
15,266

 
15,347

 
15,596

 
15,634

 
15,756

Core deposit premium
 
—

 
—

 
—

 
—

 
669

Bank-owned life insurance
 
158,294

 
158,392

 
157,440

 
157,085

 
156,945

Federal Home Loan Bank ("FHLB") stock
 
17,824

 
16,145

 
16,645

 
10,965

 
10,246

Right of use lease asset [1]
 
53,678

 
54,781

 
—

 
—

 
—

Other assets
 
36,383

 
42,366

 
46,543

 
54,201

 
53,376

Total assets
 
$
5,920,006

 
$
5,841,352

 
$
5,807,026

 
$
5,728,640

 
$
5,681,519

LIABILITIES AND SHAREHOLDERS' EQUITY
 
 

 
 

 
 

 
 

 
 

Deposits:
 
 

 
 

 
 

 
 

 
 

Noninterest-bearing demand
 
$
1,351,190

 
$
1,357,890

 
$
1,436,967

 
$
1,403,534

 
$
1,365,010

Interest-bearing demand
 
1,002,706

 
965,316

 
954,011

 
935,130

 
952,991

Savings and money market
 
1,573,805

 
1,562,798

 
1,448,257

 
1,503,465

 
1,502,284

Time
 
1,049,148

 
1,062,124

 
1,107,255

 
1,161,551

 
1,158,814

Total deposits
 
4,976,849

 
4,948,128

 
4,946,490

 
5,003,680

 
4,979,099

FHLB advances and other short-term borrowings
 
221,000

 
179,000

 
197,000

 
105,000

 
87,000

Long-term debt
 
101,547

 
101,547

 
122,166

 
92,785

 
92,785

Lease liability [1]
 
53,829

 
54,861

 
—

 
—

 
—

Other liabilities
 
51,086

 
55,178

 
49,645

 
49,024

 
41,967

Total liabilities
 
5,404,311

 
5,338,714

 
5,315,301

 
5,250,489

 
5,200,851

Shareholders' equity:
 
 

 
 

 
 

 
 

 
 

Preferred stock, no par value, authorized 1,000,000 shares; issued and outstanding: none at June 30, 2019, March 31, 2019, December 31, 2018, September 30, 2018, and June 30, 2018
 
—

 
—

 
—

 
—

 
—

Common stock, no par value, authorized 185,000,000 shares; issued and outstanding: 28,567,777 at June 30, 2019, 28,723,041 at March 31, 2019, 28,967,715 at December 31, 2018, 29,270,398 at September 30, 2018, and 29,489,954 at June 30, 2018
 
456,293

 
462,952

 
470,660

 
478,721

 
485,402

Additional paid-in capital
 
89,724

 
89,374

 
88,876

 
87,939

 
86,949

Accumulated deficit
 
(34,780
)
 
(41,733
)
 
(51,718
)
 
(61,406
)
 
(70,435
)
Accumulated other comprehensive income (loss)
 
4,458

 
(7,955
)
 
(16,093
)
 
(27,103
)
 
(21,248
)
Total shareholders' equity
 
515,695

 
502,638

 
491,725

 
478,151

 
480,668

Total liabilities and shareholders' equity
 
$
5,920,006

 
$
5,841,352

 
$
5,807,026

 
$
5,728,640

 
$
5,681,519

 
 
 
 
 
 
 
 
 
 
 
[1] The Company adopted ASU 2016-02 effective January 1, 2019 using the modified retrospective approach and recorded a right of use lease asset and lease liability on the balance sheet as of March 31, 2019 for its operating leases where it is a lessee. The Company also elected to apply the practical expedient available under ASU 2018-11, which allows entities to apply the new leases standard at the adoption date and elect to not recast comparative periods.



CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
 
Consolidated Statements of Income
 
(Unaudited)
TABLE 4
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
June 30,
(Dollars in thousands, except per share data)
 
2019
 
2019
 
2018
 
2018
 
2018
 
2019
 
2018
Interest income:
 
 

 
 

 
 
 
 
 
 

 
 

 
 

Interest and fees on loans and leases
 
$
45,540

 
$
43,768

 
$
42,836

 
$
40,531

 
$
38,699

 
$
89,308

 
$
76,089

Interest and dividends on investment securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxable investment securities
 
7,530

 
8,260

 
8,451

 
8,490

 
8,717

 
15,790

 
17,560

Tax-exempt investment securities
 
814

 
866

 
910

 
920

 
933

 
1,680

 
1,866

Dividend income on investment securities
 
14

 
18

 
17

 
26

 
3

 
32

 
18

Interest on deposits in other financial institutions
 
46

 
68

 
55

 
109

 
117

 
114

 
201

Dividend income on Federal Home Loan Bank stock
 
161

 
161

 
70

 
60

 
40

 
322

 
85

Total interest income
 
54,105

 
53,141

 
52,339

 
50,136

 
48,509

 
107,246

 
95,819

Interest expense:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Interest on deposits:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Demand
 
199

 
192

 
180

 
181

 
193

 
391

 
373

Savings and money market
 
1,507

 
791

 
579

 
593

 
459

 
2,298

 
828

Time
 
4,867

 
5,092

 
4,567

 
4,744

 
4,034

 
9,959

 
7,459

Interest on short-term borrowings
 
1,123

 
893

 
999

 
146

 
48

 
2,016

 
91

Interest on long-term debt
 
1,031

 
1,060

 
1,335

 
1,147

 
1,103

 
2,091

 
2,074

Total interest expense
 
8,727

 
8,028

 
7,660

 
6,811

 
5,837

 
16,755

 
10,825

Net interest income
 
45,378

 
45,113

 
44,679

 
43,325

 
42,672

 
90,491

 
84,994

Provision (credit) for loan and lease losses ("Provision")
 
1,404

 
1,283

 
(1,386
)
 
(59
)
 
532

 
2,687

 
321

Net interest income after Provision
 
43,974

 
43,830

 
46,065

 
43,384

 
42,140

 
87,804

 
84,673

Other operating income:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Mortgage banking income (refer to Table 5)
 
1,601

 
1,424

 
1,770

 
1,923

 
1,775

 
3,025

 
3,622

Service charges on deposit accounts
 
2,041

 
2,081

 
2,237

 
2,189

 
1,977

 
4,122

 
3,980

Other service charges and fees
 
3,691

 
3,064

 
3,426

 
3,286

 
3,377

 
6,755

 
6,411

Income from fiduciary activities
 
1,129

 
965

 
1,113

 
1,159

 
1,017

 
2,094

 
1,973

Equity in earnings of unconsolidated subsidiaries
 
71

 
8

 
82

 
71

 
37

 
79

 
80

Fees on foreign exchange
 
218

 
151

 
197

 
220

 
277

 
369

 
488

Net gains (losses) on sales of investment securities
 
—

 
—

 
(279
)
 
—

 
—

 
—

 
—

Income from bank-owned life insurance
 
914

 
952

 
243

 
1,055

 
501

 
1,866

 
819

Loan placement fees
 
107

 
149

 
215

 
115

 
220

 
256

 
417

Other (refer to Table 5)
 
322

 
2,879

 
396

 
802

 
449

 
3,201

 
794

Total other operating income
 
10,094

 
11,673

 
9,400

 
10,820

 
9,630

 
21,767

 
18,584

Other operating expense:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Salaries and employee benefits
 
20,563

 
19,889

 
19,053

 
19,011

 
18,783

 
40,452

 
37,288

Net occupancy
 
3,525

 
3,458

 
3,649

 
3,488

 
3,360

 
6,983

 
6,626

Equipment
 
1,138

 
1,006

 
1,079

 
1,048

 
1,044

 
2,144

 
2,112

Amortization of core deposit premium
 
—

 
—

 
—

 
669

 
668

 
—

 
1,337

Communication expense
 
903

 
734

 
863

 
903

 
746

 
1,637

 
1,644

Legal and professional services
 
1,728

 
1,570

 
2,212

 
1,528

 
1,769

 
3,298

 
3,590

Computer software expense
 
2,560

 
2,597

 
2,597

 
2,672

 
2,305

 
5,157

 
4,572

Advertising expense
 
712

 
711

 
834

 
612

 
617

 
1,423

 
1,229

Foreclosed asset expense
 
49

 
159

 
37

 
212

 
31

 
208

 
325

Other (refer to Table 5)
 
4,929

 
4,224

 
3,318

 
3,882

 
4,288

 
9,153

 
8,292

Total other operating expense
 
36,107

 
34,348

 
33,642

 
34,025

 
33,611

 
70,455

 
67,015

Income before income taxes
 
17,961

 
21,155

 
21,823

 
20,179

 
18,159

 
39,116

 
36,242

Income tax expense
 
4,427

 
5,118

 
6,031

 
4,986

 
3,935

 
9,545

 
7,741

Net income
 
$
13,534

 
$
16,037

 
$
15,792

 
$
15,193

 
$
14,224

 
$
29,571

 
$
28,501

Per common share data:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Basic earnings per share
 
$
0.47

 
$
0.56

 
$
0.54

 
$
0.52

 
$
0.48

 
$
1.03

 
$
0.96

Diluted earnings per share
 
0.47

 
0.55

 
0.54

 
0.52

 
0.48

 
1.03

 
0.95

Cash dividends declared
 
0.23

 
0.21

 
0.21

 
0.21

 
0.21

 
0.44

 
0.40

Basic weighted average shares outstanding
 
28,546,564

 
28,758,310

 
29,033,261

 
29,297,465

 
29,510,175

 
28,651,852

 
29,658,051

Diluted weighted average shares outstanding
 
28,729,510

 
28,979,855

 
29,217,480

 
29,479,812

 
29,714,942

 
28,847,786

 
29,881,534




CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
 
Other Operating Income and Other Operating Expense - Detail
 
(Unaudited)
TABLE 5

The following table sets forth the components of mortgage banking income for the periods indicated:

 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
June 30,
(Dollars in thousands)
 
2019
 
2019
 
2018
 
2018
 
2018
 
2019
 
2018
Mortgage banking income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loan servicing fees
 
$
1,245

 
$
1,245

 
$
1,290

 
$
1,269

 
$
1,289

 
$
2,490

 
$
2,600

Amortization of mortgage servicing rights
 
(601
)
 
(471
)
 
(446
)
 
(519
)
 
(437
)
 
(1,072
)
 
(894
)
Net gains on sales of residential mortgage loans
 
975

 
611

 
1,072

 
1,082

 
959

 
1,586

 
1,931

Unrealized gains (losses) on loans-held-for-sale and interest rate locks
 
(18
)
 
39

 
(146
)
 
91

 
(36
)
 
21

 
(15
)
Total mortgage banking income
 
$
1,601

 
$
1,424

 
$
1,770

 
$
1,923

 
$
1,775

 
$
3,025

 
$
3,622

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

The following table sets forth the components of other operating income - other for the periods indicated:

 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
June 30,
(Dollars in thousands)
 
2019
 
2019
 
2018
 
2018
 
2018
 
2019
 
2018
Other operating income - other:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income recovered on nonaccrual loans previously charged-off
 
$
85

 
$
82

 
$
99

 
$
395

 
$
130

 
$
167

 
$
226

Other recoveries
 
26

 
26

 
25

 
101

 
49

 
52

 
95

Commissions on sale of checks
 
79

 
80

 
79

 
79

 
84

 
159

 
170

Gain on sale of MasterCard stock
 
—

 
2,555

 
—

 
—

 
—

 
2,555

 
—

Other
 
132

 
136

 
193

 
227

 
186

 
268

 
303

Total other operating income - other
 
$
322

 
$
2,879

 
$
396

 
$
802

 
$
449

 
$
3,201

 
$
794

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

The following table sets forth the components of other operating expense - other for the periods indicated:

 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
June 30,
(Dollars in thousands)
 
2019
 
2019
 
2018
 
2018
 
2018
 
2019
 
2018
Other operating expense - other:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Charitable contributions
 
$
175

 
$
154

 
$
138

 
$
166

 
$
131

 
$
329

 
$
331

FDIC insurance assessment
 
362

 
501

 
427

 
437

 
434

 
863

 
868

Miscellaneous loan expenses
 
317

 
294

 
339

 
403

 
324

 
611

 
623

ATM and debit card expenses
 
620

 
650

 
613

 
686

 
698

 
1,270

 
1,346

Armored car expenses
 
211

 
198

 
238

 
185

 
233

 
409

 
399

Entertainment and promotions
 
1,023

 
230

 
445

 
185

 
273

 
1,253

 
432

Stationery and supplies
 
279

 
225

 
271

 
206

 
236

 
504

 
437

Directors’ fees and expenses
 
238

 
242

 
263

 
263

 
283

 
480

 
514

Provision (credit) for residential mortgage loan repurchase losses
 
(403
)
 
—

 
(181
)
 
331

 
—

 
(403
)
 
—

Increase (decrease) to the reserve for unfunded commitments
 
487

 
167

 
(461
)
 
(71
)
 
66

 
654

 
107

Other
 
1,620

 
1,563

 
1,226

 
1,091

 
1,610

 
3,183

 
3,235

Total other operating expense - other
 
$
4,929

 
$
4,224

 
$
3,318

 
$
3,882

 
$
4,288

 
$
9,153

 
$
8,292

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
 
Average Balances, Interest Income & Expense, Yields and Rates (Taxable Equivalent)
 
(Unaudited)
TABLE 6

 
 
Three Months Ended
 
Three Months Ended
 
Three Months Ended
 
 
June 30, 2019
 
March 31, 2019
 
June 30, 2018
 
 
Average
 
Average
 
 
 
Average
 
Average
 
 
 
Average
 
Average
 
 
(Dollars in thousands)
 
Balance
 
Yield/Rate
 
Interest
 
Balance
 
Yield/Rate
 
Interest
 
Balance
 
Yield/Rate
 
Interest
ASSETS
Interest-earning assets:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Interest-bearing deposits in other financial institutions
 
$
8,002

 
2.34
%
 
$
46

 
$
11,380

 
2.41
%
 
$
68

 
$
26,300

 
1.78
%
 
$
117

Investment securities, excluding valuation allowance:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxable
 
1,147,759

 
2.63

 
7,544

 
1,201,732

 
2.76

 
8,278

 
1,341,717

 
2.60

 
8,720

Tax-exempt [1]
 
142,660

 
2.89

 
1,030

 
153,196

 
2.86

 
1,096

 
164,196

 
2.87

 
1,181

Total investment securities
 
1,290,419

 
2.66

 
8,574

 
1,354,928

 
2.77

 
9,374

 
1,505,913

 
2.63

 
9,901

Loans and leases, including loans held for sale
 
4,171,558

 
4.37

 
45,540

 
4,083,791

 
4.33

 
43,768

 
3,836,739

 
4.04

 
38,699

Federal Home Loan Bank stock
 
15,998

 
4.02

 
161

 
14,278

 
4.52

 
161

 
7,163

 
2.24

 
40

Total interest-earning assets
 
5,485,977

 
3.97

 
54,321

 
5,464,377

 
3.94

 
53,371

 
5,376,115

 
3.63

 
48,757

Noninterest-earning assets
 
370,488

 
 

 
 

 
345,554

 
 

 
 

 
287,582

 
 

 
 

Total assets
 
$
5,856,465

 
 

 
 

 
$
5,809,931

 
 

 
 

 
$
5,663,697

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
Interest-bearing liabilities:
 
 
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Interest-bearing demand deposits
 
$
962,402

 
0.08
%
 
$
199

 
$
951,101

 
0.08
%
 
$
192

 
$
951,597

 
0.08
%
 
$
193

Savings and money market deposits
 
1,577,437

 
0.38

 
1,507

 
1,472,835

 
0.22

 
791

 
1,495,884

 
0.12

 
459

Time deposits under $100,000
 
173,556

 
0.70

 
305

 
175,823

 
0.66

 
287

 
178,459

 
0.48

 
214

Time deposits $100,000 and over
 
907,330

 
2.02

 
4,562

 
982,678

 
1.98

 
4,805

 
1,047,428

 
1.46

 
3,820

Total interest-bearing deposits
 
3,620,725

 
0.73

 
6,573

 
3,582,437

 
0.69

 
6,075

 
3,673,368

 
0.51

 
4,686

Federal Home Loan Bank advances and other short-term borrowings
 
175,347

 
2.57

 
1,123

 
137,544

 
2.63

 
893

 
9,900

 
1.96

 
48

Long-term debt
 
101,547

 
4.07

 
1,031

 
101,547

 
4.23

 
1,060

 
92,785

 
4.77

 
1,103

Total interest-bearing liabilities
 
3,897,619

 
0.90

 
8,727

 
3,821,528

 
0.85

 
8,028

 
3,776,053

 
0.62

 
5,837

Noninterest-bearing deposits
 
1,357,056

 
 

 
 

 
1,396,033

 
 

 
 

 
1,367,796

 
 

 
 

Other liabilities
 
97,041

 
 

 
 

 
97,735

 
 

 
 

 
38,863

 
 

 
 

Total liabilities
 
5,351,716

 
 

 
 

 
5,315,296

 
 

 
 

 
5,182,712

 
 

 
 

Shareholders’ equity
 
504,749

 
 

 
 

 
494,635

 
 

 
 

 
480,985

 
 

 
 

Non-controlling interest
 
—

 
 

 
 

 
—

 
 

 
 

 
—

 
 

 
 

Total equity
 
504,749

 
 

 
 

 
494,635

 
 

 
 

 
480,985

 
 

 
 

Total liabilities and equity
 
$
5,856,465

 
 

 
 

 
$
5,809,931

 
 

 
 

 
$
5,663,697

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 

 
 

 
$
45,594

 
 

 
 

 
$
45,343

 
 

 
 

 
$
42,920

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate spread
 
 
 
3.07
%
 
 
 
 
 
3.09
%
 
 
 
 
 
3.01
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest margin
 
 

 
3.33
%
 
 

 
 

 
3.34
%
 
 

 
 

 
3.20
%
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
[1] Interest income and resultant yield information for tax-exempt investment securities is expressed on a taxable-equivalent basis using a federal statutory tax rate of 21% effective January 1, 2018.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
 
Average Balances, Interest Income & Expense, Yields and Rates (Taxable Equivalent)
 
(Unaudited)
TABLE 7

 
 
Six Months Ended
 
Six Months Ended
 
 
June 30, 2019
 
June 30, 2018
 
 
Average
 
Average
 
 
 
Average
 
Average
 
 
(Dollars in thousands)
 
Balance
 
Yield/Rate
 
Interest
 
Balance
 
Yield/Rate
 
Interest
ASSETS
Interest-earning assets:
 
 

 
 

 
 

 
 

 
 

 
 

Interest-bearing deposits in other financial institutions
 
$
9,682

 
2.38
%
 
$
114

 
$
24,555

 
1.65
%
 
$
201

Investment securities, excluding valuation allowance:
 
 
 
 
 
 
 
 
 
 
 
 
Taxable
 
1,174,596

 
2.69

 
15,822

 
1,345,902

 
2.61

 
17,578

Tax-exempt [1]
 
147,899

 
2.88

 
2,127

 
164,684

 
2.87

 
2,362

Total investment securities
 
1,322,495

 
2.71

 
17,949

 
1,510,586

 
2.64

 
19,940

Loans and leases, including loans held for sale
 
4,127,917

 
4.35

 
89,308

 
3,813,169

 
4.01

 
76,089

Federal Home Loan Bank stock
 
15,143

 
4.26

 
322

 
7,001

 
2.42

 
85

Total interest-earning assets
 
5,475,237

 
3.95

 
107,693

 
5,355,311

 
3.61

 
96,315

Noninterest-earning assets
 
358,089

 
 

 
 

 
295,710

 
 

 
 

Total assets
 
$
5,833,326

 
 

 
 

 
$
5,651,021

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
Interest-bearing liabilities:
 
 

 
 

 
 

 
 

 
 

 
 

Interest-bearing demand deposits
 
$
956,783

 
0.08
%
 
$
391

 
$
943,584

 
0.08
%
 
$
373

Savings and money market deposits
 
1,525,425

 
0.30

 
2,298

 
1,497,642

 
0.11

 
828

Time deposits under $100,000
 
174,683

 
0.68

 
592

 
179,000

 
0.46

 
409

Time deposits $100,000 and over
 
944,796

 
2.00

 
9,367

 
1,038,748

 
1.37

 
7,050

Total interest-bearing deposits
 
3,601,687

 
0.71

 
12,648

 
3,658,974

 
0.48

 
8,660

Federal Home Loan Bank advances and other short-term borrowings
 
156,550

 
2.60

 
2,016

 
9,356

 
1.97

 
91

Long-term debt
 
101,547

 
4.15

 
2,091

 
92,785

 
4.51

 
2,074

Total interest-bearing liabilities
 
3,859,784

 
0.88

 
16,755

 
3,761,115

 
0.58

 
10,825

Noninterest-bearing deposits
 
1,376,437

 
 

 
 

 
1,361,776

 
 

 
 

Other liabilities
 
97,385

 
 

 
 

 
41,568

 
 

 
 

Total liabilities
 
5,333,606

 
 

 
 

 
5,164,459

 
 

 
 

Shareholders’ equity
 
499,720

 
 

 
 

 
486,554

 
 

 
 

Non-controlling interest
 
—

 
 

 
 

 
8

 
 

 
 

Total equity
 
499,720

 
 

 
 

 
486,562

 
 

 
 

Total liabilities and equity
 
$
5,833,326

 
 

 
 

 
$
5,651,021

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 

 
 

 
$
90,938

 
 

 
 

 
$
85,490

 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate spread
 
 
 
3.07
%
 
 
 
 
 
3.03
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest margin
 
 

 
3.33
%
 
 

 
 

 
3.20
%
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
[1] Interest income and resultant yield information for tax-exempt investment securities is expressed on a taxable-equivalent basis using a federal statutory tax rate of 21% effective January 1, 2018.
 
 
 
 
 
 
 
 
 
 
 
 
 




CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
 
Loans and Leases by Geographic Distribution
 
(Unaudited)
TABLE 8

 
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
(Dollars in thousands)
 
2019
 
2019
 
2018
 
2018
 
2018
HAWAII:
 
 

 
 

 
 

 
 

 
 

Commercial, financial and agricultural
 
$
435,353

 
$
411,396

 
$
439,112

 
$
427,047

 
$
411,687

Real estate:
 
 
 
 
 
 
 
 
 
 
Construction
 
72,427

 
68,981

 
64,654

 
66,286

 
64,457

Residential mortgage
 
1,516,936

 
1,451,794

 
1,428,205

 
1,392,669

 
1,377,219

Home equity
 
473,151

 
465,905

 
468,966

 
455,599

 
430,870

Commercial mortgage
 
905,479

 
869,521

 
861,086

 
845,864

 
829,647

Consumer
 
353,282

 
352,771

 
357,908

 
345,785

 
332,040

Leases
 
52

 
83

 
124

 
170

 
223

Total loans and leases
 
3,756,680

 
3,620,451

 
3,620,055

 
3,533,420

 
3,446,143

Allowance for loan and lease losses
 
(42,414
)
 
(41,413
)
 
(42,993
)
 
(41,991
)
 
(43,212
)
Net loans and leases
 
$
3,714,266

 
$
3,579,038

 
$
3,577,062

 
$
3,491,429

 
$
3,402,931

 
 
 
 
 
 
 
 
 
 
 
U.S. MAINLAND:
 
 

 
 

 
 

 
 

 
 

Commercial, financial and agricultural
 
$
155,130

 
$
155,399

 
$
142,548

 
$
138,317

 
$
111,608

Real estate:
 
 
 
 
 
 
 
 
 
 
Construction
 
—

 
2,194

 
2,273

 
2,355

 
2,437

Residential mortgage
 
—

 
—

 
—

 
—

 
—

Home equity
 
—

 
—

 
—

 
—

 
—

Commercial mortgage
 
187,379

 
188,485

 
179,192

 
187,586

 
188,543

Consumer
 
147,924

 
135,042

 
134,298

 
116,349

 
132,850

Leases
 
—

 
—

 
—

 
—

 
—

Total loans and leases
 
490,433

 
481,120

 
458,311

 
444,607

 
435,438

Allowance for loan and lease losses
 
(5,853
)
 
(5,854
)
 
(4,923
)
 
(4,835
)
 
(4,969
)
Net loans and leases
 
$
484,580

 
$
475,266

 
$
453,388

 
$
439,772

 
$
430,469

 
 
 
 
 
 
 
 
 
 
 
TOTAL:
 
 

 
 

 
 

 
 

 
 

Commercial, financial and agricultural
 
$
590,483

 
$
566,795

 
$
581,660

 
$
565,364

 
$
523,295

Real estate:
 
 
 
 
 
 
 
 
 
 
Construction
 
72,427

 
71,175

 
66,927

 
68,641

 
66,894

Residential mortgage
 
1,516,936

 
1,451,794

 
1,428,205

 
1,392,669

 
1,377,219

Home equity
 
473,151

 
465,905

 
468,966

 
455,599

 
430,870

Commercial mortgage
 
1,092,858

 
1,058,006

 
1,040,278

 
1,033,450

 
1,018,190

Consumer
 
501,206

 
487,813

 
492,206

 
462,134

 
464,890

Leases
 
52

 
83

 
124

 
170

 
223

Total loans and leases
 
4,247,113

 
4,101,571

 
4,078,366

 
3,978,027

 
3,881,581

Allowance for loan and lease losses
 
(48,267
)
 
(47,267
)
 
(47,916
)
 
(46,826
)
 
(48,181
)
Net loans and leases
 
$
4,198,846

 
$
4,054,304

 
$
4,030,450

 
$
3,931,201

 
$
3,833,400





CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
 
Deposits
 
(Unaudited)
TABLE 9
 
 
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
(Dollars in thousands)
 
2019
 
2019
 
2018
 
2018
 
2018
Noninterest-bearing demand
 
$
1,351,190

 
$
1,357,890

 
$
1,436,967

 
$
1,403,534

 
$
1,365,010

Interest-bearing demand
 
1,002,706

 
965,316

 
954,011

 
935,130

 
952,991

Savings and money market
 
1,573,805

 
1,562,798

 
1,448,257

 
1,503,465

 
1,502,284

Time deposits less than $100,000
 
171,106

 
174,265

 
176,707

 
174,920

 
175,695

Core deposits
 
4,098,807

 
4,060,269

 
4,015,942

 
4,017,049

 
3,995,980

 
 
 
 
 
 
 
 
 
 
 
Government time deposits
 
574,825

 
600,572

 
631,293

 
696,349

 
727,087

Other time deposits $100,000 to $250,000
 
105,382

 
107,051

 
106,783

 
104,339

 
100,971

Other time deposits greater than $250,000
 
197,835

 
180,236

 
192,472

 
185,943

 
155,061

Total time deposits $100,000 and over
 
878,042

 
887,859

 
930,548

 
986,631

 
983,119

Total deposits
 
$
4,976,849

 
$
4,948,128

 
$
4,946,490

 
$
5,003,680

 
$
4,979,099





CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
 
Nonperforming Assets, Past Due and Restructured Loans
 
(Unaudited)
TABLE 10

 
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
(Dollars in thousands)
 
2019
 
2019
 
2018
 
2018
 
2018
Nonaccrual loans (including loans held for sale):
 
 
 
 
 
 
 
 
 
 
Real estate:
 
 
 
 
 
 
 
 
 
 
Residential mortgage
 
$
738

 
$
2,492

 
$
2,048

 
$
2,197

 
$
2,400

Home equity
 
244

 
570

 
275

 
415

 
514

Total nonaccrual loans
 
982

 
3,062

 
2,323

 
2,612

 
2,914

 
 
 
 
 
 
 
 
 
 
 
Other real estate owned ("OREO"):
 
 

 
 

 
 

 
 

 
 

Real estate:
 
 
 
 
 
 
 
 

 
 

Residential mortgage
 
276

 
276

 
414

 
414

 
595

Total OREO
 
276

 
276

 
414

 
414

 
595

Total nonperforming assets ("NPAs")
 
1,258

 
3,338

 
2,737

 
3,026

 
3,509

 
 
 
 
 
 
 
 
 
 
 
Loans delinquent for 90 days or more still accruing interest:
 
 

 
 

 
 

 
 

 
 

Real estate:
 
 
 
 
 
 
 
 

 
 

Residential mortgage
 
—

 
—

 
—

 
—

 
279

Home equity
 
—

 
—

 
298

 
—

 
—

Consumer
 
267

 
159

 
238

 
333

 
362

Total loans delinquent for 90 days or more still accruing interest
 
267

 
159

 
536

 
333

 
641

 
 
 
 
 
 
 
 
 
 
 
Restructured loans still accruing interest:
 
 

 
 

 
 

 
 

 
 

Commercial, financial and agricultural
 
178

 
199

 
220

 
388

 
423

Real estate:
 
 
 
 
 
 
 
 

 
 

Construction
 
—

 
2,194

 
2,273

 
—

 
—

Residential mortgage
 
6,831

 
7,141

 
8,026

 
9,747

 
9,621

Commercial mortgage
 
2,097

 
2,222

 
2,348

 
1,145

 
1,253

Total restructured loans still accruing interest
 
9,106

 
11,756

 
12,867

 
11,280

 
11,297

Total NPAs and loans delinquent for 90 days or more and restructured loans still accruing interest
 
$
10,631

 
$
15,253

 
$
16,140

 
$
14,639

 
$
15,447

 
 
 
 
 
 
 
 
 
 
 
Total nonaccrual loans as a percentage of loans and leases
 
0.02
%
 
0.07
%
 
0.06
%
 
0.07
%
 
0.08
%
Total NPAs as a percentage of loans and leases and OREO
 
0.03
%
 
0.08
%
 
0.07
%
 
0.08
%
 
0.09
%
Total NPAs and loans delinquent for 90 days or more still accruing interest as a percentage of loans and leases and OREO
 
0.04
%
 
0.09
%
 
0.08
%
 
0.08
%
 
0.11
%
Total NPAs and loans delinquent for 90 days or more and restructured loans still accruing interest as a percentage of loans and leases and OREO
 
0.25
%
 
0.37
%
 
0.40
%
 
0.37
%
 
0.40
%
 
 
 
 
 
 
 
 
 
 
 
Quarter-to-quarter changes in NPAs:
 
 
 
 

 
 

 
 

 
 

Balance at beginning of quarter
 
$
3,338

 
$
2,737

 
$
3,026

 
$
3,509

 
$
3,438

Additions
 
—

 
810

 
—

 
—

 
330

Reductions:
 
 
 
 
 
 
 
 

 
 

Payments
 
(2,055
)
 
(71
)
 
(154
)
 
(121
)
 
(37
)
Return to accrual status
 
(25
)
 
—

 
(135
)
 
(181
)
 
(222
)
Charge-offs/valuation adjustments
 
—

 
(138
)
 
—

 
(181
)
 
—

Total reductions
 
(2,080
)
 
(209
)
 
(289
)
 
(483
)
 
(259
)
Balance at end of quarter
 
$
1,258

 
$
3,338

 
$
2,737

 
$
3,026

 
$
3,509




CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
 
Allowance for Loan and Lease Losses
 
(Unaudited)
TABLE 11
 
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
June 30,
(Dollars in thousands)
 
2019
 
2019
 
2018
 
2018
 
2018
 
2019
 
2018
Allowance for loan and lease losses:
 
 

 
 

 
 
 
 
 
 

 
 

 
 

Balance at beginning of period
 
$
47,267

 
$
47,916

 
$
46,826

 
$
48,181

 
$
49,217

 
$
47,916

 
$
50,001

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provision (credit) for loan and lease losses
 
1,404

 
1,283

 
(1,386
)
 
(59
)
 
532

 
2,687

 
321

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Charge-offs:
 
 
 
 
 
 
 
 
 
 
 
 

 
 
Commercial, financial and agricultural
 
839

 
463

 
881

 
731

 
742

 
1,302

 
1,240

Consumer
 
1,459

 
2,251

 
1,899

 
1,762

 
1,729

 
3,710

 
3,662

Total charge-offs
 
2,298

 
2,714

 
2,780

 
2,493

 
2,471

 
5,012

 
4,902

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recoveries:
 
 

 
 

 
 

 
 
 
 
 
 

 
 

Commercial, financial and agricultural
 
315

 
233

 
186

 
578

 
295

 
548

 
439

Real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction
 
592

 
6

 
4,554

 
6

 
6

 
598

 
1,199

Residential mortgage
 
372

 
22

 
106

 
51

 
21

 
394

 
47

Home equity
 
9

 
9

 
9

 
6

 
9

 
18

 
12

Commercial mortgage
 
25

 
—

 
—

 
8

 
29

 
25

 
44

Consumer
 
581

 
512

 
401

 
548

 
543

 
1,093

 
1,020

Total recoveries
 
1,894

 
782

 
5,256

 
1,197

 
903

 
2,676

 
2,761

Net charge-offs (recoveries)
 
404

 
1,932

 
(2,476
)
 
1,296

 
1,568

 
2,336

 
2,141

Balance at end of period
 
$
48,267

 
$
47,267

 
$
47,916

 
$
46,826

 
$
48,181

 
$
48,267

 
$
48,181

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average loans and leases, net of deferred costs
 
$
4,171,558

 
$
4,083,791

 
$
4,022,376

 
$
3,941,511

 
$
3,836,739

 
$
4,127,917

 
$
3,813,169

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annualized ratio of net charge-offs to average loans and leases
 
0.04
%
 
0.19
%
 
(0.25
)%
 
0.13
%
 
0.16
%
 
0.11
%
 
0.11
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ratio of allowance for loan and lease losses to loans and leases
 
1.14
%
 
1.15
%
 
1.17
 %
 
1.18
%
 
1.24
%
 
1.14
%
 
1.24
%