Central Pacific Financial Corp. CPF

NYS: CPF | ISIN: US1547604090   15:38
24,23 USD (+1,00%)
(+1,00%)   15:38

Central Pacific Financial Announces Record Earnings And Launches New Banking-As-A-Service Initiative To Drive Mainland Expansion

HONOLULU, Jan. 26, 2022 /PRNewswire/ -- Central Pacific Financial Corp. (NYSE: CPF) (the "Company"), parent company of Central Pacific Bank (the "Bank"), today reported record net income for the fourth quarter and the 2021 year. Net income for the quarter was $22.3 million, or fully diluted earnings per share ("EPS") of $0.80, compared to net income in the fourth quarter of 2020 of $12.2 million, or EPS of $0.43, and net income in the third quarter of 2021 of $20.8 million, or EPS of $0.74. For the year, net income was $79.9 million, or EPS of $2.83, compared to net income of $37.3 million, or EPS of $1.32 for all of 2020. Pre-tax net income was $29.9 million and $105.7 million for the fourth quarter and the 2021 year, which represents the best pre-tax quarter and full year results since 2007.

The Company is also announcing the launch of a new Banking-as-a-Service ("BaaS") initiative with the goal of expanding the Company both in and beyond Hawaii by investing in or collaborating with leading fintech companies. The BaaS initiative is being developed based on the successful product development and launch strategies used in the Company's new Shaka digital product. Shaka, Hawaii's first all-digital checking account, was launched with a VIP waitlist campaign and the largest social media influencer campaign in Hawaii's history. Since the product launch on November 8, 2021, over 3,300 Shaka accounts have been opened.

Beginning in the first quarter of 2022, the Company will continue its BaaS initiatives with an equity investment in Swell, a new fintech company. Swell plans to launch a consumer banking app that combines checking, credit and more into one integrated account, and Central Pacific Bank will serve as the bank sponsor.  There will also be a collaboration between the Company, Swell and Elevate Credit (NYSE:ELVT), a leading provider of digital lending solutions. Swell is scheduled to launch its first product in mid-2022.

"We are very pleased with our record earnings and an extremely successful 2021," said Paul Yonamine, Chairman and Chief Executive Officer.  "We will maintain our commitment to be a top community bank in Hawaii, combining the latest in digital convenience with our strong tradition of customer service.  Today's announcement of our BaaS initiatives, represents an exciting new chapter of our Company as we expand beyond the Hawaii market which we believe will drive revenue growth and create even more shareholder value."

On January 25, 2022, the Company's Board of Directors declared a quarterly cash dividend of $0.26 per share on its outstanding common shares. This represents a 4.0% increase from the dividend paid of $0.25 per share in the fourth quarter of 2021. The dividend will be payable on March 15, 2022 to shareholders of record at the close of business on February 28, 2022.

On January 25, 2022, 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 $6.3 million in remaining repurchase authority as of December 31, 2021. During the fourth quarter of 2021, the Company repurchased 305,594 shares of common stock, at a total cost of $8.4 million, or an average cost per share of $27.64. During the year ended December 31, 2021, the Company returned $45.6 million in capital to its shareholders through cash dividends and share repurchases.

Earnings Highlights

Net interest income for the fourth quarter of 2021 was $53.1 million, compared to $51.5 million in the year-ago quarter and $56.1 million in the previous quarter. Net interest margin for the fourth quarter of 2021 was 3.08%, compared to 3.32% in the year-ago quarter and 3.31% in the previous quarter. The sequential quarter decrease in net interest income and net interest margin is primarily due to lower net interest income and loan fees on PPP loans, and lower yields on core loans, partially offset by higher average loan and investment security balances. Net interest income for the fourth quarter of 2021 included $4.7 million in net interest income and loan fees on PPP loans, compared to $8.6 million in the previous quarter. Net deferred fees on PPP loans totaled $3.5 million at December 31, 2021, compared to $7.9 million at September 30, 2021, respectively. Additional information on average balances, interest income and expenses and yields and rates is presented in Tables 4 and 5.

In the fourth quarter of 2021, the Company recorded a credit to the provision for credit losses of $7.7 million, compared to a provision of $4.9 million in the year-ago quarter and a credit to the provision of $2.6 million in the previous quarter. The credit to the provision for credit losses in the fourth quarter of 2021 was driven by continued improvements in the economic forecast, net recoveries during the current quarter and strong asset quality as the State of Hawaii continues to recover from the COVID-19 pandemic.

Other operating income for the fourth quarter of 2021 totaled $11.6 million, compared to $14.1 million in the year-ago quarter and $10.3 million in the previous quarter. The decrease from the year-ago quarter was primarily due to lower mortgage banking income of $3.5 million, partially offset by higher other service charges and fees of $1.3 million. The increase from the previous quarter was primarily due to higher mortgage banking income and bank-owned life insurance of $0.6 million and $0.4 million, respectively. Additional information on other operating income is presented in Table 3.

Other operating expense for the fourth quarter of 2021 totaled $42.4 million, compared to $44.7 million in the year-ago quarter and $41.3 million in the previous quarter. Other operating expense in the current quarter included $1.1 million in severance expense and $0.4 million in costs related to the consolidation of our Kapalama Branch on Oahu. The Company plans to consolidate three additional branches in 2022. The decrease in other operating expense from the year-ago quarter was primarily due to $3.9 million in nonrecurring expenses (included in other) in the year-ago quarter, which included: branch consolidation costs of $1.3 million, litigation settlements of $0.8 million, Federal Home Loan Bank advance prepayment fee of $0.7 million, loss on disposal of fixed assets of $0.6 million and other nonrecurring expenses totaling $0.5 million. The increase in other operating expense from the previous quarter is primarily due to branch consolidation costs, higher deferred compensation plan expenses and higher promotions expense of $0.4 million each. Additional information on other operating expense is presented in Table 3.

The efficiency ratio for the fourth quarter of 2021 was 65.61%, compared to 68.20% in the year-ago quarter and 62.32% in the previous quarter.

The effective tax rate for the fourth quarter of 2021 was 25.4%, compared to 23.7% in the year-ago quarter and 24.7% in the previous quarter.

Balance Sheet Highlights

Total assets at December 31, 2021 of $7.42 billion increased from $6.59 billion at December 31, 2020, and increased from $7.30 billion at September 30, 2021.

Total loans, net of deferred fees and costs, at December 31, 2021 of $5.10 billion increased from $4.96 billion at December 31, 2020, and increased from $5.05 billion at September 30, 2021. The sequential quarter increase in total loans included a net increase in core loans (or non-PPP loans) of $183.2 million led by residential mortgage loan growth of $127.3 million, offset by a decline in PPP loans of $127.3 million due to SBA forgiveness and payments. Loans on forbearance or deferral totaled $0.4 million, or less than 1% of total loans at December 31, 2021. Loans by geographic distribution are summarized in Table 6.

Total deposits at December 31, 2021 of $6.64 billion increased from $5.80 billion at December 31, 2020, and increased from $6.52 billion at September 30, 2021. Core deposits, which include demand deposits, savings and money market deposits and time deposits up to $250,000, totaled $6.16 billion at December 31, 2021, and increased by $66.0 million from September 30, 2021. Non-core deposits increased by $57.3 million from September 30, 2021. The Company's loan-to-deposit ratio was 76.8% at December 31, 2021, compared to 77.4% at September 30, 2021. Core deposit and total deposit balances are summarized in Table 7.

Asset Quality

Nonperforming assets at December 31, 2021 totaled $5.9 million, or 0.08% of total assets, compared to $6.2 million, or 0.09% of total assets at December 31, 2020, and $7.2 million, or 0.10% of total assets at September 30, 2021. Additional information on nonperforming assets, past due and restructured loans is presented in Table 8.

Net recoveries in the fourth quarter of 2021 totaled $0.9 million, compared to net charge-offs of $1.8 million in the year-ago quarter, and net charge-offs of $0.2 million in the previous quarter.

The allowance for credit losses, as a percentage of total loans at December 31, 2021 was 1.33%, compared to 1.68% at December 31, 2020 and 1.48% at September 30, 2021. Excluding PPP loans, the allowance for credit losses, as a percentage of core loans at December 31, 2021 was 1.36%, compared to 1.55% at September 30, 2021. Additional information on net charge-offs and recoveries and the allowance for credit losses is presented in Tables 9 and 10.

Capital

Total shareholders' equity was $558.2 million at December 31, 2021, compared to $546.7 million and $555.4 million at December 31, 2020 and September 30, 2021, 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 December 31, 2021, the Company's leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ratios were 8.5%, 12.2%, 14.5%, and 11.2%, respectively, compared to 8.5%, 12.2%, 14.6%, and 11.2%, respectively, at September 30, 2021.

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.

Conference Call

The Company's management will host a conference call today at 1:00 p.m. Eastern Time (8:00 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.cpb.bank. Alternatively, investors may participate in the live call by dialing 1-844-200-6205 (access code: 319900). A playback of the call will be available through February 25, 2022 by dialing 1-866-813-9403 (access code: 961340) and on the Company's website. Information which may be discussed in the conference call is provided in an earnings supplement presentation on the Company's website at http://ir.cpb.bank.

About Central Pacific Financial Corp.

Central Pacific Financial Corp. is a Hawaii-based bank holding company with approximately $7.4 billion in assets as of December 31, 2021. Central Pacific Bank, its primary subsidiary, operates 30 branches and 69 ATMs in the state of Hawaii. For additional information, please visit the Company's website at http://www.cpb.bank.

**********

Forward-Looking Statements

This document may contain forward-looking statements concerning: projections of revenues, expenses, income or loss, earnings or loss per share, capital expenditures, the payment or nonpayment of dividends, capital position, credit losses, net interest margin or other financial items; statements of plans, objectives and expectations of Central Pacific Financial Corp. or its management or Board of Directors, including those relating to business plans, use of capital resources, products or services and regulatory developments and regulatory actions; statements of future economic performance including anticipated performance results from our business initiatives; or any statements of the assumptions underlying or relating to any of the foregoing. Words such as "believes," "plans," "anticipates," "expects," "intends," "forecasts," "hopes," "targeting," "continue," "remain," "will," "should," "estimates," "may" and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

While we believe 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 differ materially from those statements or projections for a variety of reasons, including, but not limited to: the adverse effects of the COVID-19 pandemic virus on local, national and international economies, including, but not limited to, the adverse impact on tourism and construction in the State of Hawaii, our borrowers, customers, third-party contractors, vendors and employees as well as the effects of government programs and initiatives in response to COVID-19; the impact of our participation in the Paycheck Protection Program ("PPP") and fulfillment of government guarantees on our PPP loans; our ability to successfully implement our Banking-as-a-Service initiatives, including adoption of the initiatives by customers and risks faced by any of our bank collaborations including reputational and regulatory risk; the increase in inventory or adverse conditions in the real estate market and deterioration 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 business initiatives; the impact of local, national, and international economies and events (including natural disasters such as wildfires, volcanic eruptions, hurricanes, tsunamis, storms, earthquakes and pandemic viruses and diseases, including COVID-19) 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 domestic economic conditions, including any destabilization in the financial industry and deterioration of the real estate market, as well as the impact of declining levels of consumer and business confidence in the state of the economy in general and in financial institutions in particular; 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 (the "Dodd-Frank Act"), changes in capital standards, other regulatory reform and federal and state legislation, including but not limited to regulations promulgated by the Consumer Financial Protection Bureau (the "CFPB"), government-sponsored enterprise reform, and any related rules and regulations which affect 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, the results of regulatory examinations or reviews and the effect of, and our ability to comply with, any regulatory orders or actions we are or may become subject to; ability to successfully implement our initiatives to lower our efficiency ratio; 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 (the "FRB" or the "Federal Reserve"); inflation, interest rate, securities market and monetary fluctuations, including the anticipated replacement of the London Interbank Offered Rate ("LIBOR") Index and the impact on our loans and debt which are tied to that index; negative trends in our market capitalization and adverse changes in the price of the Company's common stock; political instability; acts of war or terrorism;  pandemic virus and disease, including COVID-19; changes in consumer spending, borrowings and savings habits; failure to maintain effective internal control over financial reporting or disclosure controls and procedures; cybersecurity and data privacy breaches and the consequence therefrom; the ability to address deficiencies in our internal controls over financial reporting or disclosure controls and procedures; technological changes and developments; changes in the competitive environment among financial holding companies and other financial service providers; the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board ("FASB") and other accounting standard setters and the cost and resources required to implement such changes; our ability to attract and retain key personnel; changes in our personnel, organization, compensation and benefit plans; 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 and, in particular, the discussion of "Risk Factors" set forth therein. We urge investors to consider all of these factors carefully in evaluating the forward-looking statements contained in this Form 8-K. 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 statements are made, or to reflect the occurrence of unanticipated events except as required by law.

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES


Financial Highlights


(Unaudited)

TABLE 1




Three Months Ended


Year Ended

(Dollars in thousands,


Dec 31,


Sep 30,


Jun 30,


Mar 31,


Dec 31,


Dec 31,

except for per share amounts)


2021


2021


2021


2021


2020


2021


2020

CONDENSED INCOME STATEMENT















Net interest income


$     53,096


$     56,086


$     52,061


$     49,804


$     51,474


$   211,047


$   197,683

(Credit) provision for credit losses [1]


(7,692)


(2,635)


(3,443)


(821)


4,898


(14,591)


42,111

Total other operating income


11,566


10,253


10,530


10,711


14,057


43,060


45,198

Total other operating expense [1]


42,422


41,345


41,433


37,846


44,690


163,046


151,737

Income tax expense


7,605


6,814


5,887


5,452


3,772


25,758


11,760

Net income


22,327


20,815


18,714


18,038


12,171


79,894


37,273

Basic earnings per common share


$        0.80


$        0.74


$        0.66


$        0.64


$        0.43


$        2.85


$        1.33

Diluted earnings per common share


0.80


0.74


0.66


0.64


0.43


2.83


1.32

Dividends declared per common share


0.25


0.24


0.24


0.23


0.23


0.96


0.92
















PERFORMANCE RATIOS















Return on average assets (ROA) [2]


1.22  %


1.15  %


1.06  %


1.07  %


0.74  %


1.13  %


0.58  %

Return on average shareholders' equity (ROE) [2]


16.05


14.82


13.56


13.07


8.87


14.38


6.85

Average shareholders' equity to average assets


7.61


7.79


7.84


8.19


8.29


7.85


8.47

Efficiency ratio  [3]


65.61


62.32


66.20


62.54


68.20


64.16


62.47

Net interest margin (NIM) [2]


3.08


3.31


3.16


3.19


3.32


3.18


3.30

Dividend payout ratio [4]


31.25


32.43


36.36


35.94


53.49


33.92


69.70
















SELECTED AVERAGE BALANCES















Average loans, including loans held for sale


$ 5,073,069


$ 5,022,909


$ 5,110,820


$ 5,079,874


$ 5,034,717


$ 5,071,516


$ 4,855,169

Average interest-earning assets


6,890,829


6,761,643


6,606,779


6,305,786


6,202,228


6,643,193


6,015,166

Average assets


7,315,325


7,210,210


7,039,928


6,738,825


6,621,127


7,078,025


6,418,661

Average deposits


6,536,826


6,424,768


6,269,516


5,958,742


5,755,257


6,299,369


5,555,877

Average interest-bearing liabilities


4,407,612


4,221,073


4,253,382


4,161,453


4,163,396


4,288,041


4,070,923

Average shareholders' equity


556,462


561,606


552,102


551,976


548,663


555,600


543,919

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES


Financial Highlights


(Unaudited)

TABLE 1 (CONTINUED)




Dec 31,


Sep 30,


Jun 30,


Mar 31,


Dec 31,

(dollars in thousands)


2021


2021


2021


2021


2020

REGULATORY CAPITAL RATIOS











Central Pacific Financial Corp.











Leverage capital ratio


8.5  %


8.5  %


8.6  %


8.9  %


8.8  %

Tier 1 risk-based capital ratio


12.2


12.2


12.7


13.1


12.9

Total risk-based capital ratio


14.5


14.6


14.9


15.4


15.2

Common equity tier 1 capital ratio


11.2


11.2


11.6


12.0


11.8

Central Pacific Bank











Leverage capital ratio


8.9


9.0


9.1


9.4


9.4

Tier 1 risk-based capital ratio


12.8


13.0


13.5


13.9


13.7

Total risk-based capital ratio


14.0


14.3


14.6


15.0


14.9

Common equity tier 1 capital ratio


12.8


13.0


13.5


13.9


13.7

























Dec 31,


Sep 30,


Jun 30,


Mar 31,


Dec 31,

(dollars in thousands, except for per share amounts)


2021


2021


2021


2021


2020

BALANCE SHEET











Total loans, net of deferred fees and costs


$ 5,101,649


$ 5,045,797


$ 5,077,318


$ 5,137,849


$ 4,964,113

Total assets


7,419,089


7,298,231


7,178,481


6,979,265


6,594,583

Total deposits


6,639,158


6,515,863


6,397,159


6,208,950


5,796,118

Long-term debt


105,616


105,556


105,495


105,436


105,385

Total shareholders' equity


558,219


555,419


552,793


542,865


546,685

Total shareholders' equity to total assets


7.52  %


7.61  %


7.70  %


7.78  %


8.29  %












ASSET QUALITY











Allowance for credit losses (ACL) [1]


$     68,097


$     74,587


$     77,781


$     81,553


$     83,269

Non-performing assets (NPA)


5,881


7,237


6,745


7,194


6,192

ACL to total loans [1]


1.33  %


1.48  %


1.53  %


1.59  %


1.68  %

ACL to core loans (refer to Table 10) [1]


1.36  %


1.55  %


1.68  %


1.80  %


1.83  %

ACL to non-performing assets [1]


1,157.92  %


1,030.63  %


1,153.17  %


1,133.63  %


1,344.78  %

NPA to total assets


0.08  %


0.10  %


0.09  %


0.10  %


0.09  %












PER SHARE OF COMMON STOCK OUTSTANDING











Book value per common share


$       20.14


$       19.84


$       19.59


$       19.19


$       19.40

Closing market price per common share


28.17


25.68


26.06


26.68


19.01












[1] As of January 1, 2021, the provision for credit losses on off-balance sheet credit exposures (previously included in other operating expense) is included in the provision for credit losses line on the consolidated statements of income. Prior period amounts have been reclassified to conform to the current period presentation. The allowance for off-balance sheet credit exposures continues to be included in other liabilities.

[2] 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).

[3] Efficiency ratio is defined as total operating expense divided by total revenue (net interest income and total other operating income).

[4] Dividend payout ratio is defined as dividends declared per share divided by diluted earnings per share.

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES


Consolidated Balance Sheets


(Unaudited)

TABLE 2




Dec 31,


Sep 30,


Jun 30,


Mar 31,


Dec 31,

(Dollars in thousands, except share data)


2021


2021


2021


2021


2020

ASSETS











Cash and due from financial institutions


$           81,506


$         108,669


$       116,009


$           93,358


$           97,546

Interest-bearing deposits in other financial institutions


247,401


240,173


224,469


166,533


6,521

Investment securities:











Available-for-sale debt securities, at fair value


1,631,699


1,535,450


1,407,340


1,216,341


1,182,609

Equity securities, at fair value



1,593


1,578


1,435


1,351

Total investment securities


1,631,699


1,537,043


1,408,918


1,217,776


1,183,960

Loans held for sale


3,531


5,290


5,361


5,234


16,687

Loans, net of deferred fees and costs


5,101,649


5,045,797


5,077,318


5,137,849


4,964,113

Less allowance for credit losses


68,097


74,587


77,781


81,553


83,269

Loans, net of allowance for credit losses


5,033,552


4,971,210


4,999,537


5,056,296


4,880,844

Premises and equipment, net


80,354


80,190


76,740


72,599


65,278

Accrued interest receivable


16,709


17,110


19,014


19,440


20,224

Investment in unconsolidated entities


29,679


30,397


31,052


31,487


29,968

Other real estate owned






Mortgage servicing rights


9,738


9,976


10,500


11,094


11,865

Bank-owned life insurance


169,148


167,961


167,289


167,110


163,161

Federal Home Loan Bank ("FHLB") stock


7,964


7,952


8,149


8,155


8,237

Right of use lease asset


39,441


40,757


41,890


44,727


45,857

Other assets


68,367


81,503


69,553


85,456


64,435

Total assets


$      7,419,089


$      7,298,231


$    7,178,481


$      6,979,265


$      6,594,583

LIABILITIES AND SHAREHOLDERS' EQUITY











Deposits:











Noninterest-bearing demand


$      2,291,246


$      2,195,404


$    2,203,806


$      2,070,428


$      1,790,269

Interest-bearing demand


1,415,277


1,372,626


1,341,280


1,237,574


1,174,888

Savings and money market


2,225,903


2,296,968


2,048,945


2,004,368


1,932,043

Time


706,732


650,865


803,128


896,580


898,918

Total deposits


6,639,158


6,515,863


6,397,159


6,208,950


5,796,118

FHLB advances and other short-term borrowings






22,000

Long-term debt


105,616


105,556


105,495


105,436


105,385

Lease liability


40,731


41,933


43,112


46,033


47,191

Other liabilities


75,317


79,412


79,874


75,933


77,156

Total liabilities


6,860,822


6,742,764


6,625,640


6,436,352


6,047,850

Shareholders' equity:











Preferred stock, no par value, authorized 1,000,000 shares; issued
and outstanding:  none at December 31, 2021, September 30, 2021,
June 30, 2021, March 31, 2021, and December 31, 2020






Common stock, no par value, authorized 185,000,000 shares; issued and outstanding:  27,714,071 at December 31, 2021, 27,999,588 at September 30, 2021, 28,218,860 at June 30, 2021, 28,282,530 at March 31, 2021, and 28,183,340 at December 31, 2020


433,263


436,957


440,854


443,505


442,635

Additional paid-in capital


98,073


97,279


96,182


95,721


94,842

Retained earnings (accumulated deficit)


34,843


22,916


10,831


628


(10,920)

Accumulated other comprehensive (loss) income


(7,960)


(1,733)


4,926


3,011


20,128

Total shareholders' equity


558,219


555,419


552,793


542,865


546,685

Non-controlling interest


48


48


48


48


48

Total equity


558,267


555,467


552,841


542,913


546,733

Total liabilities and shareholders' equity


$      7,419,089


$      7,298,231


$    7,178,481


$      6,979,265


$      6,594,583























 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES


Consolidated Statements of Income


(Unaudited)

TABLE 3




Three Months Ended


Year Ended



December 31,


September 30,


June 30,


March 31,


December 31,


December 31,

(Dollars in thousands, except per share data)


2021


2021


2021


2021


2020


2021


2020

Interest income:















Interest and fees on loans


$               47,576


$               51,104


$               49,024


$               46,074


$               48,259


$            193,778


$            186,129

Interest and dividends on investment securities:















Taxable investment securities


6,667


6,210


4,447


5,106


5,002


22,430


23,302

Tax-exempt investment securities


642


470


346


514


504


1,972


2,392

Dividend income on investment securities


21


18


18


18


18


75


69

Interest on deposits in other financial institutions


86


105


61


10


4


262


46

Dividend income on FHLB stock


61


62


63


59


114


245


480

Total interest income


55,053


57,969


53,959


51,781


53,901


218,762


212,418

Interest expense:















Interest on deposits:















Demand


104


101


93


86


105


384


510

Savings and money market


352


332


282


274


314


1,240


2,416

Time


478


428


498


588


813


1,992


7,489

Interest on short-term borrowings





2


65


2


718

Interest on long-term debt


1,023


1,022


1,025


1,027


1,130


4,097


3,602

Total interest expense


1,957


1,883


1,898


1,977


2,427


7,715


14,735

Net interest income


53,096


56,086


52,061


49,804


51,474


211,047


197,683

(Credit) provision for credit losses


(7,692)


(2,635)


(3,443)


(821)


4,898


(14,591)


42,111

Net interest income after (credit) provision for credit losses


60,788


58,721


55,504


50,625


46,576


225,638


155,572

Other operating income:















Mortgage banking income


1,902


1,327


1,533


2,970


5,434


7,732


13,682

Service charges on deposit accounts


1,800


1,637


1,443


1,478


1,560


6,358


6,234

Other service charges and fees


5,016


4,942


4,619


3,790


3,709


18,367


14,867

Income from fiduciary activities


1,283


1,292


1,269


1,231


1,113


5,075


4,829

Net gain (loss) on sales of investment securities



100


50



151


150


(201)

Income from bank-owned life insurance


946


540


1,210


797


1,219


3,493


3,803

Other


619


415


406


445


871


1,885


1,984

Total other operating income


11,566


10,253


10,530


10,711


14,057


43,060


45,198

Other operating expense:















Salaries and employee benefits


23,030


23,566


23,790


19,827


23,090


90,213


83,848

Net occupancy


4,129


4,185


4,055


3,764


4,011


16,133


15,162

Equipment


1,207


1,089


1,048


1,000


1,157


4,344


4,531

Communication expense


922


824


756


769


758


3,271


3,225

Legal and professional services


2,928


2,575


2,572


2,377


2,507


10,452


9,035

Computer software expense


3,125


2,998


3,398


3,783


3,625


13,304


12,717

Advertising expense


1,179


1,329


1,329


1,658


756


5,495


3,791

Other


5,902


4,779


4,485


4,668


8,786


19,834


19,428

Total other operating expense


42,422


41,345


41,433


37,846


44,690


163,046


151,737

Income before income taxes


29,932


27,629


24,601


23,490


15,943


105,652


49,033

Income tax expense


7,605


6,814


5,887


5,452


3,772


25,758


11,760

Net income


$               22,327


$               20,815


$               18,714


$               18,038


$               12,171


$               79,894


$               37,273

Per common share data:















Basic earnings per share


$                   0.80


$                   0.74


$                   0.66


$                   0.64


$                   0.43


$                   2.85


$                   1.33

Diluted earnings per share


0.80


0.74


0.66


0.64


0.43


2.83


1.32

Cash dividends declared


0.25


0.24


0.24


0.23


0.23


0.96


0.92

Basic weighted average shares outstanding


27,769,651


27,967,089


28,173,710


28,108,648


28,071,151


28,003,744


28,074,543

Diluted weighted average shares outstanding


28,045,826


28,175,953


28,456,624


28,313,014


28,177,366


28,257,323


28,180,576
















Note: Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period.

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES


Average Balances, Interest Income & Expense, Yields and Rates (Taxable Equivalent)


(Unaudited)

TABLE 4




Three Months Ended


Three Months Ended


Three Months Ended



December 31, 2021


September 30, 2021


December 31, 2020



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


$   225,560


0.15  %


$       86


$   273,039


0.15  %


$      105


$     16,786


0.10        %


$         4

Investment securities, excluding valuation allowance:



















Taxable


1,469,711


1.82


6,688


1,351,272


1.84


6,228


1,048,665


1.91


5,020

Tax-exempt


114,529


2.84


813


106,333


2.24


595


90,452


2.83


638

Total investment securities


1,584,240


1.89


7,501


1,457,605


1.87


6,823


1,139,117


1.99


5,658

Loans, including loans held for sale


5,073,069


3.73


47,576


5,022,909


4.05


51,104


5,034,717


3.82


48,259

Federal Home Loan Bank stock


7,960


3.05


61


8,090


3.09


62


11,608


3.91


114

Total interest-earning assets


6,890,829


3.19


55,224


6,761,643


3.42


58,094


6,202,228


3.48


54,035

Noninterest-earning assets


424,496






448,567






418,899





Total assets


$  7,315,325






$  7,210,210






$  6,621,127
























LIABILITIES AND EQUITY

Interest-bearing liabilities:



















Interest-bearing demand deposits


$  1,383,696


0.03   %


$      104


$  1,356,967


0.03  %


$      101


$  1,149,759


0.04        %


$      105

Savings and money market deposits


2,224,592


0.06


352


2,168,055


0.06


332


1,902,876


0.07


314

Time deposits up to $250,000


225,451


0.31


176


228,762


0.31


181


246,573


0.57


351

Time deposits over $250,000


468,292


0.26


302


467,289


0.21


247


662,390


0.28


462

Total interest-bearing deposits


4,302,031


0.09


934


4,221,073


0.08


861


3,961,598


0.12


1,232

Federal Home Loan Bank advances and other short-term borrowings








76,968


0.33


65

Long-term debt


105,581


3.85


1,023


105,516


3.84


1,022


124,830


3.60


1,130

Total interest-bearing liabilities


4,407,612


0.18


1,957


4,326,589


0.17


1,883


4,163,396


0.23


2,427

Noninterest-bearing deposits


2,234,795






2,203,695






1,793,659





Other liabilities


116,408






118,272






115,407





Total liabilities


6,758,815






6,648,556






6,072,462





Shareholders' equity


556,462






561,606






548,663





Non-controlling interest


48






48






2





Total equity


556,510






561,654






548,665





Total liabilities and equity


$  7,315,325






$  7,210,210






$  6,621,127
























Net interest income






$ 53,267






$ 56,211






$ 51,608




















Interest rate spread




3.01  %






3.25  %






3.25        %






















Net interest margin




3.08  %






3.31  %






3.32       %










































 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES


Average Balances, Interest Income & Expense, Yields and Rates (Taxable Equivalent)


(Unaudited)

TABLE 5




Year Ended


Year Ended



December 31, 2021


December 31, 2020



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


$     191,967


0.14   %


$            262


$       13,980


0.33  %


$              46

Investment securities, excluding valuation allowance:













Taxable


1,269,900


1.77


22,505


1,037,209


2.25


23,371

Tax-exempt


101,877


2.45


2,496


96,217


3.15


3,028

Total investment securities


1,371,777


1.82


25,001


1,133,426


2.33


26,399

Loans, including loans held for sale


5,071,516


3.82


193,778


4,855,169


3.83


186,129

Federal Home Loan Bank stock


7,933


3.09


245


12,591


3.81


480

Total interest-earning assets


6,643,193


3.30


219,286


6,015,166


3.54


213,054

Noninterest-earning assets


434,832






403,495





Total assets


$  7,078,025






$  6,418,661


















LIABILITIES AND EQUITY

Interest-bearing liabilities:













Interest-bearing demand deposits


$  1,300,022


0.03   %


$            384


$  1,078,589


0.05   %


$            510

Savings and money market deposits


2,099,388


0.06


1,240


1,830,972


0.13


2,416

Time deposits up to  $250,000


230,705


0.34


795


257,708


0.75


1,921

Time deposits over $250,000


551,831


0.22


1,197


696,650


0.80


5,568

Total interest-bearing deposits


4,181,946


0.09


3,616


3,863,919


0.27


10,415

Federal Home Loan Bank advances and other short-term borrowings


607


0.30


2


89,904


0.80


718

Long-term debt


105,488


3.88


4,097


117,100


3.08


3,602

Total interest-bearing liabilities


4,288,041


0.18


7,715


4,070,923


0.36


14,735

Noninterest-bearing deposits


2,117,423






1,691,958





Other liabilities


116,936






111,859





Total liabilities


6,522,400






5,874,740





Shareholders' equity


555,600






543,919





Non-controlling interest


25






2





Total equity


555,625






543,921





Total liabilities and equity


$  7,078,025






$  6,418,661


















Net interest income






$     211,571






$     198,319














Interest rate spread




3.12  %






3.18  %
















Net interest margin




3.18 %






3.30 %






























 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES


Loans by Geographic Distribution


(Unaudited)

TABLE 6




December 31,


September 30,


June 30,


March 31,


December 31,

(Dollars in thousands)


2021


2021


2021


2021


2020

HAWAII:











Commercial, financial and agricultural:











SBA Paycheck Protection Program


$             87,459


$         198,315


$         395,352


$         548,880


$         375,879

Other


422,388


404,751


389,341


399,154


426,670

Real estate:











Construction


122,867


128,908


133,457


137,976


125,407

Residential mortgage


1,875,980


1,748,729


1,711,801


1,687,513


1,690,212

Home equity


637,249


618,951


583,430


559,514


551,266

Commercial mortgage


922,146


915,746


926,006


911,216


898,055

Consumer


333,843


331,987


328,332


319,032


332,430

Total loans, net of deferred fees and costs


4,401,932


4,347,387


4,467,719


4,563,285


4,399,919

Allowance for credit losses


(55,808)


(62,126)


(67,773)


(70,961)


(73,152)

Loans, net of allowance for credit losses


$        4,346,124


$      4,285,261


$      4,399,946


$      4,492,324


$      4,326,767












U.S. MAINLAND: [1]











Commercial, financial and agricultural:











SBA Paycheck Protection Program


$               3,868


$           20,356


$           39,258


$           48,939


$           40,496

Other


107,733


114,122


96,884


115,035


118,421

Real estate:











Commercial mortgage


298,058


292,671


260,424


253,122


258,273

Consumer


290,058


271,261


213,033


157,468


147,004

Total loans, net of deferred fees and costs


699,717


698,410


609,599


574,564


564,194

Allowance for credit losses


(12,289)


(12,461)


(10,008)


(10,592)


(10,117)

Loans, net of allowance for credit losses


$           687,428


$         685,949


$         599,591


$         563,972


$         554,077












TOTAL:











Commercial, financial and agricultural:











SBA Paycheck Protection Program


$             91,327


$         218,671


$         434,610


$         597,819


$         416,375

Other


530,121


518,873


486,225


514,189


545,091

Real estate:











Construction


122,867


128,908


133,457


137,976


125,407

Residential mortgage


1,875,980


1,748,729


1,711,801


1,687,513


1,690,212

Home equity


637,249


618,951


583,430


559,514


551,266

Commercial mortgage


1,220,204


1,208,417


1,186,430


1,164,338


1,156,328

Consumer


623,901


603,248


541,365


476,500


479,434

Total loans, net of deferred fees and costs


5,101,649


5,045,797


5,077,318


5,137,849


4,964,113

Allowance for credit losses


(68,097)


(74,587)


(77,781)


(81,553)


(83,269)

Loans, net of allowance for credit losses


$        5,033,552


$      4,971,210


$      4,999,537


$      5,056,296


$      4,880,844












[1] U.S. Mainland includes territories of the United States.

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES


Deposits


(Unaudited)

TABLE 7




December 31,


September 30,


June 30,


March 31,


December 31,

(Dollars in thousands)


2021


2021


2021


2021


2020

Noninterest-bearing demand


$        2,291,246


$        2,195,404


$        2,203,806


$        2,070,428


$        1,790,269

Interest-bearing demand


1,415,277


1,372,626


1,341,280


1,237,574


1,174,888

Savings and money market


2,225,903


2,296,968


2,048,945


2,004,368


1,932,043

Time deposits less than $100,000


136,584


139,358


141,498


145,497


149,063

Other time deposits $100,000 to $250,000 [1]


88,873


87,491


89,710


88,814


90,149

Core deposits


6,157,883


6,091,847


5,825,239


5,546,681


5,136,412












Government time deposits


214,950


238,950


403,755


500,194


500,344

Other time deposits greater than $250,000


266,325


185,066


168,165


162,075


159,362

Total time deposits greater than $250,000


481,275


424,016


571,920


662,269


659,706

Total deposits


$        6,639,158


$        6,515,863


$        6,397,159


$        6,208,950


$        5,796,118












[1] As of January 1, 2021, other time deposits $100,000 to $250,000 have been included in core deposits. Prior period amounts have been reclassified to conform to current period presentation.

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES


Nonperforming Assets, Past Due and Restructured Loans


(Unaudited)

TABLE 8




December 31,


September 30,


June 30,


March 31,


December 31,

(Dollars in thousands)


2021


2021


2021


2021


2020

Nonaccrual loans: [1]











Commercial, financial and agricultural - Other


$           183


$           689


$           699


$         1,412


$         1,461

Real estate:











Residential mortgage


4,623


5,351


5,280


4,553


4,115

Home equity


786


880


434


439


524

Commercial mortgage






Consumer


289


317


332


790


92

Total nonaccrual loans


5,881


7,237


6,745


7,194


6,192

Other real estate owned ("OREO"):











Real estate:











Residential mortgage






Total OREO






Total nonperforming assets ("NPAs")


5,881


7,237


6,745


7,194


6,192

Loans delinquent for 90 days or more still accruing interest: [1]











Commercial, financial and agricultural - Other


945



29



Real estate:











Residential mortgage



444


1,438


4,522


567

Home equity


44





Consumer


374


166


100


262


240

Total loans delinquent for 90 days or more still accruing interest


1,363


610


1,567


4,784


807

Restructured loans still accruing interest: [1]











Commercial, financial and agricultural - Other



12


26


63


100

Real estate:











Residential mortgage


3,768


4,458


4,258


5,473


5,718

Commercial mortgage


1,043


1,577


1,636


1,698


1,761

Consumer


92


99


132


198


207

Total restructured loans still accruing interest


4,903


6,146


6,052


7,432


7,786

Total NPAs and loans delinquent for 90 days or more and restructured loans still accruing interest


$       12,147


$       13,993


$       14,364


$       19,410


$       14,785












Total nonaccrual loans as a percentage of total loans


0.12  %


0.14  %


0.13  %


0.14  %


0.12  %

Total NPAs as a percentage of total loans and OREO


0.12  %


0.14  %


0.13  %


0.14  %


0.12  %

Total NPAs and loans delinquent for 90 days or more still accruing interest as a percentage of total loans and OREO


0.14  %


0.16  %


0.16  %


0.23  %


0.14  %

Total NPAs, loans delinquent for 90 days or more and restructured loans still accruing interest as a percentage of total loans and OREO


0.24  %


0.28  %


0.28  %


0.38  %


0.30  %












Quarter-to-quarter changes in NPAs:











Balance at beginning of quarter


$         7,237


$         6,745


$         7,194


$         6,192


$       13,187

Additions


1,375


1,951


1,879


2,257


1,370

Reductions:











Payments


(933)


(767)


(1,120)


(292)


(3,186)

Return to accrual status


(1,034)


(141)


(84)


(99)


(548)

Sales of NPAs






(4,353)

Charge-offs, valuation and other adjustments


(764)


(551)


(1,124)


(864)


(278)

Total reductions


(2,731)


(1,459)


(2,328)


(1,255)


(8,365)

Balance at end of quarter


$         5,881


$         7,237


$         6,745


$         7,194


$         6,192












[1] Section 4013 of the CARES Act and the revised Interagency Statement are being applied to loan modifications related to the COVID-19 pandemic as eligible and applicable. These loan modifications are not included in the delinquent or restructured loan balances presented above.

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES


Allowance for Credit Losses on Loans


(Unaudited)

TABLE 9




Three Months Ended


Year Ended



Dec 31,


Sep 30,


Jun 30,


Mar 31,


Dec 31,


December 31,

(Dollars in thousands)


2021


2021


2021


2021


2020


2021


2020

Allowance for credit  losses ("ACL"):















ACL at beginning of period


$     74,587


$     77,781


$     81,553


$     83,269


$     80,542


$     83,269


$     47,971

Adoption of ASU 2016-13








3,566

Adjusted ACL at beginning of period


74,587


77,781


81,553


83,269


80,542


83,269


51,537
















(Credit) provision for credit losses on loans [1] [2]


(7,417)


(2,969)


(2,963)


(974)


4,496


(14,323)


38,930
















Charge-offs:















Commercial, financial and agricultural - Other


379


334


401


609


676


1,723


3,026

Real estate:















Residential mortgage








63

Commercial mortgage








75

Consumer


952


829


1,523


1,098


1,856


4,402


8,191

Total charge-offs


1,331


1,163


1,924


1,707


2,532


6,125


11,355
















Recoveries:















Commercial, financial and agricultural - Other


358


281


276


89


189


1,004


1,157

Real estate:















Construction


1,159






1,159


131

Residential mortgage


13


53


186


106


15


358


229

Home equity





9


2


9


33

Commercial mortgage




65


8


1


73


16

Consumer


728


604


588


753


556


2,673


2,591

Total recoveries


2,258


938


1,115


965


763


5,276


4,157

Net (recoveries) charge-offs


(927)


225


809


742


1,769


849


7,198

ACL at end of period


$     68,097


$     74,587


$     77,781


$     81,553


$     83,269


$     68,097


$     83,269
















Average loans, net of deferred fees and costs


$ 5,073,069


$ 5,022,909


$ 5,110,820


$ 5,079,874


$ 5,034,717


$ 5,071,516


$ 4,855,169

Annualized ratio of net charge-offs to average loans


(0.07)         %


0.02  %


0.06  %


0.06  %


0.14  %


0.02  %


0.15  %
















[1] In 2020, the Company recorded a reserve on accrued interest receivable ("AIR") of $0.2 million for loans on payment forbearance or deferral, which were granted to borrowers impacted by the COVID-19 pandemic. This reserve was recorded as a contra-asset against AIR with the offset to the provision for credit losses. During the second quarter of 2021, the Company reversed the entire reserve on AIR. The provision for credit losses presented in this table excludes the provision for credit losses on AIR.

[2] As of January 1, 2021, the provision for credit losses on off-balance sheet credit exposures (previously included in other operating expense) is included in the provision for credit losses line on the consolidated statements of income.  The allowance for off-balance sheet credit exposures continues to be included in other liabilities. For roll-forward purposes, in this table we exclude the provision for credit losses on off-balance sheet credit exposures.

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES


Reconciliation of Non-GAAP Financial Measures


(Unaudited)

TABLE 10

The following table sets forth a reconciliation of our core loans and the ratios of our allowance for credit losses ("ACL") to total loans and ACL to core loans (or total loans, excluding SBA Paycheck Protection Program ("PPP") loans), for each of the periods indicated:




Dec 31,


Sep 30,


Jun 30,


Mar 31,


Dec 31,

(Dollars in thousands)


2021


2021


2021


2021


2020

ACL


$        68,097


$        74,587


$        77,781


$        81,553


$        83,269












Total loans


$   5,101,649


$   5,045,797


$   5,077,318


$   5,137,849


$   4,964,113

Less: PPP loans


91,327


218,671


434,610


597,819


416,375

Core loans (or total loans, excluding PPP loans)


$   5,010,322


$   4,827,126


4,642,708


4,540,030


$   4,547,738












Ratio of ACL to total loans


1.33 %


1.48 %


1.53 %


1.59 %


1.68 %

Ratio of ACL to core loans


1.36 %


1.55 %


1.68 %


1.80 %


1.83 %

 

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/central-pacific-financial-announces-record-earnings-and-launches-new-banking-as-a-service-initiative-to-drive-mainland-expansion-301468262.html

SOURCE Central Pacific Financial Corp.

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