Central Pacific Financial Corp. CPF

NYS: CPF | ISIN: US1547604090   15:54
24,65 USD (+2,75%)
(+2,75%)   15:54

Central Pacific Financial Reports Second Quarter Earnings Of $17.6 Million

  • Net income of $17.6 million, or $0.64 per diluted share for the quarter.
  • ROA of 0.96% and ROE of 14.93% for the quarter.
  • Total loans of $5.30 billion increased by $126.8 million, or 2.5% (10.0% annualized) in the second quarter.
  • Total deposits of $6.62 billion increased by $23.0 million, or 0.3% (1.2% annualized) in the second quarter. Core deposits increased by $34.6 million, or 0.6% (2.4% annualized) in the second quarter.
  • Net interest margin of 3.05% increased by 8 bp from the previous quarter.
  • Central Pacific Bank named the Best Bank in Hawaii by Forbes.
  • Board of Directors approved quarterly cash dividend of $0.26 per share.

HONOLULU, July 27, 2022 /PRNewswire/ -- Central Pacific Financial Corp. (NYSE: CPF) (the "Company"), parent company of Central Pacific Bank (the "Bank" or "CPB"), today reported net income for the second quarter of 2022 of $17.6 million, or fully diluted earnings per share ("EPS") of $0.64, compared to net income in the second quarter of 2021 of $18.7 million, or EPS of $0.66, and net income in the first quarter of 2022 of $19.4 million, or EPS of $0.70. Net income for the second quarter of 2022, included an $8.5 million gain on the sale of the Company's Class B common stock of Visa, Inc., partially offset by a $4.9 million non-cash settlement charge related to the termination and settlement of the Company's defined benefit pension plan.

"We are pleased to report strong financial performance for the second quarter, highlighted by solid double-digit annualized loan growth, continued inflow of core deposits, net interest margin expansion, and excellent asset quality. With these favorable trends, we expect to drive further growth in earnings throughout the rest of 2022 and beyond," said Paul Yonamine, Chairman and Chief Executive Officer.

"Statewide Hawaii visitor arrivals are expected to exceed 90% of pre-pandemic levels in 2022, thanks in part to the gradual return of higher-spending international travelers. This will bode well for the state, creating additional opportunities for economic growth," said Arnold Martines, President and Chief Operating Officer.

During the second quarter, CPB was named the top bank in Hawaii in 2022 by Forbes. CPB finished ahead of the other local banks based on a survey that ranked all of the local banks on branch and digital services, overall customer service and trust as well as financial advice.

"This recognition validates that our digital and branch strategies are creating positive momentum in the market and is really a tribute to all of our hardworking employees who serve our valued customers to the best of their ability every day," Martines said.

Earnings Highlights

Net interest income for the second quarter of 2022 was $53.0 million, compared to $52.1 million in the year-ago quarter and $50.9 million in the previous quarter. Net interest margin for the second quarter of 2022 was 3.05%, compared to 3.16% in the year-ago quarter and 2.97% in the previous quarter. The sequential quarter increase in net interest income and net interest margin is primarily due to higher average loan balances and higher average yields earned on loans and investment securities. These increases were partially offset by lower net interest income and loan fees on PPP loans. Net interest income for the second quarter of 2022 included $0.9 million in net interest income and loan fees on PPP loans, compared to $1.9 million in the previous quarter. Net deferred fees on PPP loans remaining at June 30, 2022 was $0.9 million, compared to $1.7 million at March 31, 2022. Additional information on average balances, interest income and expenses and yields and rates is presented in Tables 4 and 5.

In the second quarter of 2022, the Company recorded a provision for credit losses of $1.0 million, compared to releases of the credit loss reserves of $3.4 million and $3.2 million in the year-ago and previous quarters, respectively. The provision for credit losses in the second quarter of 2022 was driven by the increase in our loan portfolio and net charge-offs.

Other operating income for the second quarter of 2022 totaled $17.1 million, compared to $10.5 million in the year-ago quarter and $9.6 million in the previous quarter. The increase from the year-ago and previous quarters was primarily due to the sale of our restricted Class B common stock of Visa, Inc. The investment was carried at a zero cost basis, therefore the entire net proceeds from the sale of $8.5 million were recorded as a gain on sale of investment securities. The increase was partially offset by lower income from bank-owned life insurance ("BOLI"). The Company recognized BOLI expense of $1.0 million during second quarter of 2022, compared to BOLI income of $1.2 million and $0.5 million in the year-ago and previous quarters, respectively. The lower BOLI income was primarily attributable to market volatility, and was offset by lower deferred compensation expense in other operating expenses. Additional information on other operating income is presented in Table 3.

Other operating expense for the second quarter of 2022 totaled $45.3 million, compared to $41.4 million in the year-ago quarter and $38.2 million in the previous quarter. The increase in other operating expense from the year-ago and previous quarters was primarily due to the termination and settlement of our defined benefit pension plan resulting in a non-cash settlement charge of $4.9 million (included in other). Additional information on other operating expense is presented in Table 3.

The efficiency ratio for the second quarter of 2022 was 64.68%, compared to 66.20% in the year-ago quarter and 63.16% in the previous quarter.

The effective tax rate for the second quarter of 2022 was 26.0%, compared to 23.9% in the year-ago quarter and 23.7% in the previous quarter. The increase in the effective tax rate compared to the year-ago and previous quarters was primarily due to lower tax-exempt BOLI income.

Balance Sheet Highlights

Total assets at June 30, 2022 of $7.30 billion increased by $120.7 million, or 1.7% from $7.18 billion at June 30, 2021, and remained relatively unchanged from $7.30 billion at March 31, 2022.

Total loans, net of deferred fees and costs, at June 30, 2022 of $5.30 billion increased from $5.08 billion at June 30, 2021, and increased from $5.17 billion at March 31, 2022. The sequential quarter increase in total loans included growth in commercial mortgage loans of $60.1 million, consumer loans of $50.5 million, home equity loans of $21.9 million, construction of $21.7 million, and residential mortgage of $16.7 million, offset by declines in PPP loans of $24.1 million and other commercial loans of $20.2 million. Loans by geographic distribution are summarized in Table 6.

Total deposits at June 30, 2022 of $6.62 billion increased from $6.40 billion at June 30, 2021, and increased from $6.60 billion at March 31, 2022. Core deposits, which include demand deposits, savings and money market deposits and time deposits up to $250,000, totaled $6.16 billion at June 30, 2022, and increased by $34.6 million from March 31, 2022. The Company's loan-to-deposit ratio was 80.1% at June 30, 2022, compared to 78.4% at March 31, 2022. Core deposit and total deposit balances are summarized in Table 7.

Asset Quality

Nonperforming assets at June 30, 2022 totaled $5.0 million, or 0.07% of total assets, compared to $6.7 million, or 0.09% of total assets at June 30, 2021, and $5.3 million, or 0.07% of total assets at March 31, 2022. Additional information on nonperforming assets, past due and restructured loans is presented in Table 8.

Net charge-offs in the second quarter of 2022 totaled $1.0 million, compared to net charge-offs of $0.8 million in the year-ago quarter, and net charge-offs of $0.4 million in the previous quarter.

The allowance for credit losses, as a percentage of total loans at June 30, 2022 was 1.23%, compared to 1.53% at June 30, 2021 and 1.25% at March 31, 2022. 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 $455.1 million at June 30, 2022, compared to $552.8 million and $486.3 million at June 30, 2021 and March 31, 2022, respectively. The decline in shareholders' equity was primarily due to an increase in unrealized losses on our available-for-sale investment securities portfolio which flow through accumulated other comprehensive income, and were driven by the rising interest rate environment.

During the second quarter of 2022, the Company repurchased 174,429 shares of common stock, at a total cost of $4.2 million, or an average cost per share of $24.18. During the six months ended June 30, 2022, the Company returned $25.3 million in capital to its shareholders through cash dividends and share repurchases.

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, 2022, the Company's leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ratios were 8.6%, 11.6%, 13.9%, and 10.7%, respectively, compared to 8.5%, 11.9%, 14.2%, and 10.9%, respectively, at March 31, 2022.

On July 26, 2022, the Company's Board of Directors declared a quarterly cash dividend of $0.26 per share on its outstanding common shares. The dividend will be payable on September 15, 2022 to shareholders of record at the close of business on August 31, 2022.

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 (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.cpb.bank. Alternatively, investors may participate in the live call by dialing 1-844-200-6205 (access code: 499388). A playback of the call will be available through August 24, 2022 by dialing 1-866-813-9403 (access code: 673448) 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 $7.30 billion in assets as of June 30, 2022. Central Pacific Bank, its primary subsidiary, operates 28 branches and 65 ATMs in the state of Hawaii. For additional information, please visit the Company's website at http://www.cpb.bank.

Equal Housing Lender

Member FDIC                                                               

**********

Forward-Looking Statements ("FLS")

This document may contain FLS 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 FLS but are not the exclusive means of identifying such statements.

While we believe that our FLS 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 (and ongoing pandemic variants) 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; 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 achieve the objectives of our RISE2020 initiative; our ability to successfully implement and achieve the objectives of our Banking-as-a-Service ("BaaS") initiatives, including adoption of the initiatives by customers and risks faced by any of our bank collaborations including reputational and regulatory risk; 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 regulations or 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 and uncertainties regarding potential alternative reference rates, including the Secured Overnight Financing Rate ("SOFR"); 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 ("PCAOB"), 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 FLS, 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 FLS contained in this Form 8-K. FLS speak only as of the date on which such statements are made. We undertake no obligation to update any FLS 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


Six Months Ended

(Dollars in thousands,


Jun 30,


Mar 31,


Dec 31,


Sep 30,


Jun 30,


Jun 30,

except for per share amounts)


2022


2022


2021


2021


2021


2022


2021

CONDENSED INCOME STATEMENT















Net interest income


$     52,978


$     50,935


$     53,096


$     56,086


$     52,061


$   103,913


$   101,865

Provision (credit) for credit losses


989


(3,195)


(7,692)


(2,635)


(3,443)


(2,206)


(4,264)

Total other operating income


17,138


9,551


11,566


10,253


10,530


26,689


21,241

Total other operating expense


45,349


38,205


42,422


41,345


41,433


83,554


79,279

Income tax expense


6,184


6,038


7,605


6,814


5,887


12,222


11,339

Net income


17,594


19,438


22,327


20,815


18,714


37,032


36,752

Basic earnings per common share


$        0.64


$        0.70


$        0.80


$        0.74


$        0.66


$        1.34


$        1.31

Diluted earnings per common share


0.64


0.70


0.80


0.74


0.66


1.33


1.29

Dividends declared per common share


0.26


0.26


0.25


0.24


0.24


0.52


0.47
















PERFORMANCE RATIOS















Return on average assets (ROA) [1]


0.96 %


1.06 %


1.22 %


1.15 %


1.06 %


1.01 %


1.07 %

Return on average shareholders' equity (ROE) [1]


14.93


14.44


16.05


14.82


13.56


14.67


13.31

Average shareholders' equity to average assets


6.45


7.34


7.61


7.79


7.84


6.89


8.01

Efficiency ratio  [2]


64.68


63.16


65.61


62.32


66.20


63.98


64.40

Net interest margin (NIM) [1]


3.05


2.97


3.08


3.31


3.16


3.01


3.18

Dividend payout ratio [3]


40.63


37.14


31.25


32.43


36.36


39.10


36.43
















SELECTED AVERAGE BALANCES















Average loans, including loans held for sale


$ 5,221,300


$ 5,114,260


$ 5,073,069


$ 5,022,909


$ 5,110,820


$ 5,168,076


$ 5,095,433

Average interest-earning assets


6,982,556


6,932,649


6,890,829


6,761,643


6,606,779


6,957,918


6,457,115

Average assets


7,309,939


7,341,850


7,315,325


7,210,210


7,039,928


7,325,042


6,890,195

Average deposits


6,626,462


6,581,593


6,536,826


6,424,768


6,269,516


6,603,467


6,114,975

Average interest-bearing liabilities


4,442,172


4,429,114


4,407,612


4,221,073


4,253,382


4,435,678


4,207,670

Average shareholders' equity


471,420


538,601


556,462


561,606


552,102


504,825


552,039
















[1] ROA and ROE 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 (ie. 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.




















 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Financial Highlights  







(Unaudited) 








TABLE 1 (CONTINUED)












Jun 30,


Mar 31,


Dec 31,


Sep 30,


Jun 30,



2022


2022


2021


2021


2021

REGULATORY CAPITAL RATIOS











Central Pacific Financial Corp











Leverage capital ratio


8.6 %


8.5 %


8.5 %


8.5 %


8.6 %

Tier 1 risk-based capital ratio


11.6


11.9


12.2


12.2


12.7

Total risk-based capital ratio


13.9


14.2


14.5


14.6


14.9

Common equity tier 1 capital ratio


10.7


10.9


11.2


11.2


11.6

Central Pacific Bank











Leverage capital ratio


9.0


9.0


8.9


9.0


9.1

Tier 1 risk-based capital ratio


12.2


12.6


12.8


13.0


13.5

Total risk-based capital ratio


13.5


13.8


14.0


14.3


14.6

Common equity tier 1 capital ratio


12.2


12.6


12.8


13.0


13.5














Jun 30,


Mar 31,


Dec 31,


Sep 30,


Jun 30,

(dollars in thousands, except for per share amounts)


2022


2022


2021


2021


2021

BALANCE SHEET











Total loans, net of deferred fees and costs


$ 5,301,633


$ 5,174,837


$ 5,101,649


$ 5,045,797


$ 5,077,318

Total assets


7,299,178


7,298,819


7,419,089


7,298,231


7,178,481

Total deposits


6,622,061


6,599,031


6,639,158


6,515,863


6,397,159

Long-term debt


105,738


105,677


105,616


105,556


105,495

Total shareholders' equity


455,100


486,328


558,219


555,419


552,793

Total shareholders' equity to total assets


6.23 %


6.66 %


7.52 %


7.61 %


7.70 %












ASSET QUALITY











Allowance for credit losses (ACL)


$     65,211


$     64,754


$     68,097


$     74,587


$     77,781

Nonaccrual loans


4,983


5,336


5,881


7,237


6,745

Non-performing assets (NPA)


4,983


5,336


5,881


7,237


6,745

ACL to total loans


1.23 %


1.25 %


1.33 %


1.48 %


1.53 %

ACL to core loans (refer to Table 9)


1.23 %


1.26 %


1.36 %


1.55 %


1.68 %

ACL to nonaccrual loans


1,308.67 %


1,213.53 %


1,157.92 %


1,030.63 %


1,153.17 %

NPA to total assets


0.07 %


0.07 %


0.08 %


0.10 %


0.09 %












PER SHARE OF COMMON STOCK OUTSTANDING











Book value per common share


$       16.57


$       17.63


$       20.14


$       19.84


$       19.59

Closing market price per common share


21.45


27.90


28.17


25.68


26.06


 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)   










TABLE 2














Jun 30,


Mar 31,


Dec 31,


Sep 30,


Jun 30,

(Dollars in thousands, except share data)


2022


2022


2021


2021


2021

ASSETS











Cash and due from financial institutions


$         108,389


$           83,947


$         81,506


$         108,669


$         116,009

Interest-bearing deposits in other financial institutions


22,741


118,183


247,401


240,173


224,469

Investment securities:











Available-for-sale debt securities, at fair value


787,373


1,199,482


1,631,699


1,535,450


1,407,340

Held-to-maturity debt securities, at amortized cost; fair value of:

$635,565 at June 30, 2022, $329,503 at March 31, 2022, and

none at December 31, 2021, September 30, 2021, and June 30, 2021


663,365


329,507




Equity securities, at fair value





1,593


1,578

Total investment securities


1,450,738


1,528,989


1,631,699


1,537,043


1,408,918

Loans held for sale


535


4,677


3,531


5,290


5,361

Loans, net of deferred fees and costs


5,301,633


5,174,837


5,101,649


5,045,797


5,077,318

Less: allowance for credit losses


65,211


64,754


68,097


74,587


77,781

Loans, net of allowance for credit losses


5,236,422


5,110,083


5,033,552


4,971,210


4,999,537

Premises and equipment, net


88,664


79,455


80,354


80,190


76,740

Accrued interest receivable


17,146


16,423


16,709


17,110


19,014

Investment in unconsolidated entities


37,341


31,092


29,679


30,397


31,052

Mortgage servicing rights


9,369


9,480


9,738


9,976


10,500

Bank-owned life insurance


167,202


167,407


169,148


167,961


167,289

Federal Home Loan Bank ("FHLB") stock


8,943


8,943


7,964


7,952


8,149

Right of use lease asset


36,978


38,435


39,441


40,757


41,890

Other assets


114,710


101,705


68,367


81,503


69,553

Total assets


$      7,299,178


$      7,298,819


$    7,419,089


$      7,298,231


$      7,178,481

LIABILITIES











Deposits:











Noninterest-bearing demand


$      2,282,967


$      2,269,562


$    2,291,246


$      2,195,404


$      2,203,806

Interest-bearing demand


1,444,566


1,433,284


1,415,277


1,372,626


1,341,280

Savings and money market


2,214,146


2,197,647


2,225,903


2,296,968


2,048,945

Time


680,382


698,538


706,732


650,865


803,128

Total deposits


6,622,061


6,599,031


6,639,158


6,515,863


6,397,159

Long-term debt


105,738


105,677


105,616


105,556


105,495

Lease liability


38,037


39,610


40,731


41,933


43,112

Other liabilities


78,242


68,123


75,317


79,412


79,874

Total liabilities


6,844,078


6,812,441


6,860,822


6,742,764


6,625,640

EQUITY











Shareholders' equity:











Preferred stock, no par value, authorized 1,000,000 shares; issued and outstanding:

none at June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021, and

June 30, 2021






Common stock, no par value, authorized 185,000,000 shares; issued and outstanding:

27,463,562 at June 30, 2022, 27,584,929 at March 31, 2022, 27,714,071 at

December 31, 2021, 27,999,588 at September 30, 2021, and 28,218,860 at June 30, 2021


417,862


421,153


426,091


436,957


440,854

Additional paid-in capital


98,977


98,270


98,073


97,279


96,182

Retained earnings


64,693


54,252


42,015


22,916


10,831

Accumulated other comprehensive (loss) income


(126,432)


(87,347)


(7,960)


(1,733)


4,926

Total shareholders' equity


455,100


486,328


558,219


555,419


552,793

Non-controlling interest



50


48


48


48

Total equity


455,100


486,378


558,267


555,467


552,841

Total liabilities and  equity


$      7,299,178


$      7,298,819


$    7,419,089


$      7,298,231


$      7,178,481























 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited) 




TABLE 3








Three Months Ended


Six Months Ended



Jun 30,


Mar 31,


Dec 31,


Sep 30,


Jun 30,


June 30,

(Dollars in thousands, except per share data)


2022


2022


2021


2021


2021


2022


2021

Interest income:















Interest and fees on loans


$               46,963


$               44,949


$               47,576


$               51,104


$               49,024


$               91,912


$               95,098

Interest and dividends on investment securities:















Taxable investment securities


7,200


7,134


6,667


6,210


4,447


14,334


9,553

Tax-exempt investment securities


642


651


642


470


346


1,293


860

Dividend income on investment securities



21


21


18


18


21


36

Interest on deposits in other financial institutions


191


72


86


105


61


263


71

Dividend income on FHLB stock


68


59


61


62


63


127


122

Total interest income


55,064


52,886


55,053


57,969


53,959


107,950


105,740

Interest expense:















Interest on deposits:















Demand


144


112


104


101


93


256


179

Savings and money market


317


329


352


332


282


646


556

Time


490


469


478


428


498


959


1,086

Interest on short-term borrowings


2






2


2

Interest on long-term debt


1,133


1,041


1,023


1,022


1,025


2,174


2,052

Total interest expense


2,086


1,951


1,957


1,883


1,898


4,037


3,875

Net interest income


52,978


50,935


53,096


56,086


52,061


103,913


101,865

Provision (credit) for credit losses


989


(3,195)


(7,692)


(2,635)


(3,443)


(2,206)


(4,264)

Net interest income after provision (credit)
for credit losses


51,989


54,130


60,788


58,721


55,504


106,119


106,129

Other operating income:















Mortgage banking income


1,140


1,172


1,902


1,327


1,533


2,312


4,503

Service charges on deposit accounts


2,026


1,861


1,800


1,637


1,443


3,887


2,921

Other service charges and fees


4,610


4,488


5,016


4,942


4,619


9,098


8,409

Income from fiduciary activities


1,188


1,154


1,283


1,292


1,269


2,342


2,500

Net gain on sales of investment securities


8,506




100


50


8,506


50

Income from bank-owned life insurance


(1,028)


539


946


540


1,210


(489)


2,007

Other


696


337


619


415


406


1,033


851

Total other operating income


17,138


9,551


11,566


10,253


10,530


26,689


21,241

Other operating expense:















Salaries and employee benefits


22,369


20,942


23,030


23,566


23,790


43,311


43,617

Net occupancy


4,448


3,774


4,129


4,185


4,055


8,222


7,819

Equipment


1,075


1,082


1,207


1,089


1,048


2,157


2,048

Communication


744


806


922


824


756


1,550


1,525

Legal and professional services


2,916


2,626


2,928


2,575


2,572


5,542


4,949

Computer software


3,624


3,082


3,125


2,998


3,398


6,706


7,181

Advertising


1,150


1,150


1,179


1,329


1,329


2,300


2,987

Other


9,023


4,743


5,902


4,779


4,485


13,766


9,153

Total other operating expense


45,349


38,205


42,422


41,345


41,433


83,554


79,279

Income before income taxes


23,778


25,476


29,932


27,629


24,601


49,254


48,091

Income tax expense


6,184


6,038


7,605


6,814


5,887


12,222


11,339

Net income


$               17,594


$               19,438


$               22,327


$               20,815


$               18,714


$               37,032


$               36,752

Per common share data:















Basic earnings per share


$                   0.64


$                   0.70


$                   0.80


$                   0.74


$                   0.66


$                   1.34


$                   1.31

Diluted earnings per share


0.64


0.70


0.80


0.74


0.66


1.33


1.29

Cash dividends declared


0.26


0.26


0.25


0.24


0.24


0.52


0.47

Basic weighted average shares outstanding


27,516,284


27,591,390


27,769,651


27,967,089


28,173,710


27,553,629


28,141,360

Diluted weighted average shares outstanding


27,676,619


27,874,924


28,045,826


28,175,953


28,456,624


27,759,187


28,407,479
















 

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



June 30, 2022


March 31, 2022


June 30, 2021



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


$   106,083


0.72 %


$      191


$   157,861


0.18 %


$       72


$   222,934


0.11 %


$       61

Investment securities, excluding valuation
allowance:



















Taxable


1,532,282


1.88


7,200


1,535,039


1.86


7,155


1,172,183


1.52


4,465

Tax-exempt [1]


113,934


2.85


813


117,493


2.80


824


92,702


1.89


438

Total investment securities


1,646,216


1.95


8,013


1,652,532


1.93


7,979


1,264,885


1.55


4,903

Loans, including loans held for sale


5,221,300


3.60


46,963


5,114,260


3.54


44,949


5,110,820


3.84


49,024

Federal Home Loan Bank stock


8,957


3.02


68


7,996


2.98


59


8,140


3.11


63

Total interest-earning assets


6,982,556


3.17


55,235


6,932,649


3.08


53,059


6,606,779


3.28


54,051

Noninterest-earning assets


327,383






409,201






433,149





Total assets


$  7,309,939






$  7,341,850






$  7,039,928
























LIABILITIES AND EQUITY

Interest-bearing liabilities:



















Interest-bearing demand deposits


$  1,435,088


0.04 %


$      144


$  1,425,303


0.03 %


$      112


$  1,269,676


0.03 %


$       93

Savings and money market deposits


2,204,934


0.06


317


2,212,426


0.06


329


2,028,583


0.06


282

Time deposits up to $250,000


217,605


0.27


148


223,661


0.28


156


231,922


0.34


196

Time deposits over $250,000


478,483


0.29


342


462,087


0.28


313


617,745


0.20


302

Total interest-bearing deposits


4,336,110


0.09


951


4,323,477


0.09


910


4,147,926


0.08


873

Federal Home Loan Bank advances and other

short-term borrowings


363


1.84


2







Long-term debt


105,699


4.30


1,133


105,637


4.00


1,041


105,456


3.90


1,025

Total interest-bearing liabilities


4,442,172


0.19


2,086


4,429,114


0.18


1,951


4,253,382


0.18


1,898

Noninterest-bearing deposits


2,290,352






2,258,116






2,121,590





Other liabilities


105,979






115,971






112,852





Total liabilities


6,838,503






6,803,201






6,487,824





Shareholders' equity


471,420






538,601






552,102





Non-controlling interest


16






48






2





Total equity


471,436






538,649






552,104





Total liabilities and equity


$  7,309,939






$  7,341,850






$  7,039,928
























Net interest income






$ 53,149






$ 51,108






$ 52,153




















Interest rate spread




2.98 %






2.90 %






3.10 %






















Net interest margin




3.05 %






2.97 %






3.16 %






















[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%.




















 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

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

(Unaudited) 




TABLE 5








Six Months Ended


Six Months Ended



June 30, 2022


June 30, 2021



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


$     131,829


0.40 %


$            263


$     133,684


0.11 %


$              71

Investment securities, excluding valuation
allowance:













Taxable


1,533,570


1.87


14,355


1,126,978


1.70


9,589

Tax-exempt [1]


115,964


2.82


1,637


93,181


2.34


1,089

Total investment securities


1,649,534


1.94


15,992


1,220,159


1.75


10,678

Loans, including loans held for sale


5,168,076


3.58


91,912


5,095,433


3.75


95,098

Federal Home Loan Bank stock


8,479


3.00


127


7,839


3.12


122

Total interest-earning assets


6,957,918


3.13


108,294


6,457,115


3.30


105,969

Noninterest-earning assets


367,124






433,080





Total assets


$  7,325,042






$  6,890,195


















LIABILITIES AND EQUITY

Interest-bearing liabilities:













Interest-bearing demand deposits


$  1,430,222


0.04 %


$            256


$  1,228,548


0.03 %


$            179

Savings and money market deposits


2,208,659


0.06


646


2,000,845


0.06


556

Time deposits up to $250,000


220,617


0.28


303


234,361


0.38


437

Time deposits over $250,000


470,330


0.28


656


637,266


0.21


649

Total interest-bearing deposits


4,329,828


0.09


1,861


4,101,020


0.09


1,821

Federal Home Loan Bank advances and other
short-term borrowings


182


1.84


2


1,221


0.30


2

Long-term debt


105,668


4.15


2,174


105,429


3.93


2,052

Total interest-bearing liabilities


4,435,678


0.18


4,037


4,207,670


0.19


3,875

Noninterest-bearing deposits


2,273,639






2,013,955





Other liabilities


110,868






116,529





Total liabilities


6,820,185






6,338,154





Shareholders' equity


504,825






552,039





Non-controlling interest


32






2





Total equity


504,857






552,041





Total liabilities and equity


$  7,325,042






$  6,890,195


















Net interest income






$     104,257






$     102,094














Interest rate spread




2.95 %






3.11 %
















Net interest margin




3.01 %






3.18 %
















[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%.














 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Loans by Geographic Distribution








(Unaudited)










TABLE 6














Jun 30,


Mar 31,


Dec 31,


Sep 30,


Jun 30,

(Dollars in thousands)


2022


2022


2021


2021


2021

HAWAII:











Commercial, financial and agricultural:











SBA Paycheck Protection Program


$             19,469


$           43,380


$           87,459


$         198,315


$         395,352

Other


367,676


407,559


422,388


404,751


389,341

Real estate:











Construction


134,103


122,329


122,867


128,908


133,457

Residential mortgage


1,890,783


1,874,048


1,875,980


1,748,729


1,711,801

Home equity


698,209


676,326


637,249


618,951


583,430

Commercial mortgage


994,405


927,241


922,146


915,746


926,006

Consumer


341,213


337,188


333,843


331,987


328,332

Total loans, net of deferred fees and costs


4,445,858


4,388,071


4,401,932


4,347,387


4,467,719

Allowance for credit losses


(51,374)


(51,521)


(55,808)


(62,126)


(67,773)

Loans, net of allowance for credit losses


$        4,394,484


$      4,336,550


$      4,346,124


$      4,285,261


$      4,399,946












U.S. MAINLAND: [1]











Commercial, financial and agricultural:











SBA Paycheck Protection Program


$                  712


$                851


$             3,868


$           20,356


$           39,258

Other


156,567


136,857


107,733


114,122


96,884

Real estate:











Construction


10,935


988




Commercial mortgage


309,230


316,258


298,058


292,671


260,424

Consumer


378,331


331,812


290,058


271,261


213,033

Total loans, net of deferred fees and costs


855,775


786,766


699,717


698,410


609,599

Allowance for credit losses


(13,837)


(13,233)


(12,289)


(12,461)


(10,008)

Loans, net of allowance for credit losses


$           841,938


$         773,533


$         687,428


$         685,949


$         599,591












TOTAL:











Commercial, financial and agricultural:











SBA Paycheck Protection Program


$             20,181


$           44,231


$           91,327


$         218,671


$         434,610

Other


524,243


544,416


530,121


518,873


486,225

Real estate:











Construction


145,038


123,317


122,867


128,908


133,457

Residential mortgage


1,890,783


1,874,048


1,875,980


1,748,729


1,711,801

Home equity


698,209


676,326


637,249


618,951


583,430

Commercial mortgage


1,303,635


1,243,499


1,220,204


1,208,417


1,186,430

Consumer


719,544


669,000


623,901


603,248


541,365

Total loans, net of deferred fees and costs


5,301,633


5,174,837


5,101,649


5,045,797


5,077,318

Allowance for credit losses


(65,211)


(64,754)


(68,097)


(74,587)


(77,781)

Loans, net of allowance for credit losses


$        5,236,422


$      5,110,083


$      5,033,552


$      4,971,210


$      4,999,537












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

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Deposits







(Unaudited)  










TABLE 7














Jun 30,


Mar 31,


Dec 31,


Sep 30,


Jun 30,

(Dollars in thousands)


2022


2022


2021


2021


2021

Noninterest-bearing demand


$        2,282,967


$        2,269,562


$        2,291,246


$        2,195,404


$        2,203,806

Interest-bearing demand


1,444,566


1,433,284


1,415,277


1,372,626


1,341,280

Savings and money market


2,214,146


2,197,647


2,225,903


2,296,968


2,048,945

Time deposits less than $100,000


129,103


132,712


136,584


139,358


141,498

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


84,840


87,838


88,873


87,491


89,710

Core deposits


6,155,622


6,121,043


6,157,883


6,091,847


5,825,239












Government time deposits


165,000


188,000


214,950


238,950


403,755

Other time deposits greater than $250,000


301,439


289,988


266,325


185,066


168,165

Total time deposits greater than $250,000


466,439


477,988


481,275


424,016


571,920

Total deposits


$        6,622,061


$        6,599,031


$        6,639,158


$        6,515,863


$        6,397,159












 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Nonperforming Assets, Past Due and Restructured Loans











(Unaudited)   










TABLE 8














Jun 30,


Mar 31,


Dec 31,


Sep 30,


Jun 30,

(Dollars in thousands)


2022


2022


2021


2021


2021

Nonaccrual loans: [1]











Commercial, financial and agricultural - Other


$           333


$           293


$           183


$           689


$           699

Real estate:











Residential mortgage


3,490


3,804


4,623


5,351


5,280

Home equity


592


820


786


880


434

Consumer


568


419


289


317


332

Total nonaccrual loans


4,983


5,336


5,881


7,237


6,745

Other real estate owned ("OREO"):











Real estate:











Residential mortgage






Total OREO






Total nonperforming assets ("NPAs")


4,983


5,336


5,881


7,237


6,745

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











Commercial, financial and agricultural - Other


309


592


945



29

Real estate:











Residential mortgage



111



444


1,438

Home equity




44



Consumer


842


621


374


166


100

Total loans delinquent for 90 days or more still accruing
interest


1,151


1,324


1,363


610


1,567

Restructured loans still accruing interest: [1]











Commercial, financial and agricultural - Other





12


26

Real estate:











Residential mortgage


2,006


2,751


3,768


4,458


4,258

Commercial mortgage


965


1,004


1,043


1,577


1,636

Consumer


76


83


92


99


132

Total restructured loans still accruing interest


3,047


3,838


4,903


6,146


6,052

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


$         9,181


$       10,498


$       12,147


$       13,993


$       14,364












Total nonaccrual loans as a percentage of total loans


0.09 %


0.10 %


0.12 %


0.14 %


0.13 %

Total NPAs as a percentage of total loans and OREO


0.09 %


0.10 %


0.12 %


0.14 %


0.13 %

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

loans and OREO


0.12 %


0.13 %


0.14 %


0.16 %


0.16 %

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

percentage of total loans and OREO


0.17 %


0.20 %


0.24 %


0.28 %


0.28 %












Quarter-to-quarter changes in NPAs:











Balance at beginning of quarter


$         5,336


$         5,881


$         7,237


$         6,745


$         7,194

Additions


1,881


1,659


1,375


1,951


1,879

Reductions:











Payments


(285)


(1,598)


(933)


(767)


(1,120)

Return to accrual status


(979)


(38)


(1,034)


(141)


(84)

Charge-offs, valuation and other adjustments


(970)


(568)


(764)


(551)


(1,124)

Total reductions


(2,234)


(2,204)


(2,731)


(1,459)


(2,328)

Balance at end of quarter


$         4,983


$         5,336


$         5,881


$         7,237


$         6,745












[1] Section 4013 of the CARES Act and the revised Interagency Statement were applied to loan modifications related to the COVID-19 pandemic as eligible and applicable. This relief ended on

January 1, 2022. These loan modifications were 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


Six Months Ended



Jun 30,


Mar 31,


Dec 31,


Sep 30,


Jun 30,


June 30,

(Dollars in thousands)


2022


2022


2021


2021


2021


2022


2021

Allowance for credit losses ("ACL"):















ACL at beginning of period


$     64,754


$     68,097


$     74,587


$     77,781


$     81,553


$     68,097


$     83,269
















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


1,456


(2,931)


(7,417)


(2,969)


(2,963)


(1,475)


(3,937)
















Charge-offs:















Commercial, financial and agricultural - Other


487


254


379


334


401


741


1,010

Consumer


1,390


1,216


952


829


1,523


2,606


2,621

Total charge-offs


1,877


1,470


1,331


1,163


1,924


3,347


3,631
















Recoveries:















Commercial, financial and agricultural - Other


215


350


358


281


276


565


365

Real estate:















Construction


62



1,159




62


Residential mortgage


36


112


13


53


186


148


292

Home equity








9

Commercial mortgage






65



73

Consumer


565


596


728


604


588


1,161


1,341

Total recoveries


878


1,058


2,258


938


1,115


1,936


2,080

Net charge-offs (recoveries)


999


412


(927)


225


809


1,411


1,551

ACL at end of period


$     65,211


$     64,754


$     68,097


$     74,587


$     77,781


$     65,211


$     77,781
















Average loans, net of deferred fees and costs


$ 5,221,300


$ 5,114,260


$ 5,073,069


$ 5,022,909


$ 5,110,820


$ 5,168,076


$ 5,095,433

Annualized ratio of net charge-offs to average loans


0.08 %


0.03 %


(0.07) %


0.02 %


0.06 %


0.05 %


0.06 %
















[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:














Jun 30,


Mar 31,


Dec 31,


Sep 30,


Jun 30,

(Dollars in thousands)


2022


2022


2021


2021


2021

ACL


$        65,211


$        64,754


$        68,097


$        74,587


$        77,781












Total loans


$   5,301,633


$   5,174,837


$   5,101,649


$   5,045,797


$   5,077,318

Less: PPP loans


20,181


44,231


91,327


218,671


434,610

Core loans (or total loans, excluding PPP loans)


$   5,281,452


$   5,130,606


5,010,322


4,827,126


$   4,642,708












Ratio of ACL to total loans


1.23 %


1.25 %


1.33 %


1.48 %


1.53 %

Ratio of ACL to core loans


1.23 %


1.26 %


1.36 %


1.55 %


1.68 %

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/central-pacific-financial-reports-second-quarter-earnings-of-17-6-million-301593901.html

SOURCE Central Pacific Financial Corp.

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