Central Pacific Financial Corp. CPF

NYS: CPF | ISIN: US1547604090   16/07/2024
23,99 USD (+3,27%)
(+3,27%)   16/07/2024

Central Pacific Financial Reports Third Quarter Earnings Of $16.7 Million

  • Net income of $16.7 million, or $0.61 per diluted share for the quarter.
  • ROA of 0.91% and ROE of 14.49% for the quarter.
  • Total loans of $5.42 billion increased by $120.6 million, or 2.3% (9.2% annualized) in the third quarter.
  • Net interest income increased by $2.4 million, or 4.5% from the previous quarter.
  • Net interest margin of 3.17% increased by 12 bps from the previous quarter.
  • Board of Directors approved quarterly cash dividend of $0.26 per share.
  • Arnold Martines, current President and Chief Operating Officer announced to succeed Paul Yonamine as Chief Executive Officer, effective January 1, 2023.

HONOLULU, Oct. 21, 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 third quarter of 2022 of $16.7 million, or fully diluted earnings per share ("EPS") of $0.61.

"We continued to execute well in the third quarter as reflected in our strong earnings, loan growth and expanding net interest margin," said Paul Yonamine, Chairman and Chief Executive Officer. "While the broader economy is presenting challenges for the entire financial services industry, Hawaii has outperformed the nation during past recessions. Additionally, Central Pacific is well-positioned with solid asset quality and capital."

"We are pleased with our third quarter performance as our teams continue to work hard to meet our customers' needs.  We continue to develop our digital and Banking-as-a-Service initiatives as a key part of our long-term strategic goal to build robust digital channels," said Arnold Martines, President and Chief Operating Officer.

Yesterday, the Company announced the promotion of Martines to Chief Executive Officer of both the Company and the Bank, succeeding Yonamine who will become Chairman Emeritus of the Company and the Bank, as well as an advisor to Martines. Also, Catherine Ngo, presently Executive Vice Chair, will become Chair of the Board of Directors of both the Company and the Bank. All changes will be effective January 1, 2023. In commenting on the changes, Yonamine said, "I have had four great years at Central Pacific Bank and have accomplished all of my strategic goals for the Company and the Bank, including our RISE 2020 program with the $40 million renovation of our Central Pacific Plaza headquarters, our online, mobile and ATM upgrades and our total corporate rebrand. These accomplishments have put us on a solid path to becoming a digital-first bank to help us excel in the rapidly changing banking paradigm. I'd like to express my appreciation to the Board, Arnold, David and Catherine, for their partnership and support the past four years. I expect us to continue on our current path and can think of no better banker anywhere than Arnold Martines to lead this great institution into the future."

In commenting on the changes, Martines, who will also be named to the Board of Directors of the Company and the Bank, said, "It is my honor and privilege to lead Central Pacific Bank. We are an organization with strong core values and a solid digital roadmap for the future, thanks to Paul and Catherine. We intend to stay true to our founders and continue their legacy of focusing on serving the needs of our customers, by providing exceptional service while leveraging new technologies to provide the ultimate in convenience and value." 

Earnings Highlights
Net interest income for the third quarter of 2022 was $55.4 million, an increase of $2.4 million, or 4.5% from the prior quarter, and a decrease of $0.7 million, or 1.3% from the year-ago quarter.

Net interest margin for the third quarter of 2022 was 3.17%, an increase of 12 basis points ("bps") from the prior quarter and a decrease of 14 bps from the year-ago quarter. The year-ago quarter included $8.6 million in net PPP interest income and fees, compared to $0.7 million in the current quarter.

The sequential quarter increase in net interest income and net interest margin is primarily due to higher asset yields and continued strong loan growth. Additional information on average balances, interest income and expenses and yields and rates is presented in Tables 4 and 5.

In the third quarter of 2022, the Company recorded a provision for credit losses of $0.4 million, compared to a provision of $1.0 million in the previous quarter and a release of the credit loss reserves of $2.6 million in the year-ago quarter.

Other operating income for the third quarter of 2022 totaled $9.6 million, compared to $17.1 million in the previous quarter and $10.3 million in the year-ago quarter. The decrease from the previous quarter was primarily due to the $8.5 million gain on sale of restricted Class B common stock of Visa, Inc. last quarter. Additional information on other operating income is presented in Table 3.

Other operating expense for the third quarter of 2022 totaled $42.0 million, compared to $45.3 million in the previous quarter and $41.3 million in the year-ago quarter. The decrease in other operating expense from the previous quarter was primarily due to a non-cash settlement charge of $4.9 million for the termination of the Company's defined benefit pension plan (included in other) last quarter. Additional information on other operating expense is presented in Table 3.

The efficiency ratio for the third quarter of 2022 was 64.62%, compared to 64.68% in the previous quarter and 62.32% in the year-ago quarter.

The effective tax rate for the third quarter of 2022 was 26.2%, compared to 26.0% in the previous quarter and 24.7% in the year-ago quarter.

Balance Sheet Highlights
Total assets at September 30, 2022 of $7.34 billion increased by $38.5 million, or 0.5% from $7.30 billion at June 30, 2022, and increased by $39.4 million, or 0.5% from $7.30 billion at September 30, 2021.

Total loans, net of deferred fees and costs, at September 30, 2022 of $5.42 billion increased by $120.6 million, or 2.3% from $5.30 billion at June 30, 2022, and increased by $376.4 million, or 7.5%, from $5.05 billion at September 30, 2021. Loans by type and geographic distribution are summarized in Table 6.

Total deposits at September 30, 2022 of $6.56 billion decreased by $65.6 million or 1.0%  from $6.62 billion at June 30, 2022, but increased by $40.6 million, or 0.6%, 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 $6.04 billion at September 30, 2022, and decreased by $119.3 million from June 30, 2022. Core deposit and total deposit balances are summarized in Table 7.

Asset Quality
Nonperforming assets at September 30, 2022 totaled $4.2 million, or 0.06% of total assets, compared to $5.0 million, or 0.07% of total assets at June 30, 2022, 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 charge-offs in the third quarter of 2022 totaled $1.6 million, compared to net charge-offs of $1.0 million in the previous quarter, and net charge-offs of $0.2 million in the year-ago quarter.

The allowance for credit losses, as a percentage of total loans at September 30, 2022 was 1.19%, compared to 1.23% at June 30, 2022, and 1.48% at September 30, 2021. Additional information on net charge-offs and recoveries and the allowance for credit losses is presented in Table 9.

Capital
Total shareholders' equity was $438.5 million at September 30, 2022, compared to $455.1 million and $555.4 million at June 30, 2022 and September 30, 2021, 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 third quarter of 2022, the Company repurchased 218,000 shares of common stock, at a total cost of $4.9 million, or an average cost per share of $22.33. As of September 30, 2022, $15.2 million remained available for repurchase under the Company's share repurchase program.

At September 30, 2022, the Company's leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ratios were 8.7%, 11.5%, 13.7%, and 10.6%, respectively, compared to 8.6%, 11.6%, 13.9%, and 10.7%, respectively, at June 30, 2022.

On October 20, 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 December 15, 2022 to shareholders of record at the close of business on November 30, 2022.

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: 420241). A playback of the call will be available through November 21, 2022 by dialing 1-866-813-9403 (access code: 996439) 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 $7.34 billion in assets as of September 30, 2022. Central Pacific Bank, its primary subsidiary, operates 27 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 | CPF LISTED NYSE

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 effects of inflation and rising interest rates; 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"); 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 document. 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


Nine Months Ended

(Dollars in thousands,


Sep 30,


Jun 30,


Mar 31,


Dec 31,


Sep 30,


Sep 30,

except for per share amounts)


2022


2022


2022


2021


2021


2022


2021

CONDENSED INCOME STATEMENT















Net interest income


$     55,365


$     52,978


$     50,935


$     53,096


$     56,086


$   159,278


$   157,951

Provision (credit) for credit losses


362


989


(3,195)


(7,692)


(2,635)


(1,844)


(6,899)

Total other operating income


9,629


17,138


9,551


11,566


10,253


36,318


31,494

Total other operating expense


41,998


45,349


38,205


42,422


41,345


125,552


120,624

Income tax expense


5,919


6,184


6,038


7,605


6,814


18,141


18,153

Net income


16,715


17,594


19,438


22,327


20,815


53,747


57,567

Basic earnings per common share


$        0.61


$        0.64


$        0.70


$        0.80


$        0.74


$        1.96


$        2.05

Diluted earnings per common share


0.61


0.64


0.70


0.80


0.74


1.94


2.03

Dividends declared per common share


0.26


0.26


0.26


0.25


0.24


0.78


0.71
















PERFORMANCE RATIOS















Return on average assets (ROA) [1]


0.91 %


0.96 %


1.06 %


1.22 %


1.15 %


0.98 %


1.10 %

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


14.49


14.93


14.44


16.05


14.82


14.62


13.82

Average shareholders' equity to average assets


6.30


6.45


7.34


7.61


7.79


6.69


7.93

Efficiency ratio  [2]


64.62


64.68


63.16


65.61


62.32


64.19


63.67

Net interest margin (NIM) [1]


3.17


3.05


2.97


3.08


3.31


3.06


3.22

Dividend payout ratio [3]


42.62


40.63


37.14


31.25


32.43


40.21


34.98
















SELECTED AVERAGE BALANCES















Average loans, including loans held for sale


$ 5,355,088


$ 5,221,300


$ 5,114,260


$ 5,073,069


$ 5,022,909


$ 5,231,098


$ 5,070,993

Average interest-earning assets


6,991,773


6,982,556


6,932,649


6,890,829


6,761,643


6,969,326


6,559,740

Average assets


7,320,751


7,309,939


7,341,850


7,315,325


7,210,210


7,323,596


6,998,034

Average deposits


6,535,321


6,626,462


6,581,593


6,536,826


6,424,768


6,580,502


6,219,372

Average interest-bearing liabilities


4,538,893


4,442,172


4,429,114


4,407,612


4,326,589


4,470,461


4,247,745

Average shareholders' equity


461,328


471,420


538,601


556,462


561,606


490,140


555,264
















[1] ROA and ROE are annualized based on a 30/360 day convention. Annualized net interest income and expense in theNIM 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)














Sep 30,


Jun 30,


Mar 31,


Dec 31,


Sep 30,



2022


2022


2022


2021


2021

REGULATORY CAPITAL RATIOS











Central Pacific Financial Corp











Leverage capital ratio


8.7 %


8.6 %


8.5 %


8.5 %


8.5 %

Tier 1 risk-based capital ratio


11.5


11.6


11.9


12.2


12.2

Total risk-based capital ratio


13.7


13.9


14.2


14.5


14.6

Common equity tier 1 capital ratio


10.6


10.7


10.9


11.2


11.2

Central Pacific Bank











Leverage capital ratio


9.1


9.0


9.0


8.9


9.0

Tier 1 risk-based capital ratio


12.2


12.2


12.6


12.8


13.0

Total risk-based capital ratio


13.4


13.5


13.8


14.0


14.3

Common equity tier 1 capital ratio


12.2


12.2


12.6


12.8


13.0














Sep 30,


Jun 30,


Mar 31,


Dec 31,


Sep 30,

(dollars in thousands, except for per share amounts)


2022


2022


2022


2021


2021

BALANCE SHEET











Total loans, net of deferred fees and costs


$ 5,422,212


$ 5,301,633


$ 5,174,837


$ 5,101,649


$ 5,045,797

Total assets


7,337,631


7,299,178


7,298,819


7,419,089


7,298,231

Total deposits


6,556,434


6,622,061


6,599,031


6,639,158


6,515,863

Long-term debt


105,799


105,738


105,677


105,616


105,556

Total shareholders' equity


438,468


455,100


486,328


558,219


555,419

Total shareholders' equity to total assets


5.98 %


6.23 %


6.66 %


7.52 %


7.61 %












ASSET QUALITY











Allowance for credit losses (ACL)


$     64,382


$     65,211


$     64,754


$     68,097


$     74,587

Nonaccrual loans


4,220


4,983


5,336


5,881


7,237

Non-performing assets (NPA)


4,220


4,983


5,336


5,881


7,237

ACL to total loans


1.19 %


1.23 %


1.25 %


1.33 %


1.48 %

ACL to nonaccrual loans


1,525.64 %


1,308.67 %


1,213.53 %


1,157.92 %


1,030.63 %

NPA to total assets


0.06 %


0.07 %


0.07 %


0.08 %


0.10 %












PER SHARE OF COMMON STOCK OUTSTANDING











Book value per common share


$       16.08


$       16.57


$       17.63


$       20.14


$       19.84

Closing market price per common share


20.69


21.45


27.90


28.17


25.68


 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)

TABLE 2



Sep 30,


Jun 30,


Mar 31,


Dec 31,


Sep 30,

(Dollars in thousands, except share data)


2022


2022


2022


2021


2021

ASSETS











Cash and due from financial institutions


$         116,365


$         108,389


$         83,947


$           81,506


$         108,669

Interest-bearing deposits in other financial institutions


22,332


22,741


118,183


247,401


240,173

Investment securities:











Available-for-sale debt securities, at fair value


686,681


787,373


1,199,482


1,631,699


1,535,450

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

$590,880 at September 30, 2022,  $635,565 at June 30, 2022,

$329,503 at March 31, 2022, and none at December 31, 2021

and September 30, 2021


662,827


663,365


329,507



Equity securities, at fair value






1,593

Total investment securities


1,349,508


1,450,738


1,528,989


1,631,699


1,537,043

Loans held for sale


1,701


535


4,677


3,531


5,290

Loans, net of deferred fees and costs


5,422,212


5,301,633


5,174,837


5,101,649


5,045,797

Less: allowance for credit losses


64,382


65,211


64,754


68,097


74,587

Loans, net of allowance for credit losses


5,357,830


5,236,422


5,110,083


5,033,552


4,971,210

Premises and equipment, net


89,979


88,664


79,455


80,354


80,190

Accrued interest receivable


18,134


17,146


16,423


16,709


17,110

Investment in unconsolidated entities


36,769


37,341


31,092


29,679


30,397

Mortgage servicing rights


9,216


9,369


9,480


9,738


9,976

Bank-owned life insurance


167,761


167,202


167,407


169,148


167,961

Federal Home Loan Bank ("FHLB") stock


13,546


8,943


8,943


7,964


7,952

Right of use lease asset


35,978


36,978


38,435


39,441


40,757

Other assets


118,512


114,710


101,705


68,367


81,503

Total assets


$      7,337,631


$      7,299,178


$    7,298,819


$      7,419,089


$      7,298,231

LIABILITIES











Deposits:











Noninterest-bearing demand


$      2,138,083


$      2,282,967


$    2,269,562


$      2,291,246


$      2,195,404

Interest-bearing demand


1,441,302


1,444,566


1,433,284


1,415,277


1,372,626

Savings and money market


2,194,991


2,214,146


2,197,647


2,225,903


2,296,968

Time


782,058


680,382


698,538


706,732


650,865

Total deposits


6,556,434


6,622,061


6,599,031


6,639,158


6,515,863

FHLB advances and other short-term borrowings


115,000





Long-term debt


105,799


105,738


105,677


105,616


105,556

Lease liability


36,941


38,037


39,610


40,731


41,933

Other liabilities


84,989


78,242


68,123


75,317


79,412

Total liabilities


6,899,163


6,844,078


6,812,441


6,860,822


6,742,764

EQUITY











Shareholders' equity:











Preferred stock, no par value, authorized 1,000,000 shares;

issued and outstanding:  none at September 30, 2022, June 30, 2022,

March 31, 2022, December 31, 2021, and September 30, 2021






Common stock, no par value, authorized 185,000,000 shares;

issued and outstanding:  27,262,879 at September 30, 2022,

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

27,714,071 at December 31, 2021, and 27,999,588 at September 30, 2021


412,994


417,862


421,153


426,091


436,957

Additional paid-in capital


100,426


98,977


98,270


98,073


97,279

Retained earnings


74,301


64,693


54,252


42,015


22,916

Accumulated other comprehensive loss


(149,253)


(126,432)


(87,347)


(7,960)


(1,733)

Total shareholders' equity


438,468


455,100


486,328


558,219


555,419

Non-controlling interest




50


48


48

Total equity


438,468


455,100


486,378


558,267


555,467

Total liabilities and  equity


$      7,337,631


$      7,299,178


$    7,298,819


$      7,419,089


$      7,298,231













 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

TABLE 3



Three Months Ended


Nine Months Ended



Sep 30,


Jun 30,


Mar 31,


Dec 31,


Sep 30,


September 30,

(Dollars in thousands, except per share data)


2022


2022


2022


2021


2021


2022


2021

Interest income:















Interest and fees on loans


$           51,686


$           46,963


$           44,949


$           47,576


$           51,104


$         143,598


$         146,202

Interest and dividends on investment securities:















Taxable investment securities


6,933


7,035


6,969


6,667


6,210


20,937


15,763

Tax-exempt investment securities


805


807


816


642


470


2,428


1,330

Dividend income on investment securities




21


21


18


21


54

Interest on deposits in other financial institutions


107


191


72


86


105


370


176

Dividend income on FHLB stock


138


68


59


61


62


265


184

Total interest income


59,669


55,064


52,886


55,053


57,969


167,619


163,709

Interest expense:















Interest on deposits:















Demand


217


144


112


104


101


473


280

Savings and money market


1,054


317


329


352


332


1,700


888

Time


1,092


490


469


478


428


2,051


1,514

Interest on short-term borrowings


660


2





662


2

Interest on long-term debt


1,281


1,133


1,041


1,023


1,022


3,455


3,074

Total interest expense


4,304


2,086


1,951


1,957


1,883


8,341


5,758

Net interest income


55,365


52,978


50,935


53,096


56,086


159,278


157,951

Provision (credit) for credit losses


362


989


(3,195)


(7,692)


(2,635)


(1,844)


(6,899)

Net interest income after provision (credit) for credit losses


55,003


51,989


54,130


60,788


58,721


161,122


164,850

Other operating income:















Mortgage banking income


831


1,140


1,172


1,902


1,327


3,143


5,830

Service charges on deposit accounts


2,138


2,026


1,861


1,800


1,637


6,025


4,558

Other service charges and fees


4,955


4,610


4,488


5,016


4,942


14,053


13,351

Income from fiduciary activities


1,165


1,188


1,154


1,283


1,292


3,507


3,792

Net gain on sales of investment securities



8,506




100


8,506


150

Income from bank-owned life insurance


167


(1,028)


539


946


540


(322)


2,547

Other


373


696


337


619


415


1,406


1,266

Total other operating income


9,629


17,138


9,551


11,566


10,253


36,318


31,494

Other operating expense:















Salaries and employee benefits


22,778


22,369


20,942


23,030


23,566


66,089


67,183

Net occupancy


4,743


4,448


3,774


4,129


4,185


12,965


12,004

Equipment


1,085


1,075


1,082


1,207


1,089


3,242


3,137

Communication


712


744


806


922


824


2,262


2,349

Legal and professional services


2,573


2,916


2,626


2,928


2,575


8,115


7,524

Computer software


4,138


3,624


3,082


3,125


2,998


10,844


10,179

Advertising


1,150


1,150


1,150


1,179


1,329


3,450


4,316

Other


4,819


9,023


4,743


5,902


4,779


18,585


13,932

Total other operating expense


41,998


45,349


38,205


42,422


41,345


125,552


120,624

Income before income taxes


22,634


23,778


25,476


29,932


27,629


71,888


75,720

Income tax expense


5,919


6,184


6,038


7,605


6,814


18,141


18,153

Net income


$           16,715


$           17,594


$           19,438


$           22,327


$           20,815


$           53,747


$           57,567

Per common share data:















Basic earnings per share


$               0.61


$               0.64


$               0.70


$               0.80


$               0.74


$               1.96


$               2.05

Diluted earnings per share


0.61


0.64


0.70


0.80


0.74


1.94


2.03

Cash dividends declared


0.26


0.26


0.26


0.25


0.24


0.78


0.71

Basic weighted average shares outstanding


27,356,614


27,516,284


27,591,390


27,769,651


27,967,089


27,487,237


28,082,632

Diluted weighted average shares outstanding


27,501,212


27,676,619


27,874,924


28,045,826


28,175,953


27,666,197


28,316,574

















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



September 30, 2022


June 30, 2022


September 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


$   19,802


2.14 %


$   107


$ 106,083


0.72 %


$   191


$   273,039


0.15 %


$      105

Investment securities, excluding valuation allowance:



















Taxable


1,445,781


1.92


6,934


1,487,129


1.89


7,034


1,351,272


1.84


6,228

Tax-exempt [1]


158,052


2.57


1,018


159,087


2.57


1,023


106,333


2.24


595

Total investment securities


1,603,833


1.98


7,952


1,646,216


1.96


8,057


1,457,605


1.87


6,823

Loans, including loans held for sale


5,355,088


3.84


51,686


5,221,300


3.60


46,963


5,022,909


4.05


51,104

Federal Home Loan Bank stock


13,050


4.23


138


8,957


3.02


68


8,090


3.09


62

Total interest-earning assets


6,991,773


3.41


59,883


6,982,556


3.17


55,279


6,761,643


3.42


58,094

Noninterest-earning assets


328,978






327,383






448,567





Total assets


$  7,320,751






$  7,309,939






$  7,210,210
























LIABILITIES AND EQUITY

Interest-bearing liabilities:



















Interest-bearing demand deposits


$  1,450,434


0.06 %


$      217


$  1,435,088


0.04 %


$      144


$  1,356,967


0.03 %


$      101

Savings and money market deposits


2,208,037


0.19


1,054


2,204,934


0.06


317


2,168,055


0.06


332

Time deposits up to $250,000


228,707


0.42


245


217,605


0.27


148


228,762


0.31


181

Time deposits over $250,000


443,178


0.76


847


478,483


0.29


342


467,289


0.21


247

Total interest-bearing deposits


4,330,356


0.22


2,363


4,336,110


0.09


951


4,221,073


0.08


861

Federal Home Loan Bank advances and other short-term borrowings


102,777


2.55


660


363


1.84


2




Long-term debt


105,760


4.80


1,281


105,699


4.30


1,133


105,516


3.84


1,022

Total interest-bearing liabilities


4,538,893


0.38


4,304


4,442,172


0.19


2,086


4,326,589


0.17


1,883

Noninterest-bearing deposits


2,204,965






2,290,352






2,203,695





Other liabilities


115,565






105,979






118,272





Total liabilities


6,859,423






6,838,503






6,648,556





Shareholders' equity


461,328






471,420






561,606





Non-controlling interest







16






48





Total equity


461,328






471,436






561,654





Total liabilities and equity


$  7,320,751






$  7,309,939






$  7,210,210
























Net interest income






$ 55,579






$ 53,193






$ 56,211




















Interest rate spread




3.03 %






2.98 %






3.25 %






















Net interest margin




3.17 %






3.05 %






3.31 %























[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



Nine Months Ended


Nine Months Ended



September 30, 2022


September 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


$   94,076


0.53 %


$     370


$ 180,646


0.13 %


$     176

Investment securities, excluding valuation allowance:













Taxable


1,473,989


1.90


20,958


1,202,564


1.75


15,817

Tax-exempt [1]


160,144


2.56


3,073


97,613


2.30


1,684

Total investment securities


1,634,133


1.96


24,031


1,300,177


1.79


17,501

Loans, including loans held for sale


5,231,098


3.67


143,598


5,070,993


3.85


146,202

Federal Home Loan Bank stock


10,019


3.53


265


7,924


3.11


184

Total interest-earning assets


6,969,326


3.22


168,264


6,559,740


3.34


164,063

Noninterest-earning assets


354,270






438,294





Total assets


$  7,323,596






$  6,998,034


















LIABILITIES AND EQUITY

Interest-bearing liabilities:













Interest-bearing demand deposits


$  1,437,034


0.04 %


$            473


$  1,271,825


0.03 %


$            280

Savings and money market deposits


2,208,449


0.10


1,700


2,057,194


0.06


888

Time deposits up to  $250,000


223,343


0.33


548


232,474


0.36


619

Time deposits over $250,000


461,180


0.44


1,503


579,984


0.21


895

Total interest-bearing deposits


4,330,006


0.13


4,224


4,141,477


0.09


2,682

Federal Home Loan Bank advances and other short-term borrowings


34,756


2.55


662


810


0.30


2

Long-term debt


105,699


4.37


3,455


105,458


3.90


3,074

Total interest-bearing liabilities


4,470,461


0.25


8,341


4,247,745


0.18


5,758

Noninterest-bearing deposits


2,250,496






2,077,895





Other liabilities


112,478






117,113





Total liabilities


6,833,435






6,442,753





Shareholders' equity


490,140






555,264





Non-controlling interest


21






17





Total equity


490,161






555,281





Total liabilities and equity


$  7,323,596






$  6,998,034


















Net interest income






$ 159,923






$     158,305














Interest rate spread




2.97 %






3.16 %
















Net interest margin




3.06 %






3.22 %

















[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



Sep 30,


Jun 30,


Mar 31,


Dec 31,


Sep 30,

(Dollars in thousands)


2022


2022


2022


2021


2021

HAWAII:











Commercial, financial and agricultural:











SBA Paycheck Protection Program


$               5,208


$           19,469


$           43,380


$           87,459


$         198,315

Other


358,805


367,676


407,559


422,388


404,751

Real estate:











Construction


138,724


134,103


122,329


122,867


128,908

Residential mortgage


1,923,068


1,890,783


1,874,048


1,875,980


1,748,729

Home equity


719,399


698,209


676,326


637,249


618,951

Commercial mortgage


1,002,874


994,405


927,241


922,146


915,746

Consumer


347,388


341,213


337,188


333,843


331,987

Total loans, net of deferred fees and costs


4,495,466


4,445,858


4,388,071


4,401,932


4,347,387

Allowance for credit losses


(47,814)


(51,374)


(51,521)


(55,808)


(62,126)

Loans, net of allowance for credit losses


$        4,447,652


$      4,394,484


$      4,336,550


$      4,346,124


$      4,285,261












U.S. MAINLAND: [1]











Commercial, financial and agricultural:











SBA Paycheck Protection Program


$                    —


$                712


$                851


$             3,868


$           20,356

Other


158,474


156,567


136,857


107,733


114,122

Real estate:











Construction


12,872


10,935


988



Commercial mortgage


332,872


309,230


316,258


298,058


292,671

Consumer


422,528


378,331


331,812


290,058


271,261

Total loans, net of deferred fees and costs


926,746


855,775


786,766


699,717


698,410

Allowance for credit losses


(16,568)


(13,837)


(13,233)


(12,289)


(12,461)

Loans, net of allowance for credit losses


$           910,178


$         841,938


$         773,533


$         687,428


$         685,949












TOTAL:











Commercial, financial and agricultural:











SBA Paycheck Protection Program


$               5,208


$           20,181


$           44,231


$           91,327


$         218,671

Other


517,279


524,243


544,416


530,121


518,873

Real estate:











Construction


151,596


145,038


123,317


122,867


128,908

Residential mortgage


1,923,068


1,890,783


1,874,048


1,875,980


1,748,729

Home equity


719,399


698,209


676,326


637,249


618,951

Commercial mortgage


1,335,746


1,303,635


1,243,499


1,220,204


1,208,417

Consumer


769,916


719,544


669,000


623,901


603,248

Total loans, net of deferred fees and costs


5,422,212


5,301,633


5,174,837


5,101,649


5,045,797

Allowance for credit losses


(64,382)


(65,211)


(64,754)


(68,097)


(74,587)

Loans, net of allowance for credit losses


$        5,357,830


$      5,236,422


$      5,110,083


$      5,033,552


$      4,971,210












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

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Deposits


(Unaudited)

TABLE 7



Sep 30,


Jun 30,


Mar 31,


Dec 31,


Sep 30,

(Dollars in thousands)


2022


2022


2022


2021


2021

Noninterest-bearing demand


$        2,138,083


$        2,282,967


$        2,269,562


$        2,291,246


$        2,195,404

Interest-bearing demand


1,441,302


1,444,566


1,433,284


1,415,277


1,372,626

Savings and money market


2,194,991


2,214,146


2,197,647


2,225,903


2,296,968

Time deposits less than $100,000


153,238


129,103


132,712


136,584


139,358

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


108,723


84,840


87,838


88,873


87,491

Core deposits


6,036,337


6,155,622


6,121,043


6,157,883


6,091,847












Government time deposits


195,057


165,000


188,000


214,950


238,950

Other time deposits greater than $250,000


325,040


301,439


289,988


266,325


185,066

Total time deposits greater than $250,000


520,097


466,439


477,988


481,275


424,016

Total deposits


$        6,556,434


$        6,622,061


$        6,599,031


$        6,639,158


$        6,515,863












 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Nonperforming Assets, Past Due and Restructured Loans

(Unaudited)

TABLE 8



Sep 30,


Jun 30,


Mar 31,


Dec 31,


Sep 30,

(Dollars in thousands)


2022


2022


2022


2021


2021

Nonaccrual loans: [1]











Commercial, financial and agricultural - Other


$           277


$           333


$           293


$           183


$           689

Real estate:











Residential mortgage


2,771


3,490


3,804


4,623


5,351

Home equity


584


592


820


786


880

Consumer


588


568


419


289


317

Total nonaccrual loans


4,220


4,983


5,336


5,881


7,237

Other real estate owned ("OREO"):











Real estate:











Residential mortgage






Total OREO






Total nonperforming assets ("NPAs")


4,220


4,983


5,336


5,881


7,237

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











Commercial, financial and agricultural - Other


669


309


592


945


Real estate:











Residential mortgage


503



111



444

Home equity





44


Consumer


623


842


621


374


166

Total loans delinquent for 90 days or more still accruing interest


1,795


1,151


1,324


1,363


610

Restructured loans still accruing interest: [1]











Commercial, financial and agricultural - Other






12

Real estate:











Residential mortgage


2,030


2,006


2,751


3,768


4,458

Commercial mortgage


925


965


1,004


1,043


1,577

Consumer


69


76


83


92


99

Total restructured loans still accruing interest


3,024


3,047


3,838


4,903


6,146

Total NPAs and loans delinquent for 90 days or more and

restructured loans still accruing interest


$         9,039


$         9,181


$       10,498


$       12,147


$       13,993












Total nonaccrual loans as a percentage of total loans


0.08 %


0.09 %


0.10 %


0.12 %


0.14 %

Total NPAs as a percentage of total loans and OREO


0.08 %


0.09 %


0.10 %


0.12 %


0.14 %

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

interest as a percentage of total loans and OREO


0.11 %


0.12 %


0.13 %


0.14 %


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 %


0.17 %


0.20 %


0.24 %


0.28 %












Quarter-to-quarter changes in NPAs:











Balance at beginning of quarter


$         4,983


$         5,336


$         5,881


$         7,237


$         6,745

Additions


1,072


1,881


1,659


1,375


1,951

Reductions:











Payments


(329)


(285)


(1,598)


(933)


(767)

Return to accrual status


(616)


(979)


(38)


(1,034)


(141)

Charge-offs, valuation and other adjustments


(890)


(970)


(568)


(764)


(551)

Total reductions


(1,835)


(2,234)


(2,204)


(2,731)


(1,459)

Balance at end of quarter


$         4,220


$         4,983


$         5,336


$         5,881


$         7,237













[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


Nine Months Ended



Sep 30,


Jun 30,


Mar 31,


Dec 31,


Sep 30,


September 30,

(Dollars in thousands)


2022


2022


2022


2021


2021


2022


2021

Allowance for credit  losses ("ACL"):















ACL at beginning of period


$     65,211


$     64,754


$     68,097


$     74,587


$     77,781


$     68,097


$     83,269
















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


731


1,456


(2,931)


(7,417)


(2,969)


(744)


(6,906)
















Charge-offs:















Commercial, financial and agricultural - Other


550


487


254


379


334


1,291


1,344

Consumer


1,912


1,390


1,216


952


829


4,518


3,450

Total charge-offs


2,462


1,877


1,470


1,331


1,163


5,809


4,794
















Recoveries:















Commercial, financial and agricultural - Other


220


215


350


358


281


785


646

Real estate:















Construction


14


62



1,159



76


Residential mortgage


14


36


112


13


53


162


345

Home equity


36






36


9

Commercial mortgage








73

Consumer


618


565


596


728


604


1,779


1,945

Total recoveries


902


878


1,058


2,258


938


2,838


3,018

Net charge-offs (recoveries)


1,560


999


412


(927)


225


2,971


1,776

ACL at end of period


$     64,382


$     65,211


$     64,754


$     68,097


$     74,587


$     64,382


$     74,587
















Average loans, net of deferred fees and costs


$ 5,355,088


$ 5,221,300


$ 5,114,260


$ 5,073,069


$ 5,022,909


$ 5,231,098


$ 5,070,993

Annualized ratio of net charge-offs to average loans


0.12 %


0.08 %


0.03 %


(0.07) %


0.02 %


0.08 %


0.05 %


[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.  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

 

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SOURCE Central Pacific Financial Corp.

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