Central Pacific Financial Corp. Reports $10.9 Million Fourth Quarter Earnings

Jan 28, 2016, 07:00 ET from Central Pacific Financial Corp.

HONOLULU, Jan. 28, 2016 /PRNewswire/ -- Central Pacific Financial Corp. (NYSE: CPF), parent company of Central Pacific Bank (the "Bank"), today reported net income for the fourth quarter of 2015 of $10.9 million, or $0.34 per diluted share, compared to net income in the fourth quarter of 2014 of $13.3 million, or $0.37 per diluted share, and net income in the third quarter of 2015 of $12.2 million, or $0.38 per diluted share. For the year ended December 31, 2015, the Company's net income was $45.9 million, or $1.40 per diluted share, compared to net income in the year ended December 31, 2014 of $40.5 million, or $1.07 per diluted share.

"We are pleased to report a solid fourth quarter highlighted by strong growth in loans and deposits. Additionally, our performance for the full year 2015 was excellent with gains in net income, loan and deposit growth, and an improvement in asset quality," said Catherine Ngo, President and Chief Executive Officer.  "We believe we are well positioned for further growth and strong performance in 2016."

On January 27, 2016, the Company's Board of Directors declared a quarterly cash dividend of $0.14 per share on the Company's outstanding common shares. The dividend will be payable on March 15, 2016 to shareholders of record at the close of business on February 29, 2016.

The Company did not repurchase any shares of common stock under its share repurchase program during the fourth quarter of 2015. During the year ended December 31, 2015, the Company repurchased approximately 11.7% of its common stock outstanding as of December 31, 2014.

On January 27, 2016, the Company's Board of Directors also authorized the repurchase of up to $30 million of the Company's common stock from time to time in the open market or in privately negotiated transactions, pursuant to a newly authorized share repurchase program (the "2016 Repurchase Plan"). The 2016 Repurchase Plan replaces and supersedes in its entirety the share repurchase program previously approved by the Company's Board of Directors, which had approximately $20.2 million in remaining repurchase authority at December 31, 2015.

Since reinstating quarterly cash dividends in 2013, the Company has returned a total of $46.3 million in cash dividends to its shareholders and repurchased 11,168,501 shares of common stock at a total cost of $234.8 million, excluding fees and expenses.

Significant Highlights and Fourth Quarter Results

  • Reported net income of $10.9 million, compared to net income in the third quarter of 2015 of $12.2 million.
  • Loans and leases increased by $110.1 million, or 3.5%, to $3.21 billion at December 31, 2015, compared to $3.10 billion at September 30, 2015.
  • Total deposits increased by $202.9 million to $4.43 billion at December 31, 2015, compared to $4.23 billion at September 30, 2015. Core deposits increased by $180.83 million to $3.58 billion at December 31, 2015, compared to $3.40 billion at September 30, 2015.
  • Reported net interest income of $38.2 million, compared to $37.8 million in the third quarter of 2015. Reported a net interest margin of 3.30%, compared to 3.31% in the third quarter of 2015.
  • Recorded a credit to the provision for loan and lease losses of $2.0 million in the fourth quarter of 2015, compared to a credit to the provision for loan and lease losses of $3.6 million in the third quarter of 2015.
  • Reported an efficiency ratio of 67.82% in the fourth quarter of 2015, compared to 67.55% in the third quarter of 2015.
  • Maintained a strong capital position with leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ratios of 10.69%, 14.41%, 15.68%, and 12.79%, respectively, as of December 31, 2015.  The Company's capital ratios continue to be in excess of the minimum levels required for a "well-capitalized" regulatory designation under Basel III.

Earnings Highlights Net interest income for the fourth quarter of 2015 was $38.2 million, compared to $36.2 million in the year-ago quarter and $37.8 million in the third quarter of 2015.  Net interest margin was 3.30%, compared to 3.33% in the year-ago quarter and 3.31% in the third quarter of 2015. The sequential quarter increase in net interest income was primarily attributable to our average loan portfolio balances increasing by $72.5 million. In addition, the taxable equivalent yield on our investment securities portfolio increased to 2.60% in the current quarter from 2.58% last quarter. These increases were partially offset by the decrease in our taxable equivalent yield on the loans and leases portfolio to 3.87% in the current quarter from 3.91% last quarter.

In the fourth quarter of 2015, a credit to the provision for loan and lease losses of $2.0 million was recorded, compared to a credit of $5.4 million in the year-ago quarter and a credit of $3.6 million in the third quarter of 2015. The credit to the provision for loan and lease losses in the current quarter was attributable to net charge-offs of $1.4 million during the quarter and improvement in overall credit quality.

Other operating income for the fourth quarter of 2015 totaled $9.8 million, compared to $10.2 million in the year-ago quarter and remained relatively unchanged from the $9.8 million reported in the third quarter of 2015. The decrease from the year-ago quarter was primarily due to lower income from bank-owned life insurance of $0.2 million and lower income recovered on nonaccrual loans previously charged-off of $0.2 million (included in other).

Other operating expense for the fourth quarter of 2015 totaled $32.6 million, compared to $32.7 million in the year-ago quarter and $32.2 million in the third quarter of 2015. The decrease from the year-ago quarter was primarily attributable to a larger credit to the reserve for residential mortgage loan repurchase losses of $0.5 million (included in other), and lower salaries and employee benefits of $0.5 million, partially offset by higher advertising expense of $0.7 million. The sequential quarter increase was primarily due to higher advertising expense of $0.5 million and higher net occupancy expense of $0.4 million, partially offset by a $0.5 million change in the reserve for unfunded loan commitments (included in other).

The efficiency ratio for the fourth quarter of 2015 was 67.82%, compared to 70.59% in the year-ago quarter and 67.55% in the third quarter of 2015. The decrease in the efficiency ratio from the year-ago quarter was primarily attributable to the growth in net interest income. The sequential quarter increase in the efficiency ratio was primarily attributable to higher other operating expenses in the current quarter as described above.

In the fourth quarter of 2015, the Company recorded income tax expense of $6.5 million, compared to income tax expense of $5.8 million in the year-ago quarter and $6.9 million in the third quarter of 2015. The effective tax rate for the fourth quarter of 2015 was 37.2%, compared to 30.3% in the year-ago quarter and 36.1% in the third quarter of 2015. The income tax expense and effective tax rate in the fourth quarter of 2014 was impacted by solar tax credits of $0.4 million and a credit true-up adjustment of the Company's net deferred tax assets of $0.5 million. As of December 31, 2015, the Company's net deferred tax assets totaled $82.0 million.

Balance Sheet Highlights Total assets at December 31, 2015 of $5.1 billion increased by $278.3 million from December 31, 2014, and increased by $109.5 million from September 30, 2015.

Total loans and leases at December 31, 2015 of $3.2 billion increased by $279.3 million and $110.1 million from December 31, 2014 and September 30, 2015, respectively.  The increase in total loans and leases from the third quarter of 2015 was primarily due to an increase in the commercial, construction, residential mortgage, commercial mortgage, and consumer loan portfolios of $14.5 million, $9.5 million, $51.0 million, $23.8 million, and $11.3 million, respectively.

Total deposits at December 31, 2015 of $4.4 billion increased by $323.1 million from December 31, 2014, and increased by $202.9 million from September 30, 2015.  Core deposits, which include demand deposits, savings and money market deposits, and time deposits less than $100,000, totaled $3.58 billion at December 31, 2015.  This represents an increase of $276.0 million and $180.8 million from a year ago and from September 30, 2015, respectively.  Changes in total deposits during the quarter included net increases in savings and money market deposits of $115.6 million, interest-bearing demand deposits of $39.0 million, noninterest-bearing demand deposits of $32.5 million, and time deposits greater than $100,000 of $22.1 million, offset by a net decrease in time deposits less than $100,000 of $6.2 million.

Total shareholders' equity was $494.6 million at December 31, 2015, compared to $568.0 million and $503.3 million at December 31, 2014 and September 30, 2015, respectively. The sequential quarter decrease reflects common stock dividends paid of $14.4 million and a change in unrealized gains on investment securities of $7.5 million, partially offset by net income of $10.9 million. Common stock dividends paid in the fourth quarter of 2015 included a special cash dividend payment of $0.32 per share totaling $10.0 million.

Asset Quality Nonperforming assets at December 31, 2015 totaled $16.2 million, or 0.32% of total assets, compared to $14.0 million, or 0.28% of total assets at September 30, 2015 and $42.0 million, or 0.87% of total assets at December 31, 2014.  The sequential-quarter change in nonperforming assets reflects a net increase in Hawaii commercial mortgage assets of $4.4 million, partially offset by net decreases in Hawaii commercial assets of $2.0 million and Hawaii residential mortgage assets of $0.1 million.

Loans delinquent for 90 days or more still accruing interest totaled $0.3 million at December 31, 2015, compared to $0.1 million at September 30, 2015.  In addition, loans delinquent for 30 days or more still accruing interest totaled $7.1 million at December 31, 2015, compared to $3.1 million at September 30, 2015.

Net charge-offs in the fourth quarter of 2015 totaled $1.4 million, compared to net charge-offs of $3.4 million in the fourth quarter of 2014, and net recoveries of $3.4 million in the third quarter of 2015. Net charge-offs during the fourth quarter of 2015 included a $0.9 million charge-off of a Hawaii commercial mortgage loan placed on nonaccrual status during the quarter.

The ALLL, as a percentage of total loans and leases, was 1.97% at December 31, 2015, compared to 2.15% at September 30, 2015.  The ALLL, as a percentage of nonperforming assets, was 390.10% at December 31, 2015, compared to 475.99% at September 30, 2015.  The ALLL, as a percentage of nonaccrual loans, was 443.75% at December 31, 2015, compared to 551.32% at September 30, 2015.

Capital Levels At December 31, 2015, the Company's leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ratios were 10.69%, 14.41%, 15.68%, and 12.79%, respectively.  At September 30, 2015, the Company's leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ratios were 10.87%, 15.00%, 16.27%, and 13.32%, respectively. The Company's capital ratios continue to exceed the levels required to be considered a "well-capitalized" institution for regulatory purposes under Basel III.

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

Conference Call The Company's management will host a conference call today at 1:00 p.m. Eastern Time (8:00 a.m. Hawaii Time) to discuss the quarterly results.  Individuals are encouraged to listen to the live webcast of the presentation by visiting the investor relations page of the Company's website at http://ir.centralpacificbank.com.  Alternatively, investors may participate in the live call by dialing 1-877-505-7644.  A playback of the call will be available through February 28, 2016 by dialing 1-877-344-7529 (passcode: 10078448) and on the Company's website.

About Central Pacific Financial Corp. Central Pacific Financial Corp. is a Hawaii-based bank holding company with approximately $5.1 billion in assets.  Central Pacific Bank, its primary subsidiary, operates 36 branches and 103 ATMs in the state of Hawaii, as of December 31, 2015.  For additional information, please visit the Company's website at http://www.centralpacificbank.com.

Forward-Looking Statements This document may contain forward-looking statements concerning projections of revenues, income/loss, earnings/loss per share, capital expenditures, dividends, capital structure, or other financial items, plans and objectives of management for future operations, future economic performance, or any of the assumptions underlying or relating to any of the foregoing.  Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts, and may include the words "believes," "plans," "expects," "anticipates," "forecasts," "intends," "hopes," "should," "estimates," or words of similar meaning.  While the Company believes that our forward-looking statements and the assumptions underlying them are reasonably based, such statements and assumptions are by their nature subject to risks and uncertainties, and thus could later prove to be inaccurate or incorrect.  Accordingly, actual results could materially differ from projections for a variety of reasons, to include, but not limited to:  the effect of, and our failure to comply with any regulatory orders we are or may become subject to; oversupply of inventory and adverse conditions in the Hawaii and California real estate markets and any weakness in the construction industry;  adverse changes in the financial performance and/or condition of our borrowers and, as a result, increased loan delinquency rates,  deterioration in asset quality, and losses in our loan portfolio; the impact of local, national, and international economies and events (including political events, acts of war or terrorism, natural disasters such as wildfires, tsunamis and earthquakes) on the Company's business and operations and on tourism, the military and other major industries operating within the Hawaii market and any other markets in which the Company does business; deterioration or malaise in economic conditions, including destabilizing factors in the financial industry and deterioration of the real estate market, as well as the impact from any declining levels of consumer and business confidence in the state of the economy in general and in financial institutions in particular;  our ability to continue making progress on our recovery plan; the impact of regulatory action on the Company and Central Pacific Bank and legislation affecting the banking industry; changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, other regulatory reform, and any related rules and regulations on our business operations and competitiveness; the costs and effects of legal and regulatory developments, including legal proceedings or regulatory or other governmental inquiries and proceedings and the resolution thereof, and the results of regulatory examinations or reviews;  the effects of and changes in trade, monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System; inflation, interest rate, securities market and monetary fluctuations;  negative trends in our market capitalization and adverse changes in the price of the Company's common shares; changes in consumer spending, borrowings and savings habits; technological changes and developments; changes in the competitive environment among financial holding companies and other financial service providers; the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters; our ability to attract and retain skilled executives and employees; changes in our organization, compensation and benefit plans; and our success at managing the risks involved in any of the foregoing items. For further information on factors that could cause actual results to materially differ from projections, please see the Company's publicly available Securities and Exchange Commission filings, including the Company's Form 10-K for the last fiscal year and, in particular, the discussion of "Risk Factors" set forth therein. The Company does not update any of its forward-looking statements except as required by law.

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Financial Highlights

(Unaudited)

TABLE 1

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

December 31,

December 31,

(dollars in thousands, except for per share amounts)

2015

2015

2014

2015

2014

INCOME STATEMENT

Net interest income

$

38,194

$

37,805

$

36,184

$

149,528

$

143,418

Provision (credit) for loan and lease losses

(1,958)

(3,647)

(5,371)

(15,671)

(6,414)

Total other operating income

9,841

9,829

10,212

38,984

43,823

Total other operating expense

32,576

32,175

32,749

131,227

132,813

Net income

10,932

12,206

13,265

45,868

40,453

Basic earnings per common share

$

0.35

$

0.39

$

0.37

$

1.42

$

1.08

Diluted earnings per common share

0.34

0.38

0.37

1.40

1.07

Dividends declared per common share

0.46

0.12

0.10

0.82

0.36

PERFORMANCE RATIOS

Return on average assets (1)

0.87

%

0.98

%

1.11

%

0.92

%

0.85

%

Return on average shareholders' equity (1)

8.68

9.91

9.28

8.91

6.80

Return on average tangible shareholders' equity (1)

8.82

10.08

9.46

9.06

6.93

Efficiency ratio (2)

67.82

67.55

70.59

69.61

70.93

Net interest margin (1)

3.30

3.31

3.33

3.30

3.32

Dividend payout ratio (3)

135.29

31.58

27.03

58.57

33.64

Average shareholders' equity to average assets

9.97

9.90

11.97

10.37

12.50

SELECTED AVERAGE BALANCES

Average loans and leases, including loans held for sale

$

3,142,895

$

3,070,384

$

2,914,253

$

3,038,100

$

2,798,826

Average interest-earning assets

4,676,931

4,611,234

4,397,741

4,590,686

4,380,314

Average assets

5,049,232

4,974,154

4,775,307

4,965,689

4,759,816

Average deposits

4,327,908

4,242,043

4,052,316

4,223,613

3,989,066

Average interest-bearing liabilities

3,370,560

3,346,484

3,148,376

3,335,445

3,175,510

Average shareholders' equity

503,570

492,683

571,514

515,043

595,210

Average tangible shareholders' equity

495,845

484,246

561,117

506,295

583,794

December 31,

September 30,

December 31,

2015

2015

2014

REGULATORY CAPITAL RATIOS

Central Pacific Financial Corp.

Leverage capital ratio

10.69

%

10.87

%

12.03

%

Tier 1 risk-based capital ratio

14.41

15.00

16.97

Total risk-based capital ratio

15.68

16.27

18.24

Common equity tier 1 capital ratio

12.79

13.32

N/A

Central Pacific Bank

Leverage capital ratio

10.42

10.51

11.57

Tier 1 risk-based capital ratio

14.05

14.51

16.33

Total risk-based capital ratio

15.32

15.78

17.59

Common equity tier 1 capital ratio

14.05

14.51

N/A

BALANCE SHEET

Loans and leases

$

3,211,532

$

3,101,463

$

2,932,198

Total assets

5,131,288

5,021,833

4,852,987

Total deposits

4,433,439

4,230,503

4,110,300

Long-term debt

92,785

92,785

92,785

Total shareholders' equity

494,614

503,261

568,041

Total shareholders' equity to total assets

9.64

%

10.02

%

11.70

%

Tangible common equity to tangible assets (4)

9.51

9.88

11.52

ASSET QUALITY

Allowance for loan and lease losses

$

63,314

$

66,644

$

74,040

Non-performing assets

16,230

14,001

42,035

Allowance to loans and leases outstanding

1.97

%

2.15

%

2.53

%

Allowance to non-performing assets

390.10

475.99

176.14

PER SHARE OF COMMON STOCK

Book value per common share

$

15.77

$

16.06

$

16.12

Tangible book value per common share

15.54

15.81

15.84

Market value per common share

22.02

20.97

21.50

(1) Annualized

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

(3) Dividend payout ratio is defined as dividends declared per share divided by diluted earnings per share.

(4) The tangible common equity ratio is a non-GAAP measure which should be read in conjunction with the Company's GAAP financial information. Comparison of our ratio with those of other companies may not be possible because other companies may calculate the ratio differently. See Reconciliation of Non-GAAP Financial Measures.

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures

(Unaudited)

TABLE 2

December 31,

September 30,

December 31,

(Dollars in thousands)

2015

2015

2014

Tangible Common Equity Ratio:

Total shareholders' equity

$

494,614

$

503,261

$

568,041

Less: Other intangible assets

(7,355)

(8,023)

(10,029)

Tangible common equity

$

487,259

$

495,238

$

558,012

Total assets

$

5,131,288

$

5,021,833

$

4,852,987

Less: Other intangible assets

(7,355)

(8,023)

(10,029)

Tangible assets

$

5,123,933

$

5,013,810

$

4,842,958

Tangible common equity to tangible assets

9.51

%

9.88

%

11.52

%

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

TABLE 3

December 31,

September 30,

December 31,

(Dollars in thousands, except share data)

2015

2015

2014

ASSETS

Cash and due from banks

$

71,797

$

69,628

$

72,316

Interest-bearing deposits in other banks

8,397

14,376

13,691

Investment securities:

Available for sale

1,272,255

1,272,382

1,229,018

Held to maturity (fair value of $244,136 at December 31, 2015,

  $254,540 at September 30, 2015 and $235,597 at December 31, 2014)

247,917

254,719

238,287

 Total investment securities

1,520,172

1,527,101

1,467,305

Loans held for sale

14,109

9,786

9,683

Loans and leases

3,211,532

3,101,463

2,932,198

Less allowance for loan and lease losses

63,314

66,644

74,040

Net loans and leases

3,148,218

3,034,819

2,858,158

Premises and equipment, net

49,161

47,822

49,214

Accrued interest receivable

14,898

13,779

13,584

Investment in unconsolidated subsidiaries

6,157

6,489

7,246

Other real estate

1,962

1,913

2,948

Mortgage servicing rights

17,797

18,174

19,668

Other intangible assets

7,355

8,023

10,029

Bank-owned life insurance

153,967

153,449

152,283

Federal Home Loan Bank stock

8,606

12,048

43,932

Other assets

108,692

104,426

132,930

Total assets

$

5,131,288

$

5,021,833

$

4,852,987

LIABILITIES AND EQUITY

Deposits:

Noninterest-bearing demand

$

1,145,244

$

1,112,761

$

1,034,146

Interest-bearing demand

824,895

785,936

788,272

Savings and money market

1,399,093

1,283,517

1,242,598

Time

1,064,207

1,048,289

1,045,284

Total deposits

4,433,439

4,230,503

4,110,300

Short-term borrowings

69,000

155,000

38,000

Long-term debt

92,785

92,785

92,785

Other liabilities

41,425

40,284

43,861

Total liabilities

4,636,649

4,518,572

4,284,946

Equity:

Preferred stock, no par value, authorized 1,100,000 shares;

   issued and outstanding none at December 31, 2015, September 30, 2015, and December 31, 2014

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

   issued and outstanding 31,361,452 shares at December 31, 2015, 31,330,644 shares at September 30, 2015, and 35,233,674 shares at December 31, 2014

548,878

548,518

642,205

Surplus

82,847

81,528

79,716

Accumulated deficit

(137,314)

(133,821)

(157,039)

Accumulated other comprehensive income (loss)

203

7,036

3,159

Total shareholders' equity

494,614

503,261

568,041

Non-controlling interest

25

Total equity

494,639

503,261

568,041

Total liabilities and equity

$

5,131,288

$

5,021,833

$

4,852,987

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

TABLE 4

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

December 31,

(Dollars in thousands, except per share data)

2015

2015

2014

2015

2014

Interest income:

Interest and fees on loans and leases

$

30,565

$

30,148

$

28,850

$

118,887

$

112,137

Interest and dividends on investment securities:

Taxable interest

8,282

8,260

7,858

32,969

33,574

Tax-exempt interest

1,006

1,008

1,000

4,022

3,996

Dividends

10

9

13

36

23

Interest on deposits in other banks

7

6

9

35

33

Dividends on Federal Home Loan Bank stock

46

11

11

86

46

Total interest income

39,916

39,442

37,741

156,035

149,809

Interest expense:

Interest on deposits:

Demand

101

104

96

399

373

Savings and money market

238

230

229

916

901

Time

647

568

573

2,312

2,453

Interest on short-term borrowings

59

73

10

254

92

Interest on long-term debt

677

662

649

2,626

2,572

Total interest expense

1,722

1,637

1,557

6,507

6,391

Net interest income

38,194

37,805

36,184

149,528

143,418

Provision (credit) for loan and lease losses

(1,958)

(3,647)

(5,371)

(15,671)

(6,414)

Net interest income after provision for loan and lease losses

40,152

41,452

41,555

165,199

149,832

Other operating income:

Service charges on deposit accounts

1,999

1,947

2,061

7,829

8,113

Loan servicing fees

1,399

1,407

1,460

5,656

5,798

Other service charges and fees

2,772

2,803

2,842

11,461

11,754

Income from fiduciary activities

825

854

865

3,343

3,552

Equity in earnings of unconsolidated subsidiaries

88

165

58

578

480

Fees on foreign exchange

98

126

113

450

464

Investment securities gains (losses)

(1,866)

240

Income from bank-owned life insurance

465

434

676

2,034

2,922

Loan placement fees

146

202

81

720

437

Net gains on sales of residential loans

1,332

1,551

1,394

6,107

5,545

Net gains on sales of foreclosed assets

189

252

9

568

971

Other (refer to Table 5)

528

88

653

2,104

3,547

Total other operating income

9,841

9,829

10,212

38,984

43,823

Other operating expense:

Salaries and employee benefits

16,895

17,193

17,405

66,429

67,941

Net occupancy

3,981

3,547

3,877

14,432

15,252

Equipment

858

775

888

3,475

3,582

Amortization of other intangible assets

1,512

1,683

1,446

6,859

5,332

Communication expense

822

895

942

3,483

3,635

Legal and professional services

1,671

1,808

1,980

7,340

7,806

Computer software expense

2,067

2,286

1,735

8,831

6,327

Advertising expense

964

502

305

2,550

2,342

Foreclosed asset expense

154

3

267

486

1,710

Other (refer to Table 6)

3,652

3,483

3,904

17,342

18,886

Total other operating expense

32,576

32,175

32,749

131,227

132,813

Income before income taxes

17,417

19,106

19,018

72,956

60,842

Income tax expense

6,485

6,900

5,753

27,088

20,389

Net income

$

10,932

$

12,206

$

13,265

$

45,868

$

40,453

Per common share data:

Basic earnings per share

$

0.35

$

0.39

$

0.37

$

1.42

$

1.08

Diluted earnings per share

0.34

0.38

0.37

1.40

1.07

Cash dividends declared

0.46

0.12

0.10

0.82

0.36

Basic weighted average shares outstanding

31,318

31,331

35,653

32,238

37,366

Diluted weighted average shares outstanding

31,726

31,750

36,275

32,651

37,936

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Other Operating Income - Other

(Unaudited)

TABLE 5

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

December 31,

December 31,

(Dollars in thousands)

2015

2015

2014

2015

2014

Income recovered on nonaccrual loans previously charged-off

$

104

$

262

$

302

$

794

$

1,436

Other recoveries

17

244

66

550

672

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

54

(646)

(125)

(324)

293

Commissions on sale of checks

79

86

83

325

336

Other

274

142

327

759

810

Total other operating income - Other

$

528

$

88

$

653

$

2,104

$

3,547

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Other Operating Expense - Other

(Unaudited)

TABLE 6

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

December 31,

December 31,

(Dollars in thousands)

2015

2015

2014

2015

2014

Charitable contributions

$

103

$

179

$

104

$

2,559

$

565

FDIC insurance assessment

622

685

730

2,706

2,848

Miscellaneous loan expenses

325

314

319

1,348

1,083

ATM and debit card expenses

407

365

366

1,538

1,566

Amortization of investments in low-income housing tax credit partnerships

258

258

298

1,078

1,363

Armored car expenses

254

213

214

896

864

Entertainment and promotions

405

191

336

1,059

968

Stationery and supplies

230

381

247

1,026

1,026

Directors' fees and expenses

101

156

113

662

795

Provision (credit) for residential mortgage loan repurchase losses

(596)

(883)

(75)

(1,352)

467

Increase (decrease) to the reserve for unfunded commitments

(223)

255

(271)

(373)

Other

1,766

1,369

1,252

6,093

7,714

Total other operating expense - Other

$

3,652

$

3,483

$

3,904

$

17,342

$

18,886

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

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

(Unaudited)

TABLE 7

Three Months Ended

Three Months Ended

Three Months Ended

December 31, 2015

September 30, 2015

December 31, 2014

Average

Average

Average

Average

Average

Average

Balance

Yield/Rate

Interest

Balance

Yield/Rate

Interest

Balance

Yield/Rate

Interest

ASSETS

Interest earning assets:

Interest-bearing deposits in other banks

$

10,504

0.27

%

$

7

$

10,277

0.23

%

$

6

$

14,321

0.24

%

$

9

Taxable investment securities, excluding valuation allowance

1,339,764

2.48

8,292

1,345,120

2.46

8,269

1,246,840

2.53

7,871

Tax-exempt investment securities, excluding valuation allowance

174,681

3.54

1,547

175,340

3.54

1,551

177,998

3.46

1,539

Loans and leases, including loans held for sale

3,142,895

3.87

30,565

3,070,384

3.91

30,148

2,914,253

3.94

28,850

Federal Home Loan Bank stock

9,087

2.00

46

10,113

0.42

11

44,329

0.10

11

Total interest earning assets

4,676,931

3.45

40,457

4,611,234

3.46

39,985

4,397,741

3.47

38,280

Nonearning assets

372,301

362,920

377,566

Total assets

$

5,049,232

$

4,974,154

$

4,775,307

LIABILITIES AND EQUITY

Interest-bearing liabilities:

Interest-bearing demand deposits

$

804,544

0.05

%

$

101

$

803,682

0.05

%

$

104

$

791,811

0.05

%

$

96

Savings and money market deposits

1,322,220

0.07

238

1,277,480

0.07

230

1,244,699

0.07

229

Time deposits under $100,000

218,188

0.36

201

223,550

0.36

203

245,209

0.42

261

Time deposits $100,000 and over

851,796

0.21

446

842,362

0.17

365

760,706

0.16

312

Short-term borrowings

81,027

0.29

59

106,625

0.27

73

13,166

0.31

10

Long-term debt

92,785

2.90

677

92,785

2.83

662

92,785

2.77

649

Total interest-bearing liabilities

3,370,560

0.20

1,722

3,346,484

0.19

1,637

3,148,376

0.20

1,557

Noninterest-bearing deposits

1,131,160

1,094,969

1,009,891

Other liabilities

43,941

40,018

45,526

Total liabilities

4,545,661

4,481,471

4,203,793

Shareholders' equity

503,570

492,683

571,514

Non-controlling interest

1

Total equity

503,571

492,683

571,514

Total liabilities and equity

$

5,049,232

$

4,974,154

$

4,775,307

Net interest income

$

38,735

$

38,348

$

36,723

Net interest margin

3.30

%

3.31

%

3.33

%

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

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

(Unaudited)

TABLE 8

Year Ended

Year Ended

December 31, 2015

December 31, 2014

Average

Average

Average

Average

Balance

Yield/Rate

Interest

Balance

Yield/Rate

Interest

ASSETS

Interest earning assets:

Interest-bearing deposits in other banks

$

13,966

0.25

%

$

35

$

13,207

0.25

%

$

33

Taxable investment securities, excluding valuation allowance

1,339,070

2.46

33,005

1,344,821

2.50

33,597

Tax-exempt investment securities, excluding valuation allowance

175,919

3.52

6,188

178,275

3.45

6,148

Loans and leases, including loans held for sale

3,038,100

3.91

118,887

2,798,826

4.01

112,137

Federal Home Loan Bank stock

23,631

0.36

86

45,185

0.10

46

Total interest earning assets

4,590,686

3.45

158,201

4,380,314

3.47

151,961

Nonearning assets

375,003

379,502

Total assets

$

4,965,689

$

4,759,816

LIABILITIES AND EQUITY

Interest-bearing liabilities:

Interest-bearing demand deposits

$

802,121

0.05

%

$

399

$

764,504

0.05

%

$

373

Savings and money market deposits

1,276,830

0.07

916

1,227,049

0.07

901

Time deposits under $100,000

227,288

0.37

838

254,572

0.42

1,069

Time deposits $100,000 and over

844,376

0.17

1,474

804,863

0.17

1,384

Short-term borrowings

92,045

0.28

254

31,732

0.29

92

Long-term debt

92,785

2.83

2,626

92,790

2.77

2,572

Total interest-bearing liabilities

3,335,445

0.20

6,507

3,175,510

0.20

6,391

Noninterest-bearing deposits

1,072,998

938,078

Other liabilities

42,203

51,003

Total liabilities

4,450,646

4,164,591

Shareholders' equity

515,043

595,210

Non-controlling interest

15

Total equity

515,043

595,225

Total liabilities and equity

$

4,965,689

$

4,759,816

Net interest income

$

151,694

$

145,570

Net interest margin

3.30

%

3.32

%

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Loans and Leases by Geographic Distribution

(Unaudited)

TABLE 9

December 31,

September 30,

June 30,

March 31,

December 31,

(Dollars in thousands)

2015

2015

2015

2015

2014

HAWAII:

Commercial, financial and agricultural

$

339,738

$

335,919

$

341,468

$

318,228

$

287,254

Real estate:

Construction

81,655

72,071

80,168

109,256

111,010

Mortgage:

- residential

1,436,305

1,385,286

1,351,962

1,300,304

1,282,324

- commercial

642,845

616,085

588,334

586,281

587,322

Consumer

273,248

263,568

254,655

249,151

254,259

Leases

1,028

1,123

2,589

2,885

3,140

Total loans and leases

2,774,819

2,674,052

2,619,176

2,566,105

2,525,309

Allowance for loan and lease losses

(54,141)

(56,150)

(57,402)

(60,676)

(62,685)

Net loans and leases

$

2,720,678

$

2,617,902

$

2,561,774

$

2,505,429

$

2,462,624

U.S. MAINLAND:

Commercial, financial and agricultural

$

181,348

$

170,624

$

158,133

$

182,455

$

176,509

Real estate:

Construction

3,230

3,309

3,387

3,465

3,544

Mortgage:

- residential

- commercial

117,904

120,900

106,859

114,975

115,951

Consumer

134,231

132,578

118,500

100,772

110,885

Leases

Total loans and leases

436,713

427,411

386,879

401,667

406,889

Allowance for loan and lease losses

(9,173)

(10,494)

(9,522)

(10,757)

(11,355)

Net loans and leases

$

427,540

$

416,917

$

377,357

$

390,910

$

395,534

TOTAL:

Commercial, financial and agricultural

$

521,086

$

506,543

$

499,601

$

500,683

$

463,763

Real estate:

Construction

84,885

75,380

83,555

112,721

114,554

Mortgage:

- residential

1,436,305

1,385,286

1,351,962

1,300,304

1,282,324

- commercial

760,749

736,985

695,193

701,256

703,273

Consumer

407,479

396,146

373,155

349,923

365,144

Leases

1,028

1,123

2,589

2,885

3,140

Total loans and leases

3,211,532

3,101,463

3,006,055

2,967,772

2,932,198

Allowance for loan and lease losses

(63,314)

(66,644)

(66,924)

(71,433)

(74,040)

Net loans and leases

$

3,148,218

$

3,034,819

$

2,939,131

$

2,896,339

$

2,858,158

 

CENTRAL PACIFIC FINANCIAL CORP AND SUBSIDIARIES

Nonperforming Assets, Past Due and Restructured Loans

(Unaudited)

TABLE 10

December 31,

September 30,

June 30,

March 31,

December 31,

(Dollars in thousands)

2015

2015

2015

2015

2014

Nonaccrual loans (including loans held for sale):

Commercial, financial and agricultural

$

1,044

$

3,056

$

3,175

$

13,377

$

13,007

Real estate:

Construction

133

146

310

Mortgage-residential

6,130

6,301

10,032

11,430

13,048

Mortgage-commercial

7,094

2,731

13,490

12,468

12,722

Total nonaccrual loans

14,268

12,088

26,830

37,421

39,087

Other real estate:

Real estate:

Construction

747

Mortgage-residential

1,962

1,913

2,433

3,349

2,201

Mortgage-commercial

2,845

Total other real estate

1,962

1,913

5,278

3,349

2,948

Total nonperforming assets ("NPAs")

16,230

14,001

32,108

40,770

42,035

Loans delinquent for 90 days or more:

Consumer

273

130

45

5

77

Leases

Total loans delinquent for 90 days or more

273

130

45

5

77

Restructured loans still accruing interest:

Commercial, financial and agricultural

327

339

350

361

Real estate:

Construction

809

841

839

866

892

Mortgage-residential

16,224

17,592

16,428

17,084

17,845

Mortgage-commercial

3,224

2,253

1,360

1,516

10,405

Total restructured loans still accruing interest

20,257

21,013

18,966

19,816

29,503

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

$

36,760

$

35,144

$

51,119

$

60,591

$

71,615

Total nonaccrual loans as a percentage of loans and leases

0.44

%

0.39

%

0.89

%

1.26

%

1.33

%

Total NPAs as a percentage of loans and leases and other real estate

0.51

%

0.45

%

1.07

%

1.37

%

1.43

%

Total NPAs and loans delinquent for 90 days or more as a percentage of loans and leases and other real estate

0.51

%

0.46

%

1.07

%

1.37

%

1.43

%

Total NPAs, loans delinquent for 90 days or more, and restructured loans still accruing interest as a percentage of loans and leases and other real estate

1.14

%

1.13

%

1.70

%

2.04

%

2.44

%

Quarter-to-quarter changes in NPAs:

Balance at beginning of quarter

$

14,001

$

32,108

$

40,770

$

42,035

$

45,292

Additions

2,992

681

6,761

1,429

1,986

Reductions

Payments

(439)

(4,002)

(3,411)

(1,712)

(843)

Return to accrual status

(216)

(10,799)

(274)

(197)

(190)

Sales of NPAs

(71)

(4,007)

(8,280)

(949)

(1,444)

Charge-offs/valuation adjustments

(37)

20

(3,458)

164

(2,766)

Total reductions

(763)

(18,788)

(15,423)

(2,694)

(5,243)

Balance at end of quarter

$

16,230

$

14,001

$

32,108

$

40,770

$

42,035

 

CENTRAL PACIFIC FINANCIAL CORP AND SUBSIDIARIES

Allowance for Loan and Lease Losses

(Unaudited)

TABLE 11

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

December 31,

December 31,

(Dollars in thousands)

2015

2015

2014

2015

2014

Allowance for loan and lease losses:

Balance at beginning of period

$

66,644

$

66,924

$

82,838

$

74,040

$

83,820

Provision (credit) for loan and lease losses

(1,958)

(3,647)

(5,371)

(15,671)

(6,414)

Charge-offs:

Commercial, financial and agricultural

554

170

3,083

5,658

5,046

Real estate:

Mortgage-residential

46

110

139

Mortgage-commercial

838

838

1,041

Consumer

721

874

1,461

4,650

3,703

Leases

8

Total charge-offs

2,113

1,090

4,544

11,256

9,937

Recoveries:

Commercial, financial and agricultural

411

504

397

4,788

2,326

Real estate:

Construction

10

283

196

880

2,040

Mortgage-residential

96

196

125

2,177

992

Mortgage-commercial

14

3,130

13

6,719

53

Consumer

210

317

384

1,610

1,152

Leases

27

2

27

8

Total recoveries

741

4,457

1,117

16,201

6,571

Net charge-offs (recoveries)

1,372

(3,367)

3,427

(4,945)

3,366

Balance at end of period

$

63,314

$

66,644

$

74,040

$

63,314

$

74,040

Average loans and leases, net of unearned

$

3,142,895

$

3,070,384

$

2,914,253

$

3,038,100

$

2,798,826

Annualized ratio of net recoveries to average loans and leases

0.17

%

(0.44)

%

0.47

%

(0.16)

%

0.12

%

Ratio of allowance for loan and lease losses to loans and leases

1.97

%

2.15

%

2.53

%

1.97

%

2.53

%

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SOURCE Central Pacific Financial Corp.



RELATED LINKS

http://www.centralpacificbank.com