Central Pacific Financial Corp. Reports $9.2 Million Second Quarter Earnings

HONOLULU, July 24, 2014 /PRNewswire/ -- Central Pacific Financial Corp. (NYSE: CPF), parent company of Central Pacific Bank (the "Bank"), today reported net income for the second quarter of 2014 of $9.2 million, or $0.25 per diluted share, compared to net income in the second quarter of 2013 of $14.3 million, or $0.34 per diluted share, and net income in the first quarter of 2014 of $9.8 million, or $0.23 per diluted share.

In July 2014, the Company's Board of Directors declared a quarterly cash dividend of $0.10 per share on the Company's outstanding common shares, an increase from $0.08 per share in the second quarter of 2014. The dividend will be payable on or about September 15, 2014 to shareholders of record at the close of business on August 29, 2014. This represents the fifth consecutive quarterly cash dividend.

"We are pleased with another quarter of solid financial performance," said John C. Dean, Chairman and CEO.  "As a result of our earnings consistency and strong capital position, we repurchased approximately 15% of our common stock outstanding since the beginning of the year and increased our dividend per share by 25% from the previous quarterly dividend."

Significant Highlights and Second Quarter Results

  • Completed repurchase agreements with our two largest shareholders to privately purchase 1,391,089 shares of common stock from each at a purchase price of $20.20 per share for a total cost of $56.2 million, excluding fees and expenses. In the first quarter of 2014, 3,405,888 shares of common stock were repurchased through a tender offer.
  • Authorized an additional repurchase and retirement of up to $30.0 million of the Company's outstanding common stock. A total of $3.4 million in common stock was repurchased in the second quarter of 2014 under this repurchase program.
  • Reported net income of $9.2 million, compared to net income in the first quarter of 2014 of $9.8 million.
  • Increased the loans and leases portfolio by $96.7 million to $2.79 billion at June 30, 2014, compared to $2.70 billion at March 31, 2014.
  • Improved our net interest margin to 3.35% in the second quarter of 2014 from 3.31% in the first quarter of 2014.
  • Increased total deposits by $16.8 million to $4.00 billion at June 30, 2014, compared to $3.99 billion at March 31, 2014.
  • Recorded a provision for loan and lease losses of $2.0 million in the second quarter of 2014, compared to a credit of $1.3 million in the first quarter of 2014.
  • Nonperforming assets decreased by $11.9 million to $42.1 million at June 30, 2014 from $54.0 million at March 31, 2014.
  • The allowance for loan and lease losses ("ALLL"), as a percentage of total loans and leases, decreased to 2.99% at June 30, 2014, compared to 3.08% at March 31, 2014.  The Company's ALLL, as a percentage of nonperforming assets, increased to 198.47% at June 30, 2014 from 153.87% at March 31, 2014 and the Company's ALLL, as a percentage of nonaccrual loans, increased to 226.72% at June 30, 2014 from 168.97% at March 31, 2014, as a result of a decline in nonperforming assets.
  • Maintained a strong capital position with Tier 1 risk-based capital, total risk-based capital, and leverage capital ratios of 17.06%, 18.33%, and 11.64%, respectively, as of June 30, 2014, compared to 18.63%, 19.90%, and 12.62%, respectively, as of March 31, 2014.  The Company's capital ratios continue to be well in excess of the minimum levels required for a "well-capitalized" regulatory designation.

Earnings Highlights
Net interest income for the second quarter of 2014 was $35.9 million, compared to $33.2 million in the year-ago quarter and $35.8 million in the first quarter of 2014.  Net interest margin was 3.35%, compared to 3.23% in the year-ago quarter and 3.31% in the first quarter of 2014. The sequential quarter increase in net interest margin was primarily due to growth in our average loan portfolio of $97.1 million and a reduction in our average investment securities portfolio of $147.3 million. The taxable equivalent yield on the investment securities portfolio decreased to 2.60% in the current quarter, compared to 2.62% last quarter. The taxable equivalent yield on the loan portfolio remained unchanged from the first quarter of 2014 of 4.07%.

The provision for loan and lease losses for the second quarter of 2014 was $2.0 million, compared to a credit to the provision for loan and lease losses of $0.2 million in the year-ago quarter and a credit of $1.3 million in the first quarter of 2014. The provision for loan and lease losses was primarily attributable to net loan charge-offs of $1.6 million and the $96.7 million increase in our loans and leases portfolio.

Other operating income for the second quarter of 2014 totaled $12.0 million, compared to $17.8 million in the year-ago quarter and $10.1 million in the first quarter of 2014. The decrease from the year-ago quarter was primarily due to the sale of a foreclosed property in the second quarter of 2013 at a gain of $7.2 million and lower net gains on sales of residential mortgage loans of $1.7 million, partially offset by higher unrealized gains on loans held for sale and interest rate locks of $1.3 million. The sequential quarter increase was primarily due to higher unrealized gains on loans held for sale and interest rate locks of $0.5 million, higher net gains on sales of foreclosed assets of $0.4 million, and income recovered on nonaccrual loans previously written-off of $0.4 million.

Other operating expense for the second quarter of 2014 totaled $32.9 million, compared to $35.0 million in the year-ago quarter and $31.9 million in the first quarter of 2014.  The decrease from the year-ago quarter was primarily attributable to lower salaries and employee benefits of $1.7 million, lower provision for losses on residential mortgage loan repurchases of $1.1 million, lower amortization of intangible assets of $0.8 million, and lower foreclosed asset expense of $0.7 million, partially offset by a higher provision for unfunded loan commitments of $1.3 million, higher computer software expense of $0.4 million, and higher legal and professional services of $0.3 million. The sequential quarter increase was primarily attributable to a higher provision for unfunded loan commitments of $0.8 million, higher legal and professional services of $0.4 million, and the reversal of interest on income tax contingencies in the first quarter of 2014 of $0.4 million, partially offset by lower salaries and employee benefits of $0.9 million and a lower provision for losses on residential mortgage loan repurchases of $0.6 million.

The efficiency ratio for the second quarter of 2014 and in the year-ago quarter was 68.65%, compared to 69.50% in the first quarter of 2014.

In the second quarter of 2014, the Company recorded income tax expense of $3.9 million, compared to an income tax expense of $1.9 million in the year-ago quarter and income tax expense of $5.5 million in the first quarter of 2014. Income tax expense in the second quarter of 2014 included a credit true-up adjustment of $0.5 million. Excluding this adjustment the effective tax rate for the quarter was 33.9%. As of June 30, 2014, the Company's net deferred tax assets totaled $114.6 million.

Balance Sheet Highlights
Total assets at June 30, 2014 of $4.73 billion increased by $21.0 million from June 30, 2013, and decreased by $99.7 million from March 31, 2014.

Total loans and leases at June 30, 2014 of $2.79 billion increased by $421.1 million and $96.7 million from June 30, 2013 and March 31, 2014, respectively.  The increase in total loans and leases from the first quarter of 2014 was due to an increase in the residential mortgage, consumer, commercial mortgage, and construction and development loan portfolios of $46.8 million, $27.3 million, $14.2 million, and $13.2 million, respectively, offset by a decrease in the commercial loan and leases portfolios of $3.5 million and $1.3 million, respectively.

Total deposits at June 30, 2014 were $4.00 billion, and increased by $146.9 million and $16.8 million from June 30, 2013 and March 31, 2014, respectively.  Core deposits, which include demand deposits, savings and money market deposits, and time deposits less than $100,000, totaled $3.19 billion at June 30, 2014.  This represents an increase of $149.5 million and $19.4 million from a year ago and from March 31, 2014, respectively.  Changes in total deposits during the quarter included net increases in noninterest-bearing demand deposits, and interest-bearing demand deposits of $23.5 million and $12.1 million, respectively, offset by net decreases in time deposits and savings and money market deposits of $9.6 million and $9.2 million, respectively.

Total shareholders' equity was $564.6 million at June 30, 2014, compared to $642.0 million and $608.4 million at June 30, 2013 and March 31, 2014, respectively. The sequential quarter decrease is due primarily to the completion of the aforementioned repurchase agreements with each of our two largest shareholders totaling $56.2 million, repurchases of $3.4 million in common stock under the Company's stock repurchase program, and cash dividends paid of $2.9 million, partially offset by an increase in unrealized gains on investment securities of $10.3 million and net income of $9.2 million in the current quarter.

Asset Quality
Nonperforming assets at June 30, 2014 totaled $42.1 million, or 0.89% of total assets, compared to $54.0 million, or 1.12% of total assets at March 31, 2014.  The sequential-quarter change reflects net decreases in U.S. Mainland commercial mortgage assets of $7.2 million, Hawaii residential mortgage assets of $3.4 million, U.S. Mainland constructions assets of $0.6 million, and Hawaii commercial assets of $0.4 million.

Loans delinquent for 90 days or more still accruing interest totaled $119,000 at June 30, 2014, compared to $30,000 at March 31, 2014.  In addition, loans delinquent for 30 days or more still accruing interest totaled $1.8 million at June 30, 2014, compared to $4.8 million at March 31, 2014.

Net charge-offs in the second quarter of 2014 totaled $1.6 million, compared to net recoveries of $0.5 million in the second quarter of 2013, and net recoveries of $0.7 million in the first quarter of 2014.

The ALLL, as a percentage of total loans and leases, was 2.99% at June 30, 2014, compared to 3.08% at March 31, 2014.  The ALLL, as a percentage of nonperforming assets, was 198.47% at June 30, 2014, compared to 153.87% at March 31, 2014.  The ALLL, as a percentage of nonaccrual loans, was 226.72% at June 30, 2014, compared to 168.97% at March 31, 2014.

Capital Levels
At June 30, 2014, the Company's Tier 1 risk-based capital, total risk-based capital, and leverage capital ratios were 17.06%, 18.33%, and 11.64%, respectively, compared to 18.63%, 19.90%, and 12.62%, respectively, at March 31, 2014.  The decline in the Company's capital levels from the sequential quarter was primarily the result of the repurchases of our common stock in the repurchase agreements and our stock buyback program described above.  The Company's capital ratios continue to exceed the levels required to be considered a "well-capitalized" institution for regulatory purposes.

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://investor.centralpacificbank.com.  Alternatively, investors may participate in the live call by dialing 1-888-505-7644.  A playback of the call will be available through August 29, 2014 by dialing 1-877-344-7529 (passcode: 10048413) and on the Company's website.

About Central Pacific Financial Corp.
Central Pacific Financial Corp. is a Hawaii-based bank holding company with approximately $4.7 billion in assets.  Central Pacific Bank, its primary subsidiary, operates 37 branches and 113 ATMs in the state of Hawaii, as of June 30, 2014.  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 further 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 the resolution of legal proceedings or regulatory or other governmental inquiries 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; 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 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)













Three Months Ended


Six Months Ended



June 30, 


March 31,


June 30, 


June 30, 


June 30, 


(dollars in thousands, except for per share amounts)

2014


2014


2013


2014


2013













INCOME STATEMENT











Net interest income

$    35,906


$    35,796


$      33,173


$      71,702


$      63,842


Provision (credit) for loan and lease losses

1,995


(1,316)


(227)


679


(6,788)


Total other operating income

12,004


10,144


17,812


22,148


30,842


Total other operating expense

32,888


31,930


35,000


64,818


67,753


Net income

9,150


9,808


14,267


18,958


151,576


Basic earnings per common share

$        0.25


$        0.23


$          0.34


$          0.49


$          3.62


Diluted earnings per common share

0.25


0.23


0.34


0.48


3.59


Dividends declared per common share

0.08


0.08


-


0.16


-













PERFORMANCE RATIOS











Return on average assets (1)

$        0.77

%

0.82

%

1.24

%

0.80

%

6.72

%

Return on average shareholders' equity (1)

6.49


5.79


8.70


6.11


51.46


Return on average tangible shareholders' equity (1)

6.63


5.90


8.90


6.23


52.79


Efficiency ratio (2)

68.65


69.50


68.65


69.07


71.56


Net interest margin (1)

3.35


3.31


3.23


3.33


3.15


Dividend payout ratio (3)

32.00


34.78


-


33.33


-


Average shareholders' equity to average assets

11.90


14.17


14.28


13.04


13.06













SELECTED AVERAGE BALANCES











Average loans and leases, including loans held for sale

2,762,963


2,665,825


2,324,107


2,714,662


2,291,709


Average interest-earning assets

4,360,129


4,409,700


4,176,895


4,384,777


4,141,306


Average assets

4,736,818


4,781,855


4,594,615


4,759,212


4,510,797


Average deposits

3,954,457


3,943,459


3,752,684


3,948,989


3,715,568


Average interest-bearing liabilities

3,210,052


3,175,982


3,013,978


3,193,111


2,989,677


Average shareholders' equity

563,895


677,765


655,932


620,516


589,049


















June 30, 


March 31,


June 30, 







2014


2014


2013













REGULATORY CAPITAL RATIOS











Central Pacific Financial Corp.











     Tier 1 leverage capital ratio





11.64

%

12.62

%

14.24

%

     Tier 1 risk-based capital ratio





17.06


18.63


21.55


     Total risk-based capital ratio





18.33


19.90


22.83













Central Pacific Bank











     Tier 1 leverage capital ratio





11.16


11.10


13.40


     Tier 1 risk-based capital ratio





16.36


16.39


20.35


     Total risk-based capital ratio





17.63


17.66


21.63













BALANCE SHEET











Loans and leases





$ 2,794,183


$ 2,697,454


$ 2,373,077


Total assets





4,727,766


4,827,437


4,706,756


Total deposits





4,002,578


3,985,767


3,855,666


Long-term debt





92,790


92,795


108,272


Total shareholders' equity





564,568


608,403


642,035


Total shareholders' equity to total assets





11.94

%

12.60

%

13.64

%

Tangible common equity to tangible assets (4)





11.73


12.38


13.38













ASSET QUALITY











Allowance for loan and lease losses





$      83,599


$      83,162


$      87,105


Nonperforming assets





42,121


54,046


60,892


Allowance to loans and leases outstanding





2.99

%

3.08

%

3.67

%

Allowance to nonperforming assets





198.47


153.87


143.05













PER SHARE OF COMMON STOCK











Book value per common share





$        15.73


$        15.71


$        15.25


Tangible book value per common share





15.41


15.40


14.92


Market value per common share





19.85


20.20


18.00



(1) Annualized

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

(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)






















Three Months Ended


Six Months Ended


 June 30, 


 March 31, 


 June 30, 


 June 30, 


 June 30, 

(Dollars in thousands, except per share data)

2014


2014


2013


2014


2013











Adjusted Net Income










Reported net income

$       9,150


$       9,808


$     14,267


$ 18,958


$ 151,576

Release of valuation allowance on net deferred tax assets

-


-


-


-


(119,802)

Adjusted net income

$       9,150


$       9,808


$     14,267


$ 18,958


$  31,774











Adjusted Diluted Earnings Per Share










Diluted earnings per share

$        0.25


$        0.23


$        0.34


$     0.48


$      3.59

Release of valuation allowance on net deferred tax assets

-


-


-


-


(2.84)

Adjusted diluted earnings per share

$        0.25


$        0.23


$        0.34


$     0.48


$      0.75












 June 30, 


 March 31, 


 June 30, 






2014


2014


2013















Tangible Common Equity Ratio










Total shareholders' equity

$   564,568


$   608,403


$   642,035





Less: Other intangible assets

(11,366)


(12,035)


(14,041)





Tangible common equity

$   553,202


$   596,368


$   627,994















Total assets

$ 4,727,766


$ 4,827,437


$ 4,706,756





Less: Other intangible assets

(11,366)


(12,035)


(14,041)





Tangible assets

$ 4,716,400


$ 4,815,402


$ 4,692,715





Tangible common equity / Tangible assets

11.73

%

12.38

%

13.38

%




 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)




















 June 30, 


 March 31, 


 June 30, 

(In thousands, except share data)






2014


2014


2013













ASSETS












Cash and due from banks





$

83,539

$

85,347

$

57,477

Interest-bearing deposits in other banks






3,480


5,919


79,697

Investment securities:












  Available for sale







1,226,935


1,408,124


1,510,861

  Held to maturity (fair value of $241,368 at June 30, 2014, $238,782 at March 31, 2014 and $245,450 at June 30, 2013)





247,206


248,788


254,981

      Total investment securities






1,474,141


1,656,912


1,765,842













Loans held for sale







8,464


11,247


14,674

Loans and leases







2,794,183


2,697,454


2,373,077

  Less allowance for loan and lease losses






83,599


83,162


87,105

      Net loans and leases






2,710,584


2,614,292


2,285,972













Premises and equipment, net






48,703


47,992


48,807

Accrued interest receivable






13,253


13,507


14,138

Investment in unconsolidated subsidiaries






7,918


8,478


18,844

Other real estate







5,247


4,829


7,437

Mortgage servicing rights






19,779


19,916


20,690

Other intangible assets







11,366


12,035


14,041

Bank-owned life insurance






151,242


150,274


148,292

Federal Home Loan Bank stock






45,011


45,592


47,059

Other assets







145,039


151,097


183,786

      Total assets






$

4,727,766

$

4,827,437

$

4,706,756













LIABILITIES AND EQUITY











Deposits:












  Noninterest-bearing demand





$

962,646

$

939,138

$

860,694

  Interest-bearing demand






756,776


744,690


720,741

  Savings and money market






1,221,253


1,230,480


1,180,657

  Time







1,061,903


1,071,459


1,093,574

      Total deposits







4,002,578


3,985,767


3,855,666













Short-term borrowings







29,000


102,000


-

Long-term debt







92,790


92,795


108,272

Other liabilities







38,830


38,411


90,837

      Total liabilities







4,163,198


4,218,973


4,054,775













Equity:












  Preferred stock, no par value, authorized 1,100,000 shares; issued and outstanding none at June 30, 2014, March 31, 2014, and June 30, 2013







-


-


-

  Common stock, no par value, authorized 185,000,000 shares; issued and outstanding 35,901,080 shares at June 30, 2014, 38,723,250 shares at March 31, 2014 and 42,088,976 shares at June 30, 2013




655,219


715,708


784,473

  Surplus







76,311


76,426


72,173

  Accumulated deficit







(171,380)


(177,649)


(197,851)

  Accumulated other comprehensive income (loss)






4,418


(6,082)


(16,760)

      Total shareholders' equity






564,568


608,403


642,035

Non-controlling interest






-


61


9,946

      Total equity







564,568


608,464


651,981













      Total liabilities and equity





$

4,727,766

$

4,827,437

$

4,706,756

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)














Three Months Ended


Six Months Ended



June 30,


March 31,


June 30,


June 30,

(In thousands, except per share data)

2014


2014


2013


2014


2013












Interest income:











  Interest and fees on loans and leases

28,040

$

26,883

$

26,505

$

54,923

$

50,948

  Interest and dividends on investment securities:











        Taxable interest


8,476


9,496


7,373


17,972


14,404

        Tax-exempt interest


1,000


994


1,040


1,994


2,067

        Dividends


1


1


6


2


11

  Interest on deposits in other banks

8


7


68


15


157

  Dividends on Federal Home Loan Bank stock

11


12


-


23


-












      Total interest income


37,536


37,393


34,992


74,929


67,587












Interest expense:











  Interest on deposits:











    Demand


91


90


87


181


168

    Savings and money market


223


224


219


447


436

    Time


621


630


720


1,251


1,479

  Interest on short-term borrowings

55


17


-


72


-

  Interest on long-term debt


640


636


793


1,276


1,662












      Total interest expense


1,630


1,597


1,819


3,227


3,745












      Net interest income


35,906


35,796


33,173


71,702


63,842

Provision (credit) for loan and lease losses

1,995


(1,316)


(227)


679


(6,788)






















      Net interest income after provision for loan and lease losses


33,911


37,112


33,400


71,023


70,630












Other operating income:











  Service charges on deposit accounts

1,989


1,993


1,583


3,982


3,174

  Loan servicing fees


1,448


1,444


1,526


2,892


3,069

  Other service charges and fees


3,083


2,943


3,117


6,026


5,904

  Income from fiduciary activities


828


1,062


686


1,890


1,383

  Equity in earnings of unconsolidated subsidiaries

359


52


192


411


220

  Fees on foreign exchange


119


114


128


233


199

  Investment securities gains


240


-


-


240


-

  Income from bank-owned life insurance

766


670


317


1,436


881

  Loan placement fees


178


143


178


321


327

  Net gains on sales of residential loans

1,227


1,239


2,888


2,466


7,016

  Net gains on sales of foreclosed assets

582


162


7,694


744


8,252

  Other


1,185


322


(497)


1,507


417












      Total other operating income


12,004


10,144


17,812


22,148


30,842












Other operating expense:











  Salaries and employee benefits


16,550


17,434


18,242


33,984


36,777

  Net occupancy 


3,734


3,590


3,622


7,324


6,849

  Equipment


945


796


878


1,741


1,836

  Amortization of other intangible assets

1,318


1,240


2,109


2,558


4,357

  Communication expense


874


894


870


1,768


1,820

  Legal and professional services


2,228


1,812


1,945


4,040


4,255

  Computer software expense


1,575


1,358


1,193


2,933


2,126

  Advertising expense


678


686


728


1,364


1,540

  Foreclosed asset expense


(17)


105


705


88


1,005

  Other


5,003


4,015


4,708


9,018


7,188












      Total other operating expense


32,888


31,930


35,000


64,818


67,753












  Income before income taxes


13,027


15,326


16,212


28,353


33,719

Income tax expense (benefit)


3,877


5,518


1,945


9,395


(117,857)

      Net income


9,150

$

9,808

$

14,267

$

18,958

$

151,576












Per common share data:











  Basic earnings per share


0.25

$

0.23

$

0.34

$

0.49

$

3.62

  Diluted earnings per share 


0.25


0.23


0.34


0.48


3.59

  Cash dividends declared


0.08


0.08


-


0.16


-












Basic weighted average shares outstanding

36,117


41,915


41,957


39,000


41,886

Diluted weighted average shares outstanding

36,656


42,477


42,320


39,405


42,235

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

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














































Three Months Ended


Three Months Ended


Six Months Ended


Six Months Ended

(Dollars in thousands)

June 30, 2014


June 30, 2013


June 30, 2014


June 30, 2013




Average

Average




Average

Average




Average

Average




Average

Average






Balance

Yield/Rate


Interest


Balance

Yield/Rate


Interest


Balance

Yield/Rate


Interest


Balance

Yield/Rate


Interest























Assets:




















Interest earning assets:





















Interest-bearing deposits in other banks

$      12,756

0.25

%

$          8


$    108,612

0.25

%

$        68


$      12,173

0.25

%

$        15


$    126,593

0.25

%

$      157


Taxable investment securities, excluding valuation allowance

1,360,329

2.49


8,477


1,516,992

1.95


7,379


1,433,863

2.51


17,974


1,497,547

1.93


14,415


Tax-exempt investment securities, excluding valuation allowance

178,609

3.45


1,539


179,724

3.56


1,600


178,308

3.44


3,068


177,798

3.58


3,180


Loans and leases, including loans held for sale

2,762,963

4.07


28,040


2,324,107

4.57


26,505


2,714,662

4.07


54,923


2,291,709

4.47


50,948


Federal Home Loan Bank stock

45,472

0.10


11


47,460

-


-


45,771

0.10


23


47,659

-


-



Total interest earning assets 

4,360,129

3.50


38,075


4,176,895

3.41


35,552


4,384,777

3.48


76,003


4,141,306

3.33


68,700

Nonearning assets

376,689





417,720





374,435





369,491





Total assets

$ 4,736,818





$ 4,594,615





$ 4,759,212





$ 4,510,797


























Liabilities & Equity:




















Interest-bearing liabilities:





















Interest-bearing demand deposits

$    743,544

0.05

%

$        91


$    703,165

0.05

%

$        87


$    739,659

0.05

%

$      181


$    688,495

0.05

%

$      168


Savings and money market deposits

1,219,159

0.07


223


1,179,152

0.07


219


1,218,626

0.07


447


1,175,573

0.07


436


Time deposits under $100,000

256,971

0.41


261


288,932

0.47


338


260,207

0.41


529


294,928

0.49


713


Time deposits $100,000 and over

821,701

0.18


360


734,456

0.21


382


831,096

0.18


722


722,405

0.21


766


Short-term borrowings

75,885

0.29


55


-

-


-


50,729

0.29


72


-

-


-


Long-term debt

92,792

2.77


640


108,273

2.94


793


92,794

2.77


1,276


108,276

3.10


1,662



Total interest-bearing liabilities

3,210,052

0.20


1,630


3,013,978

0.24


1,819


3,193,111

0.20


3,227


2,989,677

0.25


3,745

Noninterest-bearing deposits

913,082





846,979





899,401





834,167




Other liabilities

49,788





67,777





46,154





87,952





Total liabilities

4,172,922





3,928,734





4,138,666





3,911,796




Shareholders' equity

563,895





655,932





620,516





589,049




Non-controlling interest

1





9,949





30





9,952





Total equity

563,896





665,881





620,546





599,001





Total liabilities & equity

$ 4,736,818





$ 4,594,615





$ 4,759,212





$ 4,510,797


























Net interest income 




$ 36,445





$ 33,733





$ 72,776





$ 64,955













































Net interest margin


3.35

%



3.23

%



3.33

%



3.15

%

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES


Loans and Leases by Geographic Distribution













June 30,


March 31,


December 31,


September 30,


June 30,

(Dollars in thousands)

2014


2014


2013


2013


2013











Hawaii:










Commercial, financial and agricultural

$    268,037


$    272,007


$       255,987


$        244,680


$    231,730

Real estate:










   Construction

96,138


82,769


71,585


57,334


63,509

   Mortgage:










   - residential

1,226,864


1,180,092


1,136,573


1,100,382


1,045,670

   - commercial

568,672


554,299


555,270


560,896


546,912

Consumer

243,148


231,432


230,664


190,653


171,772

Leases

4,087


5,338


6,241


6,539


7,460

Total loans and leases

2,406,946


2,325,937


2,256,320


2,160,484


2,067,053

Allowance for loan and lease losses

(65,367)


(64,759)


(66,639)


(66,041)


(62,295)

Net loans and leases

$ 2,341,579


$ 2,261,178


$    2,189,681


$     2,094,443


$ 2,004,758











U.S. Mainland:










Commercial, financial and agricultural

$    164,707


$    164,237


$       142,729


$        123,550


$      84,668

Real estate:










   Construction

3,740


3,886


4,031


15,869


16,018

   Mortgage:










   - residential

-


-


-


-


-

   - commercial

129,060


129,254


147,497


149,480


179,170

Consumer

89,730


74,140


80,024


34,935


26,168

Leases

-


-


-


-


-

Total loans and leases

387,237


371,517


374,281


323,834


306,024

Allowance for loan and lease losses

(18,232)


(18,403)


(17,181)


(19,187)


(24,810)

Net loans and leases

$    369,005


$    353,114


$       357,100


$        304,647


$    281,214











Total:










Commercial, financial and agricultural

$    432,744


$    436,244


$       398,716


$        368,230


$    316,398

Real estate:










   Construction

99,878


86,655


75,616


73,203


79,527

   Mortgage:










   - residential

1,226,864


1,180,092


1,136,573


1,100,382


1,045,670

   - commercial

697,732


683,553


702,767


710,376


726,082

Consumer

332,878


305,572


310,688


225,588


197,940

Leases

4,087


5,338


6,241


6,539


7,460

Total loans and leases

2,794,183


2,697,454


2,630,601


2,484,318


2,373,077

Allowance for loan and lease losses

(83,599)


(83,162)


(83,820)


(85,228)


(87,105)

Net loans and leases

$ 2,710,584


$ 2,614,292


$    2,546,781


$     2,399,090


$ 2,285,972

 

Central Pacific Bank







Nonperforming Assets, Past Due and Restructured Loans









June 30,

March 31,

December 31,

September 30,

June 30,

(Dollars in thousands)


2014

2014

2013

2013

2013









Nonaccrual loans (including loans held for sale):






   Commercial, financial and agricultural


$  16,657

$   17,067

$            3,533

$             3,529

$    3,797

   Real estate:







      Construction 


373

379

4,015

16,497

17,086

      Mortgage-residential


13,608

18,161

20,271

20,703

21,287

      Mortgage-commercial


6,236

13,610

13,769

12,559

11,285

   Consumer


-

-

-

-

-

   Leases



-

-

-

-

-

      Total nonaccrual loans


36,874

49,217

41,588

53,288

53,455









Other real estate:







   Commercial, financial and agricultural


-

-

-

-

-

   Real estate:







      Construction 


3,048

3,770

3,770

3,769

4,200

      Mortgage-residential


2,041

901

1,184

1,783

3,028

      Mortgage-commercial


158

158

209

209

209

   Consumer


-

-

-

-

-

   Leases



-

-

-

-

-

      Total other real estate


5,247

4,829

5,163

5,761

7,437









      Total nonperforming assets


42,121

54,046

46,751

59,049

60,892









Loans delinquent for 90 days or more:







   Commercial, financial and agricultural


-

7

-

-

-

   Real estate:







      Construction


-

-

-

-

-

      Mortgage-residential


99

-

-

19

17

      Mortgage-commercial  


-

-

-

-

-

   Consumer


20

23

-

18

-

   Leases



-

-

15

-

-

      Total loans delinquent for 90 days or more

119

30

15

37

17









Restructured loans still accruing interest:






   Commercial, financial and agricultural


384

395

406

416

427

   Real estate:







      Construction 


944

970

3,857

3,935

9,317

      Mortgage-residential


18,456

18,152

16,508

15,595

14,645

      Mortgage-commercial


10,941

2,312

2,502

7,859

2,874

   Consumer


-

-

-

-

-

   Leases



-

-

-

-

-

      Total restructured loans still accruing interest

30,725

21,829

23,273

27,805

27,263









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

$  72,965

$   75,905

$          70,039

$           86,891

$  88,172









Total nonaccrual loans as a percentage of loans and leases 

1.32%

1.82%

1.58%

2.14%

2.25%









Total nonperforming assets as a percentage of loans and leases and






   other real estate


1.50%

2.00%

1.77%

2.37%

2.56%









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

1.51%

2.00%

1.77%

2.37%

2.56%









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


2.61%

2.81%

2.66%

3.49%

3.70%

















Quarter to Quarter Changes in Nonperforming Assets:






Balance at beginning of quarter


$  54,046

$   46,751

$          59,049

$           60,892

$  75,308

Additions



2,485

15,000

7,099

4,253

3,912

Reductions







   Payments


(4,327)

(2,251)

(16,654)

(2,202)

(11,198)

   Return to accrual status


(9,278)

(4,749)

(1,145)

(1,761)

(1,325)

   Sales of foreclosed real estate


(817)

(654)

(1,496)

(1,919)

(4,596)

   Charge-offs/writedowns


12

(51)

(102)

(214)

(1,209)

Total reductions


(14,410)

(7,705)

(19,397)

(6,096)

(18,328)

Balance at end of quarter


$  42,121

$   54,046

$          46,751

$           59,049

$  60,892

 

CENTRAL PACIFIC FINANCIAL CORP AND SUBSIDIARIES






Allowance for Loan and Lease Losses









Three Months Ended







Six Months Ended



June 30,

March 31,

June 30,


June 30,

June 30,

(Dollars in thousands)

2014

2014

2013


2014

2013









Allowance for loan and lease losses:







   Balance at beginning of period

$    83,162

$    83,820

$    86,806


$    83,820

$    96,413









   Provision for loan and lease losses

1,995

(1,316)

(227)


679

(6,788)









   Charge-offs:







   Commercial, financial and agricultural

1,482

73

1,597


1,555

1,841

   Real estate:







      Construction

-

-

277


-

355

      Mortgage-residential

102

37

380


139

794

      Mortgage-commercial

1,041

-

-


1,041

3,674

   Consumer

671

580

242


1,251

557

   Leases


-

8

-


8

-

      Total charge-offs

3,296

698

2,496


3,994

7,221









   Recoveries:







   Commercial, financial and agricultural

546

606

170


1,152

662

   Real estate:







      Construction

342

402

1,747


744

2,232

      Mortgage-residential

529

94

243


623

474

      Mortgage-commercial

13

13

703


26

957

   Consumer

305

239

157


544

373

   Leases


3

2

2


5

3

      Total recoveries

1,738

1,356

3,022


3,094

4,701









   Net charge-offs (recoveries)

1,558

(658)

(526)


900

2,520









   Balance at end of period

$    83,599

$    83,162

$    87,105


$    83,599

$    87,105









Average loans and leases, net of unearned

2,762,963

2,665,825

2,324,107


2,714,662

2,291,709









Annualized ratio of net charge-offs (recoveries) to average loans and leases

0.23%

-0.10%

-0.09%


0.07%

0.22%









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

2.99%

3.08%

3.67%


2.99%

3.67%

 

SOURCE Central Pacific Financial Corp.



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http://www.centralpacificbank.com

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