Central Pacific Financial Corp. Reports Continued Strong Earnings With $12.4 Million Net Income 2012 EARNINGS UP 30% OVER PREVIOUS YEAR

HONOLULU, Jan. 31, 2013 /PRNewswire/ -- Central Pacific Financial Corp. (NYSE: CPF), parent company of Central Pacific Bank (the "Bank"), today reported net income for the fourth quarter of 2012 of $12.4 million, or $0.29 per diluted share, compared to net income in the fourth quarter of 2011 of $12.1 million, or $0.29 per diluted share, and net income in the third quarter of 2012 of $10.7 million, or $0.26 per diluted share.  For the year ended December 31, 2012, the Company's net income was $47.4 million, a 30% increase over net income of $36.6 million in the previous year. On a diluted per share basis, net income was $1.13 and $3.31 for 2012 and 2011, respectively.  Net income per diluted share in 2011 included the impact of a one-time accounting adjustment from the previously reported exchange of the Company's preferred stock issued to the U.S. Department of Treasury for common stock as part of its recapitalization. 

"We are pleased at the progress our Company continued to make in 2012," said John C. Dean, President and Chief Executive Officer.  "The 30% increase in net income, year over year, is a reflection of significant improvements in our credit risk profile.  In addition, we were also encouraged by the fact that we enjoyed strong growth in both loans and core deposits during the quarter."

Significant Highlights and Fourth Quarter Results

  • Reported eighth consecutive profitable quarter since the company's recapitalization with net income of $12.4 million, compared to net income of $10.7 million in the third quarter of 2012.
  • For the seventh consecutive quarter, the Company did not incur credit costs as it reduced its allowance for loan and lease losses (ALLL) by an amount greater than net foreclosed asset expense, write-downs of loans held for sale and changes to the reserve for unfunded commitments.  The reduction in the ALLL resulted in a credit to the provision for loan and lease losses of $2.3 million, compared to a credit of $5.0 million for the third quarter of 2012.
  • Reduced nonperforming assets by $50.3 million to $90.0 million at December 31, 2012 from $140.3 million at September 30, 2012.
  • The ALLL, as a percentage of total loans and leases, decreased to 4.37% at December 31, 2012, compared to 4.59% at September 30, 2012.  In addition, the Company's ALLL, as a percentage of nonperforming assets, increased significantly to 107.10% at December 31, 2012 from 69.08% at September 30, 2012 and the Company's ALLL, as a percentage of nonaccrual loans, increased to 121.53% at December 31, 2012 from 104.30% at September 30, 2012.
  • Increased the loans and leases portfolio by $93.8 million to $2.20 billion at December 31, 2012, compared to $2.11 billion at September 30, 2012.
  • Increased total deposits by $59.2 million to $3.68 billion at December 31, 2012, compared to $3.62 billion at September 30, 2012.
  • Maintained a strong capital position with Tier 1 risk-based capital, total risk-based capital, and leverage capital ratios of 22.54%, 23.83%, and 14.32%, respectively, as of December 31, 2012, compared to 23.34%, 24.63%, and 14.06%, respectively, as of September 30, 2012.  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 fourth quarter of 2012 was $29.4 million, compared to $30.8 million in the year-ago quarter and $29.6 million in the third quarter of 2012.  Net interest margin was 3.00%, compared to 3.25% in the year-ago quarter and 3.02% in the third quarter of 2012. The decrease in both net interest income and the net interest margin from both the year-ago and sequential quarters was primarily due to lower yields on the Company's interest-earning assets resulting from the continuing lower interest rate environment.

The provision for loan and lease losses for the fourth quarter of 2012 was a credit of $2.3 million, compared to a credit of $11.2 million in the year-ago quarter and a credit of $5.0 million in the third quarter of 2012.  The credit to the provision for loan and lease losses was the result of continued improvement in the Company's credit risk profile, as evidenced by the previously mentioned decrease in nonperforming assets and further reductions in the historical quarterly charge-off data used to calculate the ALLL.

Other operating income for the fourth quarter of 2012 totaled $13.0 million, compared to $15.2 million in the year-ago quarter and $15.9 million in the third quarter of 2012. The decrease from the year-ago quarter was primarily due to lower rental income from foreclosed properties of $1.9 million, lower unrealized gains on interest rate locks of $1.1 million, lower investment securities gains of $1.0 million, lower service charges on deposit accounts of $0.8 million and lower income from bank-owned life insurance of $0.5 million, partially offset by higher gains on sales of residential mortgage loans of $2.3 million. The sequential quarter decrease was primarily due to lower unrealized gains on interest rate locks of $2.1 million, lower investment securities gains of $0.8 million, lower rental income from foreclosed properties of $0.6 million and lower service charges on deposit accounts of $0.5 million, partially offset by higher gains on sales of residential mortgage loans of $1.3 million.

Other operating expense for the fourth quarter of 2012 totaled $32.3 million, compared to $45.2 million in the year-ago quarter and $39.8 million in the third quarter of 2012.  The decrease from the year-ago quarter was primarily due to lower net credit-related charges (which includes changes in the reserve for unfunded commitments, write-downs of loans held for sale and foreclosed asset expense) of $9.2 million, lower charitable contributions of $3.1 million and a lower provision for repurchased residential mortgage loans of $1.5 million. The sequential quarter decrease was primarily attributable to lower net credit-related charges of $9.9 million, partially offset by a lower credit to the provision for repurchased residential mortgage loans of $0.7 million and higher salaries and employee benefits of $0.6 million.

The efficiency ratio for the fourth quarter of 2012 was 81.7% (excluding foreclosed asset income of $3.5 million, and amortization expense related to certain intangible assets totaling $0.7 million), compared to 92.0% in the year-ago quarter (excluding foreclosed asset expense of $3.0 million and amortization expense related to certain intangible assets totaling $0.7 million) and 78.51% (excluding foreclosed asset expense of $2.9 million, loss on sale of loans held for sale of $0.8 million and amortization expense related to certain intangible assets totaling $0.7 million) in the third quarter of 2012.

The Company continues to recognize a full valuation allowance against its net deferred tax assets and did not record any net income tax benefit or expense during the fourth quarter of 2012.

Balance Sheet Highlights
Total assets at December 31, 2012 of $4.37 billion increased by $237.5 million and $60.8 million from December 31, 2011 and September 30, 2012, respectively.

Total loans and leases at December 31, 2012 of $2.20 billion increased by $139.5 million and $93.8 million from December 31, 2011 and September 30, 2012, respectively.  The increase in total loans and leases from the third quarter of 2012 was due to an increase in the residential mortgage, commercial and consumer loan portfolios of $50.0 million, $34.8 million and $20.0 million, respectively, partially offset by a decrease in the construction and development, leases and commercial mortgage loan portfolios of $8.1 million, $1.6 million and $1.3 million, respectively.

Total deposits at December 31, 2012 were $3.68 billion, compared to $3.44 billion and $3.62 billion at December 31, 2011 and September 30, 2012, respectively.  Core deposits, which include demand deposits, savings and money market deposits, and time deposits less than $100,000, totaled $3.01 billion at December 31, 2012.  This represents an increase of $220.4 million from a year ago and an increase of $63.3 million from September 30, 2012.  Changes in total deposits during the quarter included an increase in non-interest bearing demand deposits, interest-bearing demand deposits and savings and money market deposits of $39.5 million, $24.5 million and $8.8 million, respectively, offset by a decrease in time deposits of $13.7 million.

Total shareholders' equity was $504.8 million at December 31, 2012, compared to $456.4 million and $501.0 million at December 31, 2011 and September 30, 2012, respectively.

Asset Quality
Nonperforming assets at December 31, 2012 totaled $90.0 million, or 2.06% of total assets, compared to $140.3 million, or 3.26% of total assets at September 30, 2012.  The sequential-quarter change reflects net decreases in Hawaii construction and development assets of $33.9 million, Mainland construction and development assets of $9.0 million, Hawaii residential mortgage assets of $6.5 million, Mainland commercial mortgage assets of $0.4 million, Hawaii commercial mortgage assets totaling $0.3 million, Hawaii lease assets of $0.2 million and Hawaii commercial assets of $0.1 million.

Loans delinquent for 90 days or more still accruing interest totaled $0.5 million at both December 31, 2012 and September 30, 2012.  In addition, loans delinquent for 30 days or more still accruing interest totaled $10.4 million at December 31, 2012, compared to $5.7 million at September 30, 2012.

Net recoveries in the fourth quarter of 2012 totaled $1.8 million, compared to net charge-offs of $10.1 million and $1.9 million in the year-ago quarter and third quarter of 2012, respectively.

The ALLL, as a percentage of total loans and leases, was 4.37% at December 31, 2012, compared to 4.59% at September 30, 2012.  The ALLL, as a percentage of nonperforming assets, was 107.10% at December 31, 2012, compared to 69.08% at September 30, 2012.  The ALLL, as a percentage of nonaccrual loans, was 121.53% at December 31, 2012, compared to 104.30% at September 30, 2012. 

Capital Levels
At December 31, 2012, the Company's Tier 1 risk-based capital, total risk-based capital, and leverage capital ratios were 22.54%, 23.83%, and 14.32%, respectively, compared to 23.34%, 24.63%, and 14.06%, respectively, at September 30, 2012.  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 12:00 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 1-888-317-6016.  A playback of the call will be available through February 28, 2013 by dialing 1-877-344-7529 (passcode: 10023257) and on the Company's website.

About Central Pacific Financial Corp.
Central Pacific Financial Corp. is a Hawaii-based bank holding company with approximately $4.37 billion in assets.  Central Pacific Bank, its primary subsidiary, operates 34 branches and 116 ATMs in the state of Hawaii, as of December 31, 2012.  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 all of the requirements of, the Memorandum of Understanding with the Federal Deposit Insurance Corporation ("FDIC") and the Hawaii Division of Financial Institutions ("DFI"), effective May 5, 2011, the Written Agreement with the Federal Reserve Bank of San Francisco and DFI, dated July 2, 2010, and any further regulatory orders we are or may become subject to; our ability to continue making progress on our recovery plan; oversupply of inventory and adverse conditions in the Hawaii and California real estate markets and recurring 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, further 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 the continued destabilizing factors 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;  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.

 

CENTRAL PACIFIC FINANCIAL CORP.  AND SUBSIDIARIES

Financial Highlights - December 31, 2012

(Unaudited)

















Three Months Ended




Year Ended






December 31,




December 31,




(in thousands, except per share data)

2012


2011




2012


2011


















INCOME STATEMENT













Net income

$      12,410


$      12,095




$      47,421


$      36,571




Per common share data:














Basic earnings per share (after preferred stock dividends, accretion

of discount, and conversion of preferred stock to common stock)

0.30


0.29




1.14


3.36





Diluted earnings per share (after preferred stock dividends, accretion

of discount, and conversion of preferred stock to common stock)

0.29


0.29




1.13


3.31


















PERFORMANCE RATIOS













Return on average assets (1)

1.16

%

1.19

%



1.13

%

0.90

%



Return on average shareholders' equity (1)

9.81


10.78




9.81


9.83




Net income to average tangible shareholders' equity (1) 

10.13


11.27




10.17


10.41




Efficiency ratio (2)

81.70


91.99




78.89


92.06




Net interest margin (1)

3.00


3.25




3.10


3.09


























December 31,




REGULATORY CAPITAL RATIOS







2012


2011




Central Pacific Financial Corp.














Tier 1 risk-based capital 







22.54

%

22.94

%




Total risk-based capital







23.83


24.24





Leverage capital







14.32


13.78


















Central Pacific Bank 














Tier 1 risk-based capital 







21.47

%

21.63

%




Total risk-based capital







22.75


22.93





Leverage capital







13.65


13.00
























December 31,


%










2012


2011


Change


BALANCE SHEET













Total assets







$  4,370,368


$  4,132,865


5.7

%

Loans and leases







2,203,944


2,064,447


6.8


Net loans and leases







2,107,531


1,942,354


8.5


Deposits







3,680,772


3,443,528


6.9


Total shareholders' equity







504,822


456,440


10.6


Book value per common share







12.06


10.93


10.3


Tangible book value per common share







11.69


10.48


11.5


Market value per common share







15.59


12.92


20.7


Tangible common equity ratio (3)







11.24

%

10.63

%

5.7



CENTRAL PACIFIC FINANCIAL CORP.  AND SUBSIDIARIES

Financial Highlights - December 31, 2012

(Unaudited)

















Three Months Ended




Year Ended






December 31,


%


December 31,


%




2012


2011


Change


2012


2011


Change


SELECTED AVERAGE BALANCES













Total assets

$  4,293,042


$  4,064,411


5.6

%

$  4,207,655


$  4,054,628


3.8

%

Interest-earning assets

3,983,983


3,787,703


5.2


3,898,677


3,822,410


2.0


Loans and leases, including loans held for sale

2,172,818


2,114,686


2.7


2,130,758


2,121,544


0.4


Other real estate

28,692


62,685


(54.2)


46,913


53,033


(11.5)


Deposits

3,596,155


3,348,719


7.4


3,532,318


3,212,540


10.0


Interest-bearing liabilities

2,879,056


2,846,075


1.2


2,868,352


2,925,423


(2.0)


Total shareholders' equity

505,805


448,759


12.7


483,435


371,922


30.0


























(in thousands, except per share data)



















December 31,


%










2012


2011


Change


NONPERFORMING ASSETS













Nonaccrual loans (including loans held for sale)







$      79,332


$     133,913


(40.8)

%

Other real estate







10,686


61,681


(82.7)



Total nonperforming assets







90,018


195,594


(54.0)


Loans delinquent for 90 days or more (still accruing interest)







503


28


1696.4


Restructured loans (still accruing interest)







31,760


8,263


284.4



Total nonperforming assets, loans delinquent for 90 days or more (still accruing interest)











 and restructured loans (still accruing interest)







$     122,281


$     203,885


(40.0)














































Three Months Ended




Year Ended






December 31,


%


December 31,


%




2012


2011


Change


2012


2011


Change


Loan charge-offs

$        4,098


$      11,275


(63.7)

%

$      17,429


$      41,543


(58.0)

%

Recoveries

5,866


1,153


408.8


10,634


11,472


(7.3)



Net loan charge-offs

$       (1,768)


$      10,122


(117.5)


$        6,795


$      30,071


(77.4)


Net loan charge-offs to average loans (1)

(0.33)

%

1.91

%



0.32

%

1.42

%

















CENTRAL PACIFIC FINANCIAL CORP.  AND SUBSIDIARIES

Financial Highlights - December 31, 2012

(Unaudited)





















December 31,












2012


2011




ASSET QUALITY RATIOS













Nonaccrual loans (including loans held for sale) to total loans and leases and loans held for sale


3.54

%

6.33

%



Nonperforming assets to total assets


2.06


4.73




Nonperforming assets, loans delinquent for 90 days or more (still accruing interest) and restructured loans









(still accruing interest) to total loans and leases, loans held for sale & other real estate


5.43


9.37




Allowance for loan and lease losses to total loans and leases


4.37


5.91




Allowance for loan and lease losses to nonaccrual loans (including loans held for sale)


121.53


91.17




Allowance for loan and lease losses to nonperforming assets



107.10


62.42


















(1)

Annualized



























(2)

The efficiency ratio is a non-GAAP financial measure which should be read and used in conjunction with the Company's GAAP financial information. Comparison of our efficiency ratio with those of other companies may not be possible because other companies may calculate the efficiency ratio differently. Our efficiency ratio is derived by dividing other operating expense (excluding amortization, impairment and write-down of intangible assets, goodwill, loans held for sale and foreclosed property, loss on early extinguishment of debt, loss on investment transaction and loss on sale of commercial real estate loans) by net operating revenue (net interest income on a taxable equivalent basis plus other operating income before securities transactions).  See Reconciliation of Non-GAAP Financial Measures.





(3)

The tangible common equity ratio is a non-GAAP financial measure which should be read and used in conjunction with the Company's  GAAP financial information. Comparison of our tangible common equity ratio with those of other companies may not be possible because other companies may calculate the tangible common equity ratio differently. Our tangible common equity ratio is derived by dividing common shareholders' equity, less intangible assets (excluding mortgage servicing rights (MSRs)) by total assets, less intangible assets (excluding MSRs).


 

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures

(Unaudited)
















Quarter Ended


Quarter Ended


Quarter Ended


(Dollars in thousands, except per share data)

December 31, 2012


September 30, 2012


December 31, 2011









Efficiency Ratio







Total operating expenses as a percentage of net operating revenue

75.17

%

88.17

%

100.14

%

Amortization of other intangible assets

(1.56)


(1.48)


(1.59)


Foreclosed asset expense

8.09


(6.35)


(6.56)


Write down of assets

-


(1.83)


-


Loss on early extinguishment of debt

-


-


-


Efficiency ratio

81.70

%

78.51

%

91.99

%









Year Ended


Year Ended





December 31, 2012


December 31, 2011











Total operating expenses as a percentage of net operating revenue

83.52

%

103.01

%



Amortization of other intangible assets

(2.09)


(1.72)




Foreclosed asset expense

(1.07)


(2.73)




Write down of assets

(1.47)


(2.77)




Loss on early extinguishment of debt

-


(3.73)




Efficiency ratio

78.89

%

92.06

%










Tangible Common Equity Ratio

December 31, 2012


December 31, 2011




Total shareholders' equity

$         504,822


$         456,440




Less: Other intangible assets

(15,378)


(19,053)




Tangible common equity

489,444


437,387











Total assets

4,370,368


4,132,865




Less: Other intangible assets

(15,378)


(19,053)




Tangible assets

4,354,990


4,113,812




Tangible common equity / Tangible assets

11.24

%

10.63

%










 

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)




















 December 31, 


 September 30, 


 December 31, 

(In thousands, except share data)







2012


2012


2011













ASSETS












Cash and due from banks






$

56,473

$

61,078

$

76,233

Interest-bearing deposits in other banks







120,902


159,595


180,839

Investment securities:












  Available for sale







1,536,745


1,499,546


1,492,994

  Held to maturity (fair value of $162,528 at December 31, 2012,









       $165,012 at September 30, 2012 and $976 at December 31, 2011)


161,848


163,733


931

      Total investment securities







1,698,593


1,663,279


1,493,925













Loans held for sale







38,283


24,080


50,290

Loans and leases







2,203,944


2,110,163


2,064,447

  Less allowance for loan and lease losses







96,413


96,928


122,093

      Net loans and leases







2,107,531


2,013,235


1,942,354













Premises and equipment, net







48,759


49,424


51,414

Accrued interest receivable







13,896


13,198


11,674

Investment in unconsolidated subsidiaries







10,975


11,244


12,697

Other real estate







10,686


47,378


61,681

Mortgage servicing rights







22,121


22,726


22,933

Other intangible assets







15,378


16,047


19,053

Bank-owned life insurance







147,411


146,680


144,474

Federal Home Loan Bank stock







47,928


48,363


48,797

Other assets







31,432


33,291


16,501

      Total assets






$

4,370,368

$

4,309,618

$

4,132,865













LIABILITIES AND EQUITY












Deposits:












  Noninterest-bearing demand






$

843,292

$

803,796

$

729,149

  Interest-bearing demand







672,838


648,331


569,371

  Savings and money market







1,186,011


1,177,164


1,136,180

  Time







978,631


992,299


1,008,828

      Total deposits







3,680,772


3,621,590


3,443,528













Short-term borrowings







-


-


34

Long-tem debt







108,281


108,285


158,298

Other liabilities







66,536


68,738


64,585

      Total liabilities







3,855,589


3,798,613


3,666,445













Equity:












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











        issued and outstanding none at December 31, 2012, September 30, 2012,





        and December 31, 2011







-


-


-

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










        issued and outstanding 41,867,046 shares at December 31, 2012, 41,859,566





        shares at September 30, 2012 and 41,749,116 shares at December 31, 2011

784,512


784,512


784,539

  Surplus







70,567


69,094


66,585

  Accumulated deficit







(349,427)


(361,837)


(396,848)

  Accumulated other comprehensive income (loss)






(830)


9,273


2,164

      Total shareholders' equity







504,822


501,042


456,440

Non-controlling interest







9,957


9,963


9,980

      Total equity







514,779


511,005


466,420













      Total liabilities and equity






$

4,370,368

$

4,309,618

$

4,132,865

 

 

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)
















Three Months Ended


Year Ended




December 31,


September 30,


December 31,


December 31,

(In thousands, except per share data)


2012


2012


2011


2012


2011













Interest income:











  Interest and fees on loans and leases

$

23,387

$

24,241

$

26,097

$

97,029

$

107,089

  Interest and dividends on investment











     securities:











        Taxable interest


6,959


6,641


7,179


28,803


27,559

        Tax-exempt interest


965


704


189


2,312


738

        Dividends


5


4


4


16


12

  Interest on deposits in other banks


73


84


104


285


1,052













      Total interest income


31,389


31,674


33,573


128,445


136,450













Interest expense:











  Interest on deposits:











    Demand



81


83


94


339


500

    Savings and money market


223


232


353


1,006


2,044

    Time



784


869


1,288


3,688


7,066

  Interest on short-term borrowings


-


-


-


-


204

  Interest on long-term debt


911


930


1,026


3,701


8,815













      Total interest expense


1,999


2,114


2,761


8,734


18,629













      Net interest income


29,390


29,560


30,812


119,711


117,821

Provision (credit) for loan and lease losses


(2,283)


(4,982)


(11,215)


(18,885)


(40,690)













      Net interest income after provision











           for loan and lease losses


31,673


34,542


42,027


138,596


158,511













Other operating income:











  Service charges on deposit accounts


1,648


2,130


2,460


8,367


10,024

  Other service charges and fees


4,454


4,538


4,286


17,569


17,239

  Income from fiduciary activities


669


662


658


2,599


2,794

  Equity in earnings of unconsolidated subsidiaries


188


171


157


574


458

  Fees on foreign exchange


104


165


180


551


664

  Investment securities gains


-


789


1,045


789


1,306

  Income from bank-owned life insurance


625


741


1,103


2,899


4,139

  Loan placement fees


143


114


193


690


541

  Net gains on sales of residential loans


6,011


4,713


3,670


17,095


8,050

  Other



(873)


1,906


1,483


4,611


4,966













      Total other operating income


12,969


15,929


15,235


55,744


50,181













Other operating expense:











  Salaries and employee benefits


17,833


17,256


17,344


69,344


63,675

  Net occupancy 


3,761


3,629


3,559


13,920


13,793

  Equipment



958


1,030


1,070


3,966


4,702

  Amortization of other intangible assets


2,689


2,698


2,148


10,179


7,033

  Communication expense


886


872


886


3,428


3,517

  Legal and professional services


3,189


2,772


3,536


13,824


13,506

  Computer software expense


1,109


959


923


3,961


3,629

  Advertising expense


884


906


453


3,516


2,961

  Foreclosed asset expense


(3,470)


2,863


2,959


1,888


4,557

  Write down of assets


-


827


-


2,586


4,624

  Loss on early extinguishment of debt


-


-


-


-


6,234

  Other



4,393


5,938


12,289


20,307


43,890













      Total other operating expense


32,232


39,750


45,167


146,919


172,121













  Income before income taxes


12,410


10,721


12,095


47,421


36,571

Income tax expense


-


-


-


-


-

      Net income

$

12,410

$

10,721

$

12,095

$

47,421

$

36,571













Per common share data:











  Basic earnings per share

$

0.30

$

0.26

$

0.29

$

1.14

$

3.36

  Diluted earnings per share 


0.29


0.26


0.29


1.13


3.31













Basic weighted average shares outstanding


41,766


41,764


41,628


41,720


35,891

Diluted weighted average shares outstanding


42,183


42,016


41,709


42,084


36,342

 

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

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




















































Three Months Ended


Three Months Ended


Year Ended


Year Ended

(Dollars in thousands)

December 31, 2012


December 31, 2011


December 31, 2012


December 31, 2011





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

$    115,841

0.25

%

$           73


$    162,592

0.25

%

$         104


$    114,438

0.25

%

$         285


$    412,351

0.26

%

$      1,052


Taxable investment securities, excluding

 valuation allowance

1,489,529

1.87


6,964


1,449,324

1.98


7,183


1,521,164

1.89


28,819


1,227,181

2.25


27,571


Tax-exempt investment securities, 





















   excluding valuation allowance

157,536

3.77


1,485


12,304

9.47


291


83,663

4.25


3,557


12,537

9.05


1,135


Loans and leases, including loans held for sale

2,172,818

4.29


23,387


2,114,686

4.91


26,097


2,130,758

4.55


97,029


2,121,544

5.05


107,089


Federal Home Loan Bank stock

48,259

-


-


48,797

-


-


48,654

-


-


48,797

-


-



Total interest earning assets 

3,983,983

3.20


31,909


3,787,703

3.54


33,675


3,898,677

3.33


129,690


3,822,410

3.58


136,847

Nonearning assets

309,059





276,708





308,978





232,218





Total assets

$ 4,293,042





$ 4,064,411





$ 4,207,655





$ 4,054,628



























Liabilities & Equity:




















Interest-bearing liabilities:





















Interest-bearing demand deposits

$    648,630

0.05

%

$           81


$    555,624

0.07

%

$           94


$    615,960

0.05

%

$         339


$    539,519

0.09

%

$         500


Savings and money market deposits

1,178,745

0.08


223


1,130,165

0.12


353


1,163,963

0.09


1,006


1,117,183

0.18


2,044


Time deposits under $100,000

308,619

0.52


405


359,076

0.76


688


326,288

0.59


1,937


395,500

0.99


3,900


Time deposits $100,000 and over

634,748

0.24


379


611,662

0.39


600


652,339

0.27


1,751


484,734

0.65


3,166


Short-term borrowings

32

0.63


-


1,878

0.01


-


11

0.67


-


35,810

0.57


204


Long-term debt

108,282

3.34


911


187,670

2.17


1,026


109,791

3.37


3,701


352,677

2.50


8,815



Total interest-bearing liabilities

2,879,056

0.28


1,999


2,846,075

0.38


2,761


2,868,352

0.30


8,734


2,925,423

0.64


18,629

Noninterest-bearing deposits

825,413





692,192





773,768





675,604




Other liabilities

72,807





67,402





72,131





71,687





Total liabilities

3,777,276





3,605,669





3,714,251





3,672,714




Shareholders' equity

505,805





448,759





483,435





371,922




Non-controlling interest

9,961





9,983





9,969





9,992





Total equity

515,766





458,742





493,404





381,914





Total liabilities & equity

$ 4,293,042





$ 4,064,411





$ 4,207,655





$ 4,054,628



























Net interest income 




$    29,910





$    30,914





$  120,956





$  118,218















































Net interest margin


3.00

%




3.25

%




3.10

%




3.09

%


 

SOURCE Central Pacific Financial Corp.



RELATED LINKS
http://www.centralpacificbank.com

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