Central Pacific Financial Corp. Reports $12.3 Million Second Quarter Earnings

Jul 24, 2015, 08:00 ET from Central Pacific Financial Corp.

HONOLULU, July 24, 2015 /PRNewswire/ -- Central Pacific Financial Corp. (NYSE: CPF), parent company of Central Pacific Bank (the "Bank"), today reported net income for the second quarter of 2015 of $12.3 million, or $0.39 per diluted share, compared to net income in the second quarter of 2014 of $9.2 million, or $0.25 per diluted share, and net income in the first quarter of 2015 of $10.4 million, or $0.29 per diluted share.

"During the second quarter, our positive performance trends continued with growth in loans, increase in net interest income, and a decline in nonperforming assets," said Catherine Ngo, President and Chief Executive Officer. "We are especially pleased with the strong increase in core deposits, which is reflective of our focus on strengthening customer relationships."

On July 23, 2015, the Company's Board of Directors declared a quarterly cash dividend of $0.12 per share on the Company's outstanding common shares. The dividend will be payable on September 15, 2015 to shareholders of record at the close of business on August 31, 2015.

In March 2015, the Company's Board of Directors authorized the addition of $75 million to its common stock repurchase program and promptly deployed this enhanced repurchase authority on April 1, 2015 with the repurchase of an additional 3,259,452 shares of its common stock at a purchase price per share of $23.01 (and an aggregate repurchase cost of approximately $75 million, excluding fees and expenses) in connection with the underwritten public offering of the Company's common stock by the Company's two largest shareholders, ACMO-CPF, L.L.C. and Carlyle Financial Services Harbor, L.P.

During the second quarter of 2015, the Company repurchased a total of 3,476,952 shares of common stock, including the shares repurchased in connection with the underwritten public offering noted above, at a total cost of $80.0 million, excluding fees and expenses, under its share repurchase program. The average cost was $23.01 per share repurchased. During the six months ended June 30, 2015, we have repurchased approximately 11.2% of our common stock outstanding as of December 31, 2014. The Company's remaining repurchase authority under its common stock repurchase program at June 30, 2015 is approximately $24.2 million.

Since reinstating our quarterly cash dividends in 2013, we have returned a total of $28.1 million in cash dividends to our shareholders and have repurchased 10,996,401 shares of our common stock at a total cost of $230.8 million, excluding fees and expenses.

Significant Highlights and Second Quarter Results

  • Reported net income of $12.3 million, compared to net income in the first quarter of 2015 of $10.4 million.
  • Increased the loans and leases portfolio by $38.3 million, or 1.3%, to $3.01 billion at June 30, 2015, compared to $2.97 billion at March 31, 2015.
  • Increased core deposits by $46.5 million to $3.38 billion at June 30, 2015, compared to $3.33 billion at March 31, 2015.
  • Reported a net interest margin of 3.32%, compared to 3.28% in the first quarter of 2015.
  • Recorded a credit to the provision for loan and lease losses of $7.3 million in the second quarter of 2015, compared to a credit to the provision for loan and lease losses of $2.7 million in the first quarter of 2015.
  • Nonperforming assets decreased by $8.7 million to $32.1 million at June 30, 2015 from $40.8 million at March 31, 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 10.44%, 14.47%, 15.73%, and 11.91%, respectively, as of June 30, 2015.  The Company's capital ratios continue to be well in excess of the minimum levels required for a "well-capitalized" regulatory designation under Basel III.

Earnings Highlights

Net interest income for the second quarter of 2015 was $37.3 million, compared to $35.9 million in the year-ago quarter and $36.2 million in the first quarter of 2015.  Net interest margin was 3.32%, compared to 3.35% in the year-ago quarter and 3.28% in the first quarter of 2015. The sequential quarter increase in net interest margin was primarily due to higher loan fees and prepayment income totaling $0.6 million, primarily attributable to the early repayment of loans, and higher interest received on nonaccrual loans of $0.1 million. The increase in net interest income was also the result, in part, of our average investment securities and loan portfolio balances increasing by $47.7 million and $25.7 million, respectively. The taxable equivalent yield on the loans and leases portfolio increased to 3.97% in the current quarter from 3.90% last quarter. The taxable equivalent yield on the investment securities portfolio decreased to 2.56% in the current quarter, compared to 2.61% last quarter. Rates paid on total deposits decreased to 0.08% in the current quarter, compared to 0.09% last quarter.

In the second quarter of 2015, $119.4 million in available-for-sale securities were sold as part of an investment portfolio repositioning designed to improve profitability. Investment securities sold in the second quarter had a weighted average life of 4.4 years, average yield of 1.35% and resulted in a loss of $1.9 million, recorded in other operating income. Proceeds from the sale were immediately reinvested back into the investment portfolio, purchasing $120.6 million in mortgage-backed securities with a weighted average life of 7.6 years and an average yield of 2.71%.

In the second quarter of 2015, we recorded a credit to the provision for loan and lease losses of $7.3 million, compared to a provision of $2.0 million in the year-ago quarter and a credit of $2.7 million in the first quarter of 2015. The credit to the provision for loan and lease losses was primarily attributable to improving trends in credit quality.

Other operating income for the second quarter of 2015 totaled $8.1 million, compared to $12.0 million in the year-ago quarter and $11.2 million in the first quarter of 2015. The decrease from the year-ago quarter was primarily due to investment securities losses of $1.9 million and unrealized losses on loans held for sale and interest rate locks of $0.2 million (included in other) in the second quarter of 2015, compared to investment securities gains of $0.2 million and unrealized gains on loans held for sale and interest rate locks of $0.4 million (included in other) in the year-ago quarter. In addition, we recorded lower net gains on sales of foreclosed assets of $0.5 million, lower income from bank-owned life insurance of $0.3 million, and lower other service charges of fees of $0.3 million. These decreases were offset by higher net gains on sales of residential mortgage loans of $0.4 million. The sequential quarter decrease was primarily due to the aforementioned investment securities losses of $1.9 million, unrealized losses on loans held for sale and interest rate locks of $0.2 million (included in other) in the second quarter of 2015, compared to unrealized gains on loans held for sale and interest rate locks of $0.5 million (included in other) in the first quarter of 2015, lower other service charges and fees of $0.3 million, and lower income from bank-owned life insurance of $0.2 million.

Other operating expense for the second quarter of 2015 totaled $32.5 million, compared to $32.9 million in the year-ago quarter and $34.0 million in the first quarter of 2015. The decrease from the year-ago quarter was primarily attributable to lower salaries and employee benefits of $1.4 million, lower legal and professional services of $0.6 million, lower net occupancy expense of $0.3 million, and a credit to the reserve for unfunded commitments of $0.3 million (included in other) in the second quarter of 2015, compared to an increase to the reserve for unfunded commitments of $0.1 million in the year-ago quarter. These decreases were partially offset by higher charitable contributions of $2.0 million (included in other) and higher computer software expense of $0.8 million. The higher charitable contributions were primarily attributable to a $2.0 million contribution to the Central Pacific Bank Foundation ("CPB Foundation"), which was the first contribution to CPB Foundation since December 2013. The sequential quarter decrease is primarily attributable to lower salaries and employee benefits of $2.0 million, lower legal and professional services of $0.6 million, and lower amortization of mortgage servicing rights of $0.5 million. These decreases were offset by higher charitable contributions of $2.0 million (included in other). The current quarter decrease in salaries and employee benefits was due primarily to a one-time reversal of an accrual for a former executive officer's retirement benefits which will not be paid.

The efficiency ratio for the second quarter of 2015 was 71.47%, compared to 68.65% in the year-ago quarter and 71.73% in the first quarter of 2015. The efficiency ratio in the second quarter of 2015 was primarily impacted by the investment securities losses and the CPB Foundation charitable contribution, offset by the salaries and employee benefits accrual reversal noted above.

In the second quarter of 2015, the Company recorded income tax expense of $7.9 million, compared to income tax expense of $3.9 million in the year-ago quarter and $5.8 million in the first quarter of 2015. The effective tax rate for the second quarter of 2015 was 39.2%, compared to 35.7% in the first quarter of 2015. Our income tax expense and effective tax rate in the second quarter of 2015 was impacted by $0.6 million in additional income tax expense resulting from the reduction in deferred tax liabilities related to the redemption of Federal Home Loan Bank of Des Moines ("FHLB Des Moines") membership stock during the quarter, as discussed below. Our income tax expense and effective tax rate in the first quarter of 2015 was impacted by $0.5 million in costs related to the underwriting agreement and share repurchase completed on April 1, 2015, which are not tax-deductible. As of June 30, 2015, the Company's net deferred tax assets totaled $94.2 million.

Balance Sheet Highlights

Total assets at June 30, 2015 of $4.97 billion increased by $240.1 million from June 30, 2014, and increased by $1.9 million from March 31, 2015.

Total loans and leases at June 30, 2015 of $3.01 billion increased by $211.9 million and $38.3 million from June 30, 2014 and March 31, 2015, respectively.  The increase in total loans and leases from the first quarter of 2015 was primarily due to an increase in the residential mortgage and consumer loan portfolios of $51.7 million and $23.2 million, respectively, partially offset by a decrease in the construction and commercial mortgage loan portfolios of $29.2 million and $6.1 million, respectively.

During the second quarter of 2015, following their merger with Federal Home Loan Bank of Seattle on June 1, 2015, we redeemed $31.3 million in excess FHLB Des Moines membership stock at par value of $100 per share.

Total deposits at June 30, 2015 of $4.18 billion increased by $179.7 million from June 30, 2014, and decreased by $6.3 million from March 31, 2015.  Core deposits, which include demand deposits, savings and money market deposits, and time deposits less than $100,000, totaled $3.38 billion at June 30, 2015.  This represents an increase of $182.5 million and $46.5 million from a year ago and from March 31, 2015, respectively.  Changes in total deposits during the quarter included net decreases in time deposits of $59.1 million, offset by net increases in noninterest-bearing demand deposits, savings and money market deposits, and interest-bearing demand deposits of $37.6 million, $13.9 million, and $1.3 million, respectively.

Total shareholders' equity was $488.8 million at June 30, 2015, compared to $564.6 million and $572.9 million at June 30, 2014 and March 31, 2015, respectively. The sequential quarter decrease is due primarily to repurchases of $80.0 million in common stock, excluding fees and expenses, under the Company's stock repurchase program, a $11.4 million change in unrealized losses on investment securities, and common stock dividends paid of $3.8 million, partially offset by net income of $12.3 million in the current quarter.

Asset Quality

Nonperforming assets at June 30, 2015 totaled $32.1 million, or 0.65% of total assets, compared to $40.8 million, or 0.82% of total assets at March 31, 2015.  The sequential-quarter change in nonperforming assets reflects net decreases in U.S. Mainland commercial and industrial assets of $10.1 million, Hawaii residential mortgage assets of $2.3 million, and U.S. Mainland commercial mortgage assets of $1.6 million. These net decreases were offset by net increases in Hawaii commercial and industrial assets of $2.8 million and Hawaii commercial mortgage assets of $2.6 million.

Loans delinquent for 90 days or more still accruing interest totaled $45,000 at June 30, 2015, compared to $5,000 at March 31, 2015.  In addition, loans delinquent for 30 days or more still accruing interest totaled $2.8 million at June 30, 2015, compared to $3.6 million at March 31, 2015.

Net recoveries in the second quarter of 2015 totaled $2.8 million, compared to net charge-offs of $1.6 million in the second quarter of 2014, and net recoveries of $0.1 million in the first quarter of 2015. Net recoveries during the second quarter of 2015 included recoveries of two Hawaii commercial and industrial loans to a single borrower totaling $2.8 million, a $2.5 million recovery of a Hawaii commercial mortgage loan, and a $1.0 million recovery of a Hawaii commercial mortgage loan, partially offset by charge-offs of two U.S. Mainland commercial and industrial loans to a single borrower totaling $3.5 million.

The ALLL, as a percentage of total loans and leases, was 2.23% at June 30, 2015, compared to 2.41% at March 31, 2015.  The ALLL, as a percentage of nonperforming assets, was 208.43% at June 30, 2015, compared to 175.21% at March 31, 2015.  The ALLL, as a percentage of nonaccrual loans, was 249.44% at June 30, 2015, compared to 190.89% at March 31, 2015.

Capital Levels

At June 30, 2015, the Company's leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ratios were 10.44%, 14.47%, 15.73%, and 11.91%, respectively.  At March 31, 2015, the Company's leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ratios were 12.79%, 17.43%, 18.69%, and 14.89%, 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 (7:00 a.m. Hawaii Time) to discuss the quarterly results.  Individuals are encouraged to listen to the live webcast of the presentation by visiting the investor relations page of the Company's website at http://ir.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 August 24, 2015 by dialing 1-877-344-7529 (passcode: 10069135) and on the Company's website.

About Central Pacific Financial Corp.

Central Pacific Financial Corp. is a Hawaii-based bank holding company with approximately $5.0 billion in assets.  Central Pacific Bank, its primary subsidiary, operates 36 branches and 110 ATMs in the state of Hawaii, as of June 30, 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

Six Months Ended

June 30,

March 31,

June 30,

June 30,

June 30,

(dollars in thousands, except for per share amounts)

2015

2015

2014

2015

2014

INCOME STATEMENT

Net interest income

$      37,294

$      36,235

$      35,906

$      73,529

$      71,702

Provision (credit) for loan and lease losses

(7,319)

(2,747)

1,995

(10,066)

679

Total other operating income

8,124

11,190

12,004

19,314

22,148

Total other operating expense

32,458

34,018

32,888

66,476

64,818

Net income

12,335

10,395

9,150

22,730

18,958

Basic earnings per common share

$          0.39

$          0.30

$          0.25

$          0.69

$          0.49

Diluted earnings per common share

0.39

0.29

0.25

0.68

0.48

Dividends declared per common share

0.12

0.12

0.08

0.24

0.16

PERFORMANCE RATIOS

Return on average assets (1)

1.00

%

0.85

%

0.77

%

0.92

%

0.80

%

Return on average shareholders' equity (1)

9.93

7.32

6.49

8.54

6.11

Return on average tangible shareholders' equity (1)

10.11

7.45

6.63

8.70

6.23

Efficiency ratio (2)

71.47

71.73

68.65

71.60

69.07

Net interest margin (1)

3.32

3.28

3.35

3.30

3.33

Dividend payout ratio (3)

30.77

41.38

32.00

35.29

33.33

Average shareholders' equity to average assets

10.04

11.62

11.90

10.82

13.04

SELECTED AVERAGE BALANCES

Average loans and leases, including loans held for sale

$ 2,981,184

$ 2,955,525

$ 2,762,963

$ 2,968,425

$ 2,714,662

Average interest-earning assets

4,566,577

4,505,895

4,360,129

4,536,404

4,384,777

Average assets

4,947,802

4,889,722

4,736,818

4,918,923

4,759,212

Average deposits

4,198,758

4,123,293

3,954,457

4,161,234

3,948,989

Average interest-bearing liabilities

3,357,400

3,266,067

3,210,052

3,311,986

3,193,111

Average shareholders' equity

496,881

567,991

563,895

532,239

620,516

June 30,

March 31,

June 30,

2015

2015

2014

REGULATORY CAPITAL RATIOS

Central Pacific Financial Corp.

     Leverage capital ratio

10.44

%

11.92

%

11.64

%

     Tier 1 risk-based capital ratio

14.47

16.04

17.06

     Total risk-based capital ratio

15.73

17.30

18.33

     Common equity tier 1 capital ratio

11.91

13.52

 N/A 

Central Pacific Bank

     Leverage capital ratio

10.33

11.66

11.16

     Tier 1 risk-based capital ratio

14.26

15.65

16.36

     Total risk-based capital ratio

15.52

16.91

17.63

     Common equity tier 1 capital ratio

14.26

15.65

 N/A 

BALANCE SHEET

Loans and leases

$ 3,006,055

$ 2,967,772

$ 2,794,183

Total assets

4,967,851

4,965,925

4,727,766

Total deposits

4,182,322

4,188,642

4,002,578

Long-term debt

92,785

92,785

92,790

Total shareholders' equity

488,847

572,925

564,568

Total shareholders' equity to total assets

9.84

%

11.54

%

11.94

%

Tangible common equity to tangible assets (4)

9.68

11.37

11.73

ASSET QUALITY

Allowance for loan and lease losses

$      66,924

$      71,433

$      83,599

Non-performing assets

32,108

40,770

42,121

Allowance to loans and leases outstanding

2.23

%

2.41

%

2.99

%

Allowance to non-performing assets

208.43

175.21

198.47

PER SHARE OF COMMON STOCK

Book value per common share

$        15.52

$        16.46

$        15.73

Tangible book value per common share

15.24

16.20

15.41

Market value per common share

23.75

22.97

19.85

(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

 June 30, 

 March 31, 

 June 30, 

(Dollars in thousands)

2015

2015

2014

Tangible Common Equity Ratio:

Total shareholders' equity

$   488,847

$   572,925

$   564,568

Less: Other intangible assets

(8,692)

(9,361)

(11,366)

Tangible common equity

$   480,155

$   563,564

$   553,202

Total assets

$ 4,967,851

$ 4,965,925

$ 4,727,766

Less: Other intangible assets

(8,692)

(9,361)

(11,366)

Tangible assets

$ 4,959,159

$ 4,956,564

$ 4,716,400

Tangible common equity to tangible assets

9.68

%

11.37

%

11.73

%

 

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)

TABLE 3

 June 30, 

 March 31, 

 June 30, 

(Dollars in thousands, except share data)

2015

2015

2014

ASSETS

Cash and due from banks

$

66,715

$

74,743

$

83,539

Interest-bearing deposits in other banks

14,775

10,478

3,480

Investment securities:

  Available for sale

1,274,312

1,298,487

1,226,935

  Held to maturity (fair value of $259,150 at June 30, 2015, $256,357 at March 31, 2015 and $241,368 at June 30, 2014)

262,778

255,592

247,206

      Total investment securities

1,537,090

1,554,079

1,474,141

Loans held for sale

22,917

7,206

8,464

Loans and leases

3,006,055

2,967,772

2,794,183

  Less allowance for loan and lease losses

66,924

71,433

83,599

      Net loans and leases

2,939,131

2,896,339

2,710,584

Premises and equipment, net

47,681

48,768

48,703

Accrued interest receivable

14,021

13,420

13,253

Investment in unconsolidated subsidiaries

6,720

6,840

7,918

Other real estate

5,278

3,349

5,247

Mortgage servicing rights

18,586

18,869

19,779

Other intangible assets

8,692

9,361

11,366

Bank-owned life insurance

153,015

153,251

151,242

Federal Home Loan Bank stock

12,129

43,442

45,011

Other assets

121,101

125,780

145,039

      Total assets

$

4,967,851

$

4,965,925

$

4,727,766

LIABILITIES AND EQUITY

Deposits:

  Noninterest-bearing demand

$

1,080,428

$

1,042,781

$

962,646

  Interest-bearing demand

807,851

806,555

756,776

  Savings and money market

1,261,180

1,247,266

1,221,253

  Time

1,032,863

1,092,040

1,061,903

      Total deposits

4,182,322

4,188,642

4,002,578

Short-term borrowings

157,000

70,000

29,000

Long-term debt

92,785

92,785

92,790

Other liabilities

46,897

41,573

38,830

      Total liabilities

4,479,004

4,393,000

4,163,198

Equity:

  Preferred stock, no par value, authorized 1,100,000 shares; issued and outstanding none at June 30, 2015, March 31, 2015 and June 30, 2014

-

-

-

  Common stock, no par value, authorized 185,000,000 shares; issued and outstanding 31,501,633 shares at June 30, 2015, 34,797,133 shares at March 31, 2015 and 35,901,080 shares at June 30, 2014

552,527

632,867

655,219

  Surplus

79,373

80,545

76,311

  Accumulated deficit

(142,267)

(150,815)

(171,380)

  Accumulated other comprehensive income (loss)

(786)

10,328

4,418

      Total shareholders' equity

488,847

572,925

564,568

Non-controlling interest

-

-

-

      Total equity

488,847

572,925

564,568

      Total liabilities and equity

$

4,967,851

$

4,965,925

$

4,727,766

 

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

TABLE 4

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

(Dollars in thousands, except per share data)

2015

2015

2014

2015

2014

Interest income:

  Interest and fees on loans and leases

$

29,572

$

28,602

$

28,040

$

58,174

$

54,923

  Interest and dividends on investment securities:

        Taxable interest

8,277

8,150

8,476

16,427

17,972

        Tax-exempt interest

1,010

998

1,000

2,008

1,994

        Dividends

8

9

1

17

2

  Interest on deposits in other banks

11

11

8

22

15

  Dividends on Federal Home Loan Bank stock

18

11

11

29

23

      Total interest income

38,896

37,781

37,536

76,677

74,929

Interest expense:

  Interest on deposits:

    Demand

99

95

91

194

181

    Savings and money market

225

223

223

448

447

    Time

549

548

621

1,097

1,251

  Interest on short-term borrowings

79

43

55

122

72

  Interest on long-term debt

650

637

640

1,287

1,276

      Total interest expense

1,602

1,546

1,630

3,148

3,227

      Net interest income

37,294

36,235

35,906

73,529

71,702

Provision (credit) for loan and lease losses

(7,319)

(2,747)

1,995

(10,066)

679

      Net interest income after provision for loan and lease losses

44,613

38,982

33,911

83,595

71,023

Other operating income:

  Service charges on deposit accounts

1,915

1,968

1,989

3,883

3,982

  Loan servicing fees

1,427

1,423

1,448

2,850

2,892

  Other service charges and fees

2,781

3,105

3,083

5,886

6,026

  Income from fiduciary activities

830

834

828

1,664

1,890

  Equity in earnings of unconsolidated subsidiaries

229

96

359

325

411

  Fees on foreign exchange

98

128

119

226

233

  Investment securities gains (losses)

(1,866)

-

240

(1,866)

240

  Income from bank-owned life insurance

461

674

766

1,135

1,436

  Loan placement fees

225

147

178

372

321

  Net gains on sales of residential loans

1,630

1,594

1,227

3,224

2,466

  Net gains on sales of foreclosed assets

94

33

582

127

744

  Other (refer to Table 5)

300

1,188

1,185

1,488

1,507

      Total other operating income

8,124

11,190

12,004

19,314

22,148

Other operating expense:

  Salaries and employee benefits

15,176

17,165

16,550

32,341

33,984

  Net occupancy 

3,403

3,501

3,734

6,904

7,324

  Equipment

933

909

945

1,842

1,741

  Amortization of other intangible assets

1,559

2,105

1,318

3,664

2,558

  Communication expense

942

824

874

1,766

1,768

  Legal and professional services

1,642

2,219

2,228

3,861

4,040

  Computer software expense

2,382

2,096

1,575

4,478

2,933

  Advertising expense

449

635

678

1,084

1,364

  Foreclosed asset expense

257

72

(17)

329

88

  Other (refer to Table 6)

5,715

4,492

5,003

10,207

9,018

      Total other operating expense

32,458

34,018

32,888

66,476

64,818

  Income before income taxes

20,279

16,154

13,027

36,433

28,353

Income tax expense

7,944

5,759

3,877

13,703

9,395

      Net income

$

12,335

$

10,395

$

9,150

$

22,730

$

18,958

Per common share data:

  Basic earnings per share

$

0.39

$

0.30

$

0.25

$

0.69

$

0.49

  Diluted earnings per share 

0.39

0.29

0.25

0.68

0.48

  Cash dividends declared

0.12

0.12

0.08

0.24

0.16

Basic weighted average shares outstanding

31,525

34,827

36,117

33,167

39,000

Diluted weighted average shares outstanding

31,953

35,479

36,656

33,588

39,405

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Other Operating Income - Other

(Unaudited)

TABLE 5

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

June 30,

(Dollars in thousands)

2015

2015

2014

2015

2014

Income recovered on nonaccrual loans previously charged-off

$   209

$      219

$   526

$   428

$       639

Other recoveries

15

274

15

289

39

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

(198)

466

413

268

353

Commissions on sale of checks

82

78

84

160

170

Other

192

151

147

343

306

Total other operating income - Other

$   300

$   1,188

$ 1,185

$ 1,488

$     1,507

 

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Other Operating Expense - Other

(Unaudited)

TABLE 6

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

June 30,

(Dollars in thousands)

2015

2015

2014

2015

2014

Charitable contributions

$ 2,138

$      139

$   110

$  2,277

$       262

FDIC insurance assessment

701

698

728

1,399

1,402

Miscellaneous loan expenses

434

275

272

709

493

ATM and debit card expenses

180

586

464

766

913

Amortization of investments in low-income housing tax credit partnerships

274

288

351

562

758

Armored car expenses

195

234

214

429

440

Entertainment and promotions

266

197

215

463

432

Stationery and supplies

219

196

261

415

539

Directors' fees and expenses

214

191

462

405

571

Provision (credit) for residential mortgage loan repurchase losses

(32)

159

(147)

127

308

Increase (decrease) to the reserve for unfunded commitments

(272)

(31)

81

(303)

(669)

Other

1,398

1,560

1,992

2,958

3,569

Total other operating expense - Other

$ 5,715

$    4,492

$ 5,003

$ 10,207

$     9,018

 

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

(Dollars in thousands)

June 30, 2015

March 31, 2015

June 30, 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

$      17,160

0.24

%

$        11

$      18,046

0.25

%

$        11

$      12,756

0.25

%

$           8

Taxable investment securities, excluding valuation allowance

1,360,101

2.44

8,285

1,310,909

2.49

8,159

1,360,329

2.49

8,477

Tax-exempt investment securities, excluding valuation allowance

176,086

3.53

1,554

177,606

3.46

1,536

178,609

3.45

1,539

Loans and leases, including loans held for sale

2,981,184

3.97

29,572

2,955,525

3.90

28,602

2,762,963

4.07

28,040

Federal Home Loan Bank stock

32,046

0.23

18

43,809

0.10

11

45,472

0.10

11

Total interest earning assets 

4,566,577

3.46

39,440

4,505,895

3.42

38,319

4,360,129

3.50

38,075

Nonearning assets

381,225

383,827

376,689

Total assets

$ 4,947,802

$ 4,889,722

$ 4,736,818

Liabilities & Equity:

Interest-bearing liabilities:

Interest-bearing demand deposits

$    812,339

0.05

%

$        99

$    787,717

0.05

%

$        95

$    743,544

0.05

%

$         91

Savings and money market deposits

1,257,940

0.07

225

1,248,867

0.07

223

1,219,159

0.07

223

Time deposits under $100,000

230,425

0.37

212

237,239

0.38

222

256,971

0.41

261

Time deposits $100,000 and over

846,966

0.16

337

836,232

0.16

326

821,701

0.18

360

Short-term borrowings

116,945

0.28

79

63,227

0.27

43

75,885

0.29

55

Long-term debt

92,785

2.81

650

92,785

2.78

637

92,792

2.77

640

Total interest-bearing liabilities

3,357,400

0.19

1,602

3,266,067

0.19

1,546

3,210,052

0.20

1,630

Noninterest-bearing deposits

1,051,088

1,013,238

913,082

Other liabilities

42,433

42,426

49,788

Total liabilities

4,450,921

4,321,731

4,172,922

Shareholders' equity

496,881

567,991

563,895

Non-controlling interest

-

-

1

Total equity

496,881

567,991

563,896

Total liabilities & equity

$ 4,947,802

$ 4,889,722

$ 4,736,818

Net interest income 

$ 37,838

$ 36,773

$  36,445

Net interest margin

3.32

%

3.28

%

3.35

%

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

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

(Unaudited)

TABLE 8

Six Months Ended

Six Months Ended

(Dollars in thousands)

June 30, 2015

June 30, 2014

Average

Average

Average

Average

Balance

Yield/Rate

Interest

Balance

Yield/Rate

Interest

Assets:

Interest earning assets:

Interest-bearing deposits in other banks

$      17,601

0.25

%

$        22

$      12,173

0.25

%

$         15

Taxable investment securities, excluding valuation allowance

1,335,642

2.46

16,444

1,433,863

2.51

17,974

Tax-exempt investment securities, excluding valuation allowance

176,841

3.49

3,089

178,308

3.44

3,068

Loans and leases, including loans held for sale

2,968,425

3.94

58,174

2,714,662

4.07

54,923

Federal Home Loan Bank stock

37,895

0.15

29

45,771

0.10

23

Total interest earning assets 

4,536,404

3.44

77,758

4,384,777

3.48

76,003

Nonearning assets

382,519

374,435

Total assets

$ 4,918,923

$ 4,759,212

Liabilities & Equity:

Interest-bearing liabilities:

Interest-bearing demand deposits

$    800,096

0.05

%

$      194

$    739,659

0.05

%

$       181

Savings and money market deposits

1,253,428

0.07

448

1,218,626

0.07

447

Time deposits under $100,000

233,813

0.37

434

260,207

0.41

529

Time deposits $100,000 and over

841,629

0.16

663

831,096

0.18

722

Short-term borrowings

90,235

0.27

122

50,729

0.29

72

Long-term debt

92,785

2.80

1,287

92,794

2.77

1,276

Total interest-bearing liabilities

3,311,986

0.19

3,148

3,193,111

0.20

3,227

Noninterest-bearing deposits

1,032,268

899,401

Other liabilities

42,430

46,154

Total liabilities

4,386,684

4,138,666

Shareholders' equity

532,239

620,516

Non-controlling interest

-

30

Total equity

532,239

620,546

Total liabilities & equity

$ 4,918,923

$ 4,759,212

Net interest income 

$ 74,610

$  72,776

Net interest margin

3.30

%

3.33

%

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Loans and Leases by Geographic Distribution

(Unaudited)

TABLE 9

June 30,

March 31,

December 31,

September 30,

June 30,

(Dollars in thousands)

2015

2015

2014

2014

2014

Hawaii:

Commercial, financial and agricultural

$    341,468

$           318,228

$       287,254

$        276,804

$    268,037

Real estate:

   Construction

80,168

109,256

111,010

105,619

96,138

   Mortgage:

   - residential

1,351,962

1,300,304

1,282,324

1,251,808

1,226,864

   - commercial

588,334

586,281

587,322

579,654

568,672

Consumer

254,655

249,151

254,259

250,838

243,148

Leases

2,589

2,885

3,140

3,691

4,087

Total loans and leases

2,619,176

2,566,105

2,525,309

2,468,414

2,406,946

Allowance for loan and lease losses

(57,402)

(60,676)

(62,685)

(65,747)

(65,367)

Net loans and leases

$ 2,561,774

$        2,505,429

$    2,462,624

$     2,402,667

$ 2,341,579

U.S. Mainland:

Commercial, financial and agricultural

$    158,133

$           182,455

$       176,509

$        165,527

$    164,707

Real estate:

   Construction

3,387

3,465

3,544

3,621

3,740

   Mortgage:

   - residential

-

-

-

-

-

   - commercial

106,859

114,975

115,951

116,920

129,060

Consumer

118,500

100,772

110,885

120,273

89,730

Leases

-

-

-

-

-

Total loans and leases

386,879

401,667

406,889

406,341

387,237

Allowance for loan and lease losses

(9,522)

(10,757)

(11,355)

(17,091)

(18,232)

Net loans and leases

$    377,357

$           390,910

$       395,534

$        389,250

$    369,005

Total:

Commercial, financial and agricultural

$    499,601

$           500,683

$       463,763

$        442,331

$    432,744

Real estate:

   Construction

83,555

112,721

114,554

109,240

99,878

   Mortgage:

   - residential

1,351,962

1,300,304

1,282,324

1,251,808

1,226,864

   - commercial

695,193

701,256

703,273

696,574

697,732

Consumer

373,155

349,923

365,144

371,111

332,878

Leases

2,589

2,885

3,140

3,691

4,087

Total loans and leases

3,006,055

2,967,772

2,932,198

2,874,755

2,794,183

Allowance for loan and lease losses

(66,924)

(71,433)

(74,040)

(82,838)

(83,599)

Net loans and leases

$ 2,939,131

$        2,896,339

$    2,858,158

$     2,791,917

$ 2,710,584

 

CENTRAL PACIFIC FINANCIAL CORP AND SUBSIDIARIES

Nonperforming Assets, Past Due and Restructured Loans

(Unaudited)

TABLE 10

June 30,

March 31,

December 31,

September 30,

June 30,

(Dollars in thousands)

2015

2015

2014

2014

2014

Nonaccrual loans (including loans held for sale):

   Commercial, financial and agricultural

$    3,175

$   13,377

$          13,007

$           15,625

$       16,657

   Real estate:

      Construction 

133

146

310

324

373

      Mortgage-residential

10,032

11,430

13,048

12,691

13,608

      Mortgage-commercial

13,490

12,468

12,722

13,056

6,236

   Consumer

-

-

-

-

-

   Leases

-

-

-

-

-

      Total nonaccrual loans

26,830

37,421

39,087

41,696

36,874

Other real estate:

   Commercial, financial and agricultural

-

-

-

-

-

   Real estate:

      Construction 

-

-

747

1,804

3,048

      Mortgage-residential

2,433

3,349

2,201

1,685

2,041

      Mortgage-commercial

2,845

-

-

107

158

   Consumer

-

-

-

-

-

   Leases

-

-

-

-

-

      Total other real estate

5,278

3,349

2,948

3,596

5,247

      Total nonperforming assets

32,108

40,770

42,035

45,292

42,121

Loans delinquent for 90 days or more:

   Commercial, financial and agricultural

-

-

-

-

-

   Real estate:

      Construction

-

-

-

-

-

      Mortgage-residential

-

-

-

-

99

      Mortgage-commercial  

-

-

-

-

-

   Consumer

45

5

77

62

20

   Leases

-

-

-

-

-

      Total loans delinquent for 90 days or more

45

5

77

62

119

Restructured loans still accruing interest:

   Commercial, financial and agricultural

339

350

361

373

384

   Real estate:

      Construction 

839

866

892

918

944

      Mortgage-residential

16,428

17,084

17,845

17,980

18,456

      Mortgage-commercial

1,360

1,516

10,405

10,671

10,941

   Consumer

-

-

-

-

-

   Leases

-

-

-

-

-

      Total restructured loans still accruing interest

18,966

19,816

29,503

29,942

30,725

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

$  51,119

$   60,591

$          71,615

$           75,296

$       72,965

Total nonaccrual loans as a percentage of loans and leases 

0.89%

1.26%

1.33%

1.45%

1.32%

Total nonperforming assets as a percentage of loans and leases, and other real estate

1.07%

1.37%

1.43%

1.57%

1.50%

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

1.07%

1.37%

1.43%

1.58%

1.51%

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

1.70%

2.04%

2.44%

2.62%

2.61%

Quarter to quarter changes in nonperforming assets:

Balance at beginning of quarter

$  40,770

$   42,035

$          45,292

$           42,121

$       54,046

Additions

6,761

1,429

1,986

8,824

2,485

Reductions

   Payments

(3,411)

(1,712)

(843)

(2,209)

(4,327)

   Return to accrual status

(274)

(197)

(190)

(1,544)

(9,278)

   Sales of nonperforming assets

(8,280)

(949)

(1,444)

(542)

(817)

   Charge-offs/valuation adjustments

(3,458)

164

(2,766)

(1,358)

12

Total reductions

(15,423)

(2,694)

(5,243)

(5,653)

(14,410)

Balance at end of quarter

$  32,108

$   40,770

$          42,035

$           45,292

$       42,121

 

 

CENTRAL PACIFIC FINANCIAL CORP AND SUBSIDIARIES

Allowance for Loan and Lease Losses

(Unaudited)

TABLE 11

Three Months Ended

Six Months Ended

June 30,

March 31, 

June 30,

June 30,

June 30,

(Dollars in thousands)

2015

2015

2014

2015

2014

Allowance for loan and lease losses:

   Balance at beginning of period

$    71,433

$    74,040

$    83,162

$    74,040

$    83,820

   Provision (credit) for loan and lease losses

(7,319)

(2,747)

1,995

(10,066)

679

   Charge-offs:

   Commercial, financial and agricultural

4,003

931

1,538

4,934

1,671

   Real estate:

      Construction

-

-

-

-

-

      Mortgage-residential

50

14

102

64

139

      Mortgage-commercial

-

-

1,041

-

1,041

   Consumer

1,214

1,841

615

3,055

1,135

   Leases

-

-

-

-

8

      Total charge-offs

5,267

2,786

3,296

8,053

3,994

   Recoveries:

   Commercial, financial and agricultural

3,279

594

560

3,873

1,185

   Real estate:

      Construction

464

123

342

587

744

      Mortgage-residential

397

1,488

529

1,885

623

      Mortgage-commercial

3,562

13

12

3,575

25

   Consumer

375

708

292

1,083

512

   Leases

-

-

3

-

5

      Total recoveries

8,077

2,926

1,738

11,003

3,094

   Net charge-offs (recoveries)

(2,810)

(140)

1,558

(2,950)

900

   Balance at end of period

$    66,924

$    71,433

$    83,599

$    66,924

$    83,599

Average loans and leases, net of unearned

2,981,184

2,955,525

2,762,963

2,968,425

2,714,662

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

(0.38)

%

(0.02)

%

0.23

%

(0.20)

%

0.07

%

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

2.23

%

2.41

%

2.99

%

2.23

%

2.99

%

 

SOURCE Central Pacific Financial Corp.



RELATED LINKS

http://www.centralpacificbank.com