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Central Pacific Financial Corp. Returns to Profitability in First Quarter of 2011


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Central Pacific Financial Corp.

Apr 27, 2011, 08:00 ET

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HONOLULU, April 27, 2011 /PRNewswire/ -- Central Pacific Financial Corp. (NYSE: CPF), parent company of Central Pacific Bank, today reported net income for the first quarter of 2011 of $4.6 million, compared to net losses in the first and fourth quarters of 2010 of $160.2 million and $2.1 million, respectively.  Net income per diluted share for the first quarter of 2011 was $4.58, which included the impact of a one-time accounting adjustment totaling $85.1 million resulting from the exchange of the Company's preferred stock issued to the U.S. Department of Treasury (the "Treasury") for common stock as part of its recapitalization.  Excluding this one-time adjustment, which did not impact the Company's reported net income of $4.6 million, the Company's net income per diluted share for the first quarter of 2011 was $0.18.  During the first and fourth quarters of 2010, the Company's net loss per diluted share was $107.23 and $2.78, respectively.  

As previously announced, the Company recently completed the following significant milestones as part of its recapitalization:

  • On February 18, 2011, successfully completed a $325 million capital raise from accredited investors in a private placement (the "Private Placement").  Concurrently with the completion of the Private Placement, the Company  exchanged its Treasury preferred stock for common stock as noted above (the "TARP Exchange").
  • On April 11, 2011, commenced a common stock rights offering of up to $20 million (the "Rights Offering").  Shareholders of record as of the close of business on February 17, 2011 received at no charge transferable rights to purchase up to 2,000,000 newly-issued common shares in the Rights Offering at $10.00 per share.  The Rights Offering is expected to be completed on May 6, 2011.

On April 12, 2011, the Company announced that the registration statement registering the common shares issued to certain investors in the Private Placement was declared effective by the U.S. Securities and Exchange Commission (the "SEC").  

"We are pleased with our first quarter results," said John C. Dean, President and Chief Executive Officer.  "Our return to profitability was the result of lower credit costs driven by continued improvement in our asset quality.  With a solid capital foundation in place, we look forward to continuing our long standing commitment of service to  our customers and are well positioned for growth in our Hawaii marketplace."    

Significant Highlights and First Quarter Results

  • Achieved its plan to recapitalize the Company by successfully completing the Private Placement and the TARP Exchange.
  • Returned to profitability as the Company recorded quarterly net income of $4.6 million, compared to a net loss of $2.1 million in the fourth quarter of 2010.
  • Recognized total credit costs of $1.9 million, compared to $4.6 million in the fourth quarter of 2010.  Total credit costs during the first quarter of 2011 included foreclosed asset expense of $2.2 million and write-downs of loans held for sale of $1.6 million, partially offset by a negative provision for loan and lease losses of $1.6 million and a decrease to the reserve for unfunded commitments of $0.3 million.  Total credit costs for the fourth quarter of 2010 included a provision for loan and lease losses of $0.4 million, foreclosed asset expense of $4.2 million, and write-downs of loans held for sale of $0.5 million, partially offset by a decrease to the reserve for unfunded commitments of $0.5 million.
  • Reduced nonperforming assets by $18.0 million to $284.9 million at March 31, 2011 from $302.8 million at December 31, 2010 primarily through loan pay downs and charge-offs.
  • Had an allowance for loan and lease losses, as a percentage of total loans and leases, of 8.61% at March 31, 2011, compared to 8.89% at December 31, 2010.  In addition, the Company had an allowance for loan and lease losses, as a percentage of nonperforming assets, of 62.49% at March 31, 2011, compared to 63.69% at December 31, 2010.
  • Reduced total outstanding borrowings with the Federal Home Loan Bank of Seattle (the "FHLB") to $301.0 million at March 31, 2011 from $551.3 million at December 31, 2010.
  • Had cash and cash equivalents totaling $601.2 million at March 31, 2011, compared to $790.7 million at December 31, 2010.  The Company also lowered its loan-to-deposit ratio to 65.7% at March 31, 2011, from 69.2% at December 31, 2010.  The sequential quarter decrease in its cash and cash equivalents despite the completion of the Private Placement was due to the Company investing a portion of its excess liquidity into higher yielding investment securities and reducing its outstanding borrowings with the FHLB as described above.
  • Significantly improved its tier 1 risk-based capital, total risk-based capital, and leverage capital ratios as of March 31, 2011 to 21.34%, 22.67%, and 12.64%, respectively, from 7.64%, 8.98%, and 4.42%, respectively, as of December 31, 2010.  The Company's capital ratios now exceed the minimum levels required by the Consent Order dated December 9, 2009 (the "Consent Order")  entered into with the Federal Deposit Insurance Corporation (the "FDIC") and the Hawaii Division of Financial Institutions (the "DFI") and are also above the levels required for a "well-capitalized" regulatory designation.
  • Continued to support home ownership in Hawaii by originating residential mortgage loans totaling $220.0 million during the quarter.

Earnings Highlights

Net interest income was $28.2 million, compared to $35.1 million in the year-ago quarter and $27.0 million in the fourth quarter of 2010.  The net interest margin was 3.03%, compared to 2.76% in the fourth quarter of 2010 and 3.20% in the year-ago quarter.  The Company saw a sequential quarter improvement in its net interest margin as it began to redeploy its excess liquidity into higher yielding investment securities and reduced its borrowing costs following the previously announced prepayment of certain long-term borrowings outstanding with the FHLB totaling $106.7 million with a weighted average interest rate of 4.78% in December 2010.  Net interest income reflects the reversal of interest on certain nonaccrual loans totaling $0.3 million during the current quarter, compared to $1.6 million in the year-ago quarter and $0.5 million in the fourth quarter of 2010.  Excluding the effects of interest reversals on nonaccrual loans, the net interest margin was 3.07% for the current quarter, compared to 3.34% in the year-ago quarter and 2.81% in the fourth quarter of 2010.

The Company's provision for loan and lease losses was a credit of $1.6 million in the first quarter of 2011, compared to a charge of $0.4 million in the fourth quarter of 2010 and a charge of $58.8 million in the first quarter of 2010.  The decrease was primarily due to continued improvement in the Company's credit risk profile as evidenced by further declines in nonperforming assets and net charge-offs during the quarter, which is more fully described below.

Other operating income totaled $12.5 million, compared to $12.8 million in the year-ago quarter and $19.9 million in the fourth quarter of 2010.  The decrease from the year-ago quarter was primarily due to:  (1) lower gains on sales of investment securities of $0.8 million and (2) lower service charges on deposits of $0.6 million, partially offset by an unrealized non-cash gain attributable to a $0.5 million decrease in the fair value of a derivative liability related to an amended warrant held by the Treasury as part of the TARP Exchange.  The sequential-quarter decrease was primarily due to: (1) the recognition of a $7.7 million gain on the sale of Kaimuki Plaza in the fourth quarter of 2010 and (2) lower gains on sales of residential mortgage loans of $1.0 million, partially offset by (1) the aforementioned unrealized non-cash gain of $0.5 million, (2) higher income from bank-owned life insurance of $0.5 million and (3) higher unrealized gains on outstanding interest rate locks of $0.4 million.

Other operating expense totaled $37.6 million, compared to $149.2 million in the year-ago quarter and $48.6 million in the fourth quarter of 2010.  The decrease from the year-ago quarter reflects:  (1) a $102.7 million non-cash goodwill impairment charge recorded in the first quarter of 2010, (2) lower net credit-related charges of $4.2 million and (3) lower legal and professional services of $3.2 million.  The sequential quarter decrease reflects: (1) the recognition of a one-time loss totaling $5.7 million attributable to the previously mentioned early extinguishment of certain long-term borrowings with the FHLB during the fourth quarter of 2010, (2) a lower provision for repurchased residential mortgage loans of $4.6 million and (3) lower net credit-related charges of $0.7 million, partially offset by higher salaries and employee benefits of $2.0 million.

The efficiency ratio was 81.2% (excluding foreclosed asset expense of $2.2 million and write-downs of loans held for sale totaling $1.6 million), compared to 83.6% in the year-ago quarter (excluding the non-cash goodwill impairment charge of $102.7 million, foreclosed asset expense of $5.5 million and write-downs of loans held for sale of $0.8 million) and 79.8% (excluding the loss on early extinguishment of debt of $5.7 million, foreclosed asset expense of $4.1 million and write-downs of loans held for sale totaling $0.5 million) in the fourth quarter of 2010.

The Company continues to recognize a full valuation allowance against its net deferred tax assets and did not record any income tax benefit or expense during the first quarter of 2011.

Balance Sheet Highlights

Total assets at March 31, 2011 were $4.0 billion, compared to $4.4 billion and $3.9 billion at March 31, 2010 and December 31, 2010, respectively.

Total loans and leases at March 31, 2011 were $2.1 billion, compared to $2.8 billion and $2.2 billion at March 31, 2010 and December 31, 2010, respectively.  The current quarter decrease was primarily due to decreases in the Hawaii construction and commercial mortgage loan portfolios of $58.3 million and the Hawaii commercial loan portfolio of $24.9 million.

Total deposits of $3.1 billion at March 31, 2011 was virtually unchanged from December 31, 2010, compared to $3.3 billion at March 31, 2010.  Core deposits, which include demand deposits, savings and money market deposits, and time deposits less than $100,000, totaled $2.7 billion at March 31, 2011.  This represents a decrease of $126.1 million from a year ago and a decrease of $48.6 million from December 31, 2010.  Significant changes in total deposits during the quarter included a decrease in interest-bearing demand deposits of $111.0 million, while non-interest bearing demand deposits, savings and money market deposits and time deposits increased by $66.3 million, $30.5 million and $26.8 million, respectively.

Total shareholders' equity was $385.0 million at March 31, 2011, compared to $172.1 million and $66.1 million at March 31, 2010 and December 31, 2010, respectively, and reflects the successful completion of the $325.0 million Private Placement and the TARP Exchange in February 2011.

Asset Quality

Nonperforming assets at March 31, 2011 totaled $284.9 million, or 7.10% of total assets, compared to $302.8 million, or 7.69% of total assets at December 31, 2010.  The sequential-quarter decrease was primarily due to loan pay downs and charge-offs and reflects net decreases in the Hawaii construction and development and Hawaii commercial mortgage portfolios totaling $14.4 million and $3.7 million, respectively, partially offset by a net increase in the Hawaii residential mortgage portfolio totaling $1.2 million.

Loans delinquent for 90 days or more still accruing interest decreased from $8.5 million at December 31, 2010 to $0.5 million at March 31, 2011.  In addition, loans delinquent for 30 days or more still accruing interest decreased from $38.2 million at December 31, 2010 to $15.5 million at March 31, 2011.

Net loan charge-offs in the first quarter of 2011 totaled $13.3 million, compared to $52.5 million in the year-ago quarter and $25.2 million in the fourth quarter of 2010.  Net charge-offs included the following significant amounts:  Hawaii construction and development loans totaling $9.5 million, Hawaii residential mortgage loans totaling $1.3 million, and Mainland construction and development loans totaling $1.0 million.

The allowance for loan and lease losses, as a percentage of total loans and leases, was 8.61% at March 31, 2011, compared to 8.89% at December 31, 2010.  The allowance for loan and lease losses, as a percentage of nonperforming assets, was 62.49% at March 31, 2011, compared to 63.69% at December 31, 2010.

Construction and Development Loans

At March 31, 2011, the construction and development loan portfolio (excluding owner-occupied loans) totaled $258.2 million, or 12.5%, of the total loan portfolio.  Of this amount, $165.0 million were located in Hawaii and $93.2 million were located on the Mainland.  This portfolio decreased by $41.7 million from December 31, 2010 and by $480.2 million from March 31, 2010.  The sequential quarter decrease was primarily due to loan pay downs and reflects decreases in the Hawaii and Mainland construction and development loan portfolios (excluding owner-occupied loans) of $36.6 million and $5.1 million, respectively.

The allowance for loan and lease losses established for these loans was $53.9 million at March 31, 2011, or 20.9%, of the total outstanding balance, compared to $73.1 million, or 24.4%, of the total outstanding balance at December 31, 2010.  Of this amount, $39.4 million related to construction and development loans in Hawaii and $14.5 million related to construction and development loans on the Mainland.

Nonperforming construction and development assets in Hawaii totaled $145.2 million at March 31, 2011, or 3.6%, of total assets.  At March 31, 2011, this balance was comprised of portfolio loans totaling $93.5 million, loans held for sale totaling $29.3 million, and foreclosed properties totaling $22.4 million.  Nonperforming assets related to this sector totaled $159.3 million at December 31, 2010.

Nonperforming construction and development assets on the Mainland totaled $71.7 million at March 31, 2011, or 1.8%, of total assets.  At March 31, 2011, this balance was comprised of portfolio loans totaling $36.8 million, loans held for sale totaling $4.4 million, and foreclosed properties totaling $30.5 million.  Nonperforming assets related to this sector totaled $72.1 million at December 31, 2010.

Capital Levels

At March 31, 2011, the Company's Tier 1 risk-based capital, total risk-based capital, and leverage capital ratios significantly improved to 21.34%, 22.67%, and 12.64%, respectively, compared to 7.64%, 8.98%, and 4.42%, respectively, at December 31, 2010.   The Company's capital ratios now exceed the minimum levels required by the Consent Order and are above the levels required for a "well-capitalized" regulatory designation.

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 1-877-317-6789.  A playback of the call will be available through May 31, 2011 by dialing 1-877-344-7529 (passcode:  450252) and on the Company's website.

About Central Pacific Financial Corp.

Central Pacific Financial Corp. is a Hawaii-based bank holding company with $4.0 billion in assets.  Central Pacific Bank, its primary subsidiary, operates 34 branches, 120 ATMs, and a residential mortgage subsidiary in the state of Hawaii.  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, concerning plans and objectives of management for future operations, concerning future economic performance, or concerning 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", "intends", "expects", "anticipates", "forecasts" or words of similar meaning.  While we believe 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 impact of local, national, and international economies and events, including natural disasters, 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; the impact of regulatory actions on the Company including the Consent Order by the FDIC and the DFI and the Memorandum of Understanding entered into on February 9, 2011 with the FDIC and the DFI relating to the Bank Secrecy Act; the impact of legislation affecting the banking industry including the Emergency Economic Stabilization Act of 2008 and the Dodd-Frank Act Wall Street Reform and Consumer Protection Act; the impact of competitive products, services, pricing, and other competitive forces; movements in interest rates; loan delinquency rates and changes in asset quality generally; volatility in the financial markets and uncertainties concerning the availability of debt or equity financing; and the impact of regulatory supervision.  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 2010 Form 10-K and future 2011 Form 10-Qs.  The Company does not update any of its forward-looking statements.

Cautionary Statements

This press release shall not constitute an offer for sale of the rights in the rights offering described in this release or the shares that may be purchased by exercising those rights.  These securities  are offered by means of a prospectus.  This press release shall not constitute an offer to sell or the solicitation of an offer to buy such securities, nor shall there be any sale of such securities in any jurisdiction or state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction or state.

CENTRAL PACIFIC FINANCIAL CORP.  AND SUBSIDIARIES

Financial Highlights - March 31, 2011

(Unaudited)




Three Months Ended






March 31,




(in thousands, except per share data)

2011


2010












INCOME STATEMENT







Net income (loss)

$        4,639


$  (160,219)




Per common share data:








Basic earnings (loss) per share (after preferred stock dividends, accretion of discount,








and conversion of preferred stock to common stock)

4.59


(107.23)













Diluted earnings (loss) per share (after preferred stock dividends, accretion of discount,








and conversion of preferred stock to common stock)

4.58


(107.23)












PERFORMANCE RATIOS







Return (loss) on average assets (1)

0.47

%

(13.25)

%



Return (loss) on average shareholders' equity (1)

9.34


(196.41)




Net income (loss) to average tangible shareholders' equity (1)

10.48


(320.04)




Efficiency ratio (2)

81.15


83.55




Net interest margin (1)

3.03


3.20












REGULATORY CAPITAL RATIOS







Central Pacific Financial Corp.








Tier 1 risk-based capital

21.34

%

8.99

%




Total risk-based capital

22.67


10.32





Leverage capital

12.64


5.78












Central Pacific Bank








Tier 1 risk-based capital

20.78

%

9.13

%




Total risk-based capital

22.11


10.45





Leverage capital

12.31


5.86














March 31,


%




2011


2010


Change


BALANCE SHEET







Total assets

$ 4,013,398


$ 4,434,177


(9.5)

%

Loans and leases, net of unearned interest

2,067,302


2,844,189


(27.3)


Net loans and leases

1,889,292


2,632,543


(28.2)


Deposits

3,145,463


3,335,038


(5.7)


Total shareholders' equity

384,984


172,105


123.7


Book value per common share

9.71


28.16


(65.5)


Tangible book value per common share

9.17


12.30


(25.4)


Market value per common share

20.80


33.60


(38.1)


Tangible common equity ratio (3)

9.11

%

0.42

%

2051.5












Three Months Ended






March 31,


%




2011


2010


Change


SELECTED AVERAGE BALANCES







Total assets

$ 3,970,299


$ 4,838,007


(17.9)

%

Interest-earning assets

3,760,082


4,454,145


(15.6)


Loans and leases, net of unearned interest

2,189,603


3,047,239


(28.1)


Other real estate

58,384


32,686


78.6


Deposits

3,091,447


3,508,240


(11.9)


Interest-bearing liabilities

2,992,383


3,847,946


(22.2)


Total shareholders' equity

198,627


326,302


(39.1)


CENTRAL PACIFIC FINANCIAL CORP.  AND SUBSIDIARIES

Financial Highlights - March 31, 2011

(Unaudited)




March 31,


%


(in thousands, except per share data)

2011


2010


Change










NONPERFORMING ASSETS







Nonaccrual loans (including loans held for sale)

$ 228,251


$ 462,278


(50.6)

%

Other real estate, net

56,601


31,571


79.3



Total nonperforming assets

284,852


493,849


(42.3)


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

506


6,979


(92.7)


Restructured loans (still accruing interest)

12,410


4,641


1.7



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

$ 297,768


$ 505,469


(41.1)












Three Months Ended






March 31,






2011


2010




Loan charge-offs

$   18,131


$   59,968


(69.8)

%

Recoveries

4,862


7,498


(35.2)



Net loan charge-offs

$   13,269


$   52,470


(74.7)


Net loan charge-offs to average loans (1)

2.42

%

6.89

%













March 31,





2011


2010



ASSET QUALITY RATIOS




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

10.76

%

15.93

%



Nonperforming assets to total assets

7.10


11.14




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

13.67


17.23












Allowance for loan and lease losses to total loans and leases

8.61


7.44




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

77.99


45.78




















(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 tangible 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)

March 31, 2011


December 31, 2010


March 31, 2010









Adjusted Earnings (Loss) Per Share














Diluted earnings (loss) per share

$              4.58


$                   (2.78)


$         (107.23)









Gain on exchange of preferred stock to common stock

4.40


-


-









Diluted adjusted earnings (loss) per share

$              0.18


$                   (2.78)


$         (107.23)
















Net Interest Margin














Annualized net interest income for the quarter as a percentage of







    quarter-to-date average interest earning assets

3.03

%

2.76

%

3.20

%








Reversal of interest on nonaccrual loans

0.04


0.05


0.14









Net interest margin, excluding reversal of interest on nonaccrual loans

3.07

%

2.81

%

3.34

%















Efficiency Ratio














Total operating expenses as a percentage of net operating revenue

92.25

%

103.37

%

315.60

%








Goodwill impairment

-


-


(217.19)









Amortization of other intangible assets

(1.76)


(1.53)


(1.52)









Loss on early extinguishment of debt

-


(12.09)


-









Foreclosed asset expense

(5.50)


(8.83)


(11.70)









Write down of assets

(3.84)


(1.11)


(1.64)









Efficiency ratio

81.15

%

79.81

%

83.55

%

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)










March 31,


December 31,


March 31,

(in thousands, except per share data)


2011


2010


2010








ASSETS







Cash and due from banks

$

63,687

$

61,725

$

207,015

Interest-bearing deposits in other banks


537,495


729,014


658,337

Investment securities:







 Trading


-


-


49,491

 Available for sale


1,076,181


702,517


395,073

 Held to maturity (fair value of $2,009 at March 31, 2011, $2,913 December 31, 2010 and $4,355 March 31, 2010)


1,943


2,828


4,234








     Total investment securities


1,078,124


705,345


448,798








Loans held for sale


54,093


69,748


57,659

Loans and leases


2,067,302


2,169,444


2,844,189

 Less allowance for loan and lease losses


178,010


192,854


211,646

     Net loans and leases


1,889,292


1,976,590


2,632,543








Premises and equipment, net


55,977


57,390


73,349

Accrued interest receivable


11,461


11,279


12,063

Investment in unconsolidated subsidiaries


13,950


14,856


16,450

Other real estate


56,601


57,507


31,571

Mortgage servicing rights


23,290


22,712


21,527

Other intangible assets


21,208


21,927


24,083

Bank-owned life insurance


142,000


142,296


140,841

Federal Home Loan Bank stock


48,797


48,797


48,797

Income tax receivable


2,353


2,223


38,977

Other assets


15,070


16,642


22,167

     Total assets

$

4,013,398

$

3,938,051

$

4,434,177








LIABILITIES AND EQUITY







Deposits:







 Noninterest-bearing demand

$

678,007

$

611,744

$

611,840

 Interest-bearing demand


528,533


639,548


630,942

 Savings and money market


1,120,272


1,089,813


1,090,159

 Time


818,651


791,842


1,002,097

     Total deposits


3,145,463


3,132,947


3,335,038








Short-term borrowings


1,423


202,480


202,074

Long-tem debt


409,299


459,803


657,537

Other liabilities


62,231


66,766


57,403

     Total liabilities


3,618,416


3,861,996


4,252,052








Equity:







 Preferred stock, no par value, authorized 1,000,000 shares; issued and outstanding none at March 31, 2011, 135,000 shares at December 31, 2010, and March 31, 2010


-


130,458


129,344















 Common stock, no par value, authorized 185,000,000 shares; issued and outstanding 39,649,052 shares at March 31, 2011, 1,527,000 shares at December 31, 2010, and 1,518,522 shares at March 31, 2010


764,463


404,167


406,580















 Surplus


63,436


63,308


63,359

 Accumulated deficit


(428,780)


(517,316)


(420,224)

 Accumulated other comprehensive loss


(14,135)


(14,565)


(6,954)

     Total shareholders' equity


384,984


66,052


172,105

Non-controlling interest


9,998


10,003


10,020

     Total equity


394,982


76,055


182,125

     Total liabilities and equity

$

4,013,398

$

3,938,051

$

4,434,177

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)







Three Months Ended



March 31,


December 31,


March 31,

(In thousands, except per share data)


2011


2010


2010

Interest income:







 Interest and fees on loans and leases

$

28,566

$

31,558

$

37,312

 Interest and dividends on investment







    securities:







       Taxable interest


5,221


4,060


8,101

       Tax-exempt interest


184


179


515

       Dividends


3


3


3

 Interest on deposits in other banks


389


555


330








     Total interest income


34,363


36,355


46,261








Interest expense:







 Interest on deposits:







   Demand


132


196


258

   Savings and money market


732


1,055


1,649

   Time


2,377


2,935


3,981

 Interest on short-term borrowings


204


295


189

 Interest on long-term debt


2,717


4,855


5,115








     Total interest expense


6,162


9,336


11,192








     Net interest income


28,201


27,019


35,069

Provision for loan and lease losses


(1,575)


406


58,837

     Net interest income (loss) after provision for loan and lease losses


29,776


26,613


(23,768)








Other operating income:







 Service charges on deposit accounts


2,614


2,849


3,207

 Other service charges and fees


4,058


3,973


3,485

 Income from fiduciary activities


761


831


811

 Equity in earnings of unconsolidated subsidiaries


127


140


29

 Fees on foreign exchange


137


157


156

 Investment securities gains


-


-


831

 Income from bank-owned life insurance


1,190


673


1,184

 Loan placement fees


102


84


85

 Net gain on sales of residential loans


2,198


3,155


1,945

 Gain on sale of premises and equipment


-


7,698


-

 Other


1,313


325


1,031








     Total other operating income


12,500


19,885


12,764








Other operating expense:







 Salaries and employee benefits


15,033


12,999


14,836

 Net occupancy


3,358


3,847


3,297

 Equipment


1,130


1,222


1,477

 Amortization of other intangible assets


1,547


1,857


1,408

 Communication expense


881


886


1,212

 Legal and professional services


2,460


3,422


5,650

 Computer software expense


883


993


903

 Advertising expense


836


354


839

 Goodwill impairment


-


-


102,689

 Foreclosed asset expense


2,242


4,149


5,532

 Write down of assets


1,565


520


774

 Loss on early extinguishment of debt


-


5,685


-

 Other


7,702


12,649


10,598








     Total other operating expense


37,637


48,583


149,215








  Income (loss) before income taxes


4,639


(2,085)


(160,219)

Income tax expense


-


-


-

     Net income (loss)


4,639


(2,085)


(160,219)

Preferred stock dividends, accretion of discount







 and conversion of preferred stock to common stock


(83,897)


2,143


2,074

     Net income (loss) available to common shareholders

$

88,536

$

(4,228)

$

(162,293)








Per common share data:







 Basic earnings (loss) per share

$

4.59

$

(2.78)

$

(107.23)

 Diluted earnings (loss) per share


4.58


(2.78)


(107.23)








Basic weighted average shares outstanding


19,301


1,518


1,513

Diluted weighted average shares outstanding


19,321


1,518


1,513

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

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



















Three Months Ended


Three Months Ended


Three Months Ended

(Dollars in thousands)

March 31, 2011


December 31, 2010


March 31, 2010



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

$    617,944

0.26

%

$      389


$    865,095

0.25

%

$      555


$    503,806

0.27

%

$      330


Taxable investment securities, excluding
















  valuation allowance

890,759

2.35


5,224


622,105

2.61


4,063


808,077

4.01


8,104


Tax-exempt investment securities,
















  excluding valuation allowance

12,979

8.67


282


13,160

8.35


275


46,226

6.87


793


Loans and leases, net of unearned income

2,189,603

5.27


28,566


2,359,977

5.32


31,558


3,047,239

4.95


37,312


Federal Home Loan Bank stock

48,797

-


-


48,797

-


-


48,797

-


-


Total interest earning assets

3,760,082

3.70


34,461


3,909,134

3.71


36,451


4,454,145

4.22


46,539

Nonearning assets

210,217





200,448





383,862





Total assets

$ 3,970,299





$ 4,109,582





$ 4,838,007




















Liabilities & Equity:















Interest-bearing liabilities:
















Interest-bearing demand deposits

$    529,405

0.10

%

$      132


$    648,752

0.12

%

$      196


$    611,195

0.17

%

$      258


Savings and money market deposits

1,107,546

0.27


732


1,085,775

0.39


1,055


1,146,801

0.58


1,649


Time deposits under $100,000

441,461

1.25


1,366


472,111

1.41


1,674


531,603

1.67


2,185


Time deposits $100,000 and over

334,170

1.23


1,011


347,209

1.44


1,261


626,523

1.16


1,796


Short-term borrowings

139,707

0.59


204


202,026

0.58


295


274,157

0.28


189


Long-term debt

440,094

2.50


2,717


597,489

3.22


4,855


657,667

3.15


5,115


    Total interest-bearing liabilities

2,992,383

0.84


6,162


3,353,362

1.10


9,336


3,847,946

1.18


11,192

Noninterest-bearing deposits

678,865





592,932





592,118




Other liabilities

90,423





69,001





61,617





Total liabilities

3,761,671





4,015,295





4,501,681




Shareholders' equity

198,627





84,281





326,302




Non-controlling interest

10,001





10,006





10,024





Total equity

208,628





94,287





336,326





Total liabilities & equity

$ 3,970,299





$ 4,109,582





$ 4,838,007




















Net interest income




$ 28,299





$ 27,115





$ 35,347

































Net interest margin


3.03

%




2.76

%




3.20

%


SOURCE Central Pacific Financial Corp.

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