CENTRAL PACIFIC FINANCIAL REPORTS FIRST QUARTER EARNINGS OF $19.4 MILLION

• Net income of $19.4 million, or $0.70 per diluted share for the quarter.
• ROA of 1.06% and ROE of 14.44% for the quarter.
• Core loans increased by $120.3 million, or 2.4% (9.6% annualized), in the first quarter, while PPP loans decreased by $47.1 million, for a net increase in total loans of $73.2 million, or 1.4% (5.6% annualized) from last quarter.
• Ratio of nonperforming assets to total assets improved to 0.07% in the first quarter, from 0.08% last quarter.
• Cost of average total deposits remained at 0.06% in the first quarter.
• Completed equity investment and on track to serve as bank sponsor for Swell Financial, as part of the recently announced Banking-as-a-Service ("BaaS") strategy.
• Board of Directors approved quarterly cash dividend of $0.26 per share.

HONOLULU, April 20, 2022 /PRNewswire/ -- Central Pacific Financial Corp. (NYSE: CPF) (the "Company"), parent company of Central Pacific Bank (the "Bank" or "CPB"), today reported net income for the first quarter of 2022 of $19.4 million, or fully diluted earnings per share ("EPS") of $0.70, compared to net income in the first quarter of 2021 of $18.0 million, or EPS of $0.64, and net income in the fourth quarter of 2021 of $22.3 million, or EPS of $0.80.

In addition to the financial results, during the first quarter of 2022, the U.S. Small Business Administration ("SBA") Hawaii District Office announced that CPB was named the SBA Lender of the Year (Category 2), with CPB originating more SBA 7a loans to small businesses in Hawaii in 2021 than all other major Hawaii banks combined.

The first quarter also included an announcement that Swell Financial, Inc. ("Swell") will work with CPB and Elevate Credit, Inc. (NYSE:ELVT) ("Elevate", a leading tech-enabled provider of online credit solutions). Swell is a newly-launched fintech company incubated within CPB. It is on track to launch an integrated checking and line-of-credit account in the summer of 2022, with CPB serving as the bank sponsor. This key initiative will enable CPB to expand its presence beyond Hawaii into the U.S. mainland market. During the quarter, Swell also successfully closed a $10 million Series A capital raise that was led by third party investors, with participation from CPF and Elevate.

Finally, during the first quarter, the Bank continued its strong momentum with the new Shaka all-digital checking account base having reached nearly 4,000 accounts opened to-date. The Bank continues to focus on providing best-in-class digital convenience to our core Hawaii market through the product and related services.

"Central Pacific is pleased with our continued strong earnings in the first quarter of 2022. We anticipate that our ongoing digital transformation, along with a previously announced Banking-as-a-Service strategy, will contribute to our earnings growth in the future. With Hawaii's stronger than anticipated economic recovery, we continue to have an optimistic outlook, and are committed to supporting the financial needs of our customers and the broader community," said Paul Yonamine, Chairman and Chief Executive Officer.

"Hawaii recently removed nearly all of the COVID-related restrictions which further facilitated our tourism industry's rapid recovery. Recent air arrivals have already surpassed pre-pandemic levels, even without the return of our international market. This has had a positive impact on our unemployment rate and our real estate market which has seen significant gains in sales and prices," said Executive Vice Chair Catherine Ngo.

"Our favorable revenue growth trends continued into the first quarter with solid core loan growth. With our strong asset quality, liquidity and capital positions, we are well positioned to continue to grow our market share," according to Arnold Martines, President and Chief Operating Officer.

On April 19, 2022, the Company's Board of Directors declared a quarterly cash dividend of $0.26 per share on its outstanding common shares. The dividend will be payable on June 15, 2022 to shareholders of record at the close of business on May 31, 2022.

During the first quarter of 2022, the Company repurchased 234,981 shares of common stock, at a total cost of $6.7 million, or an average cost per share of $28.65. During the three months ended March 31, 2022, the Company returned $13.9 million in capital to its shareholders through cash dividends and share repurchases.

Net interest income for the first quarter of 2022 was $50.9 million, compared to $49.8 million in the year-ago quarter and $53.1 million in the previous quarter. Net interest margin for the first quarter of 2022 was 2.97%, compared to 3.19% in the year-ago quarter and 3.08% in the previous quarter. The sequential quarter decrease in net interest income and net interest margin is primarily due to lower net interest income and loan fees on PPP loans, combined with lower yields on core loans, partially offset by higher average loan and investment security balances. Net interest income for the first quarter of 2022 included $1.9 million in net interest income and loan fees on PPP loans, compared to $4.7 million in the previous quarter. Net deferred fees on PPP loans remaining at March 31, 2022 was $1.7 million, compared to $3.5 million at December 31, 2021. Additional information on average balances, interest income and expenses and yields and rates is presented in Table 4.

In the first quarter of 2022, the Company recorded a credit to the provision for credit losses of $3.2 million, compared to a credit to the provision of $0.8 million in the year-ago quarter and a credit to the provision of $7.7 million in the previous quarter. The credit to the provision for credit losses in the first quarter of 2022 was driven by continued improvements in the economic forecast and our loan portfolio.

Other operating income for the first quarter of 2022 totaled $9.6 million, compared to $10.7 million in the year-ago quarter and $11.6 million in the previous quarter. The decrease from the year-ago quarter was primarily due to lower mortgage banking income of $1.8 million and lower income from bank-owned life insurance ("BOLI") of $0.3 million, partially offset by higher other service charges and fees of $0.7 million and higher service charges on deposit accounts of $0.4 million. The decrease from the previous quarter was primarily due to lower mortgage banking income of $0.7 million, lower other service charges and fees of $0.5 million, and lower BOLI income of $0.4 million. The lower mortgage banking income during the current quarter was primarily attributable to lower loan origination activity due to rising interest rates. The lower BOLI income was primarily attributable to volatility in the equity markets. Additional information on other operating income is presented in Table 3.

Other operating expense for the first quarter of 2022 totaled $38.2 million, compared to $37.8 million in the year-ago quarter and $42.4 million in the previous quarter. The increase in other operating expense from the year-ago quarter was primarily due to higher salaries and employee benefits of $1.1 million and higher legal and professional services of $0.2 million, partially offset by lower computer software expense of $0.7 million, and lower advertising expense of $0.5 million. The decrease in other operating expense from the previous quarter is primarily due to lower salaries and employee benefits of $2.1 million, lower net occupancy expense of $0.4 million, lower deferred compensation plan expense of $0.4 million (included in other), lower legal and professional services of $0.3 million, and lower entertainment and promotions expense of $0.3 million (included in other). In addition, other operating expense in the previous quarter included branch consolidation costs of $0.4 million (included in other). Lower salaries and employee benefits during the current quarter was primarily due to lower incentive compensation accruals and commissions, combined with $1.1 million in severance expense included in the previous quarter. Additional information on other operating expense is presented in Table 3.

The efficiency ratio for the first quarter of 2022 was 63.16%, compared to 62.54% in the year-ago quarter and 65.61% in the previous quarter.

The effective tax rate for the first quarter of 2022 was 23.7%, compared to 23.2% in the year-ago quarter and 25.4% in the previous quarter.

Total assets at March 31, 2022 of $7.30 billion increased from $6.98 billion at March 31, 2021, and decreased from $7.42 billion at December 31, 2021.

Total loans, net of deferred fees and costs, at March 31, 2022 of $5.17 billion increased from $5.14 billion at March 31, 2021, and increased from $5.10 billion at December 31, 2021. The sequential quarter increase in total loans included a net increase in core loans (or non-PPP loans) of $120.3 million led by growth in consumer loans of $45.1 million, home equity loans of $39.1 million, commercial mortgage loans of $23.3 million, and other commercial loans of $14.3 million, partially offset by a decline in PPP loans of $47.1 million due to SBA forgiveness and paydowns. The growth in consumer loans was primarily due to mainland unsecured and automobile portfolio purchases during the quarter. Loans by geographic distribution are summarized in Table 5.

Total deposits at March 31, 2022 of $6.60 billion increased from $6.21 billion at March 31, 2021, and decreased from $6.64 billion at December 31, 2021. Core deposits, which include demand deposits, savings and money market deposits and time deposits up to $250,000, totaled $6.12 billion at March 31, 2022, and decreased by $36.8 million from December 31, 2021. Non-core deposits decreased by $3.3 million from December 31, 2021. The Company's loan-to-deposit ratio was 78.4% at March 31, 2022, compared to 76.8% at December 31, 2021. Core deposit and total deposit balances are summarized in Table 6.

Nonperforming assets at March 31, 2022 totaled $5.3 million, or 0.07% of total assets, compared to $7.2 million, or 0.10% of total assets at March 31, 2021, and $5.9 million, or 0.08% of total assets at December 31, 2021. Additional information on nonperforming assets, past due and restructured loans is presented in Table 7.

Net charge-offs in the first quarter of 2022 totaled $0.4 million, compared to net charge-offs of $0.7 million in the year-ago quarter, and net recoveries of $0.9 million in the previous quarter.

The allowance for credit losses, as a percentage of total loans at March 31, 2022 was 1.25%, compared to 1.59% at March 31, 2021 and 1.33% at December 31, 2021. Excluding PPP loans, the allowance for credit losses, as a percentage of core loans at March 31, 2022 was 1.26%, compared to 1.36% at December 31, 2021. Additional information on net charge-offs and recoveries and the allowance for credit losses is presented in Tables 8 and 9.

Total shareholders' equity was $486.3 million at March 31, 2022, compared to $542.9 million and $558.2 million at March 31, 2021 and December 31, 2021, respectively. The decline in shareholders' equity was primarily due to unrealized losses on our available-for-sale investment securities portfolio which flow through accumulated other comprehensive income, and were driven by the rising interest rate environment.

The Company maintained its strong capital position and its capital ratios continue to exceed the levels required to be considered a "well-capitalized" institution for regulatory purposes under Basel III. At March 31, 2022, the Company's leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ratios were 8.5%, 11.9%, 14.2%, and 10.9%, respectively, compared to 8.5%, 12.2%, 14.5%, and 11.2%, respectively, at December 31, 2021.

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.

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.cpb.bank. Alternatively, investors may participate in the live call by dialing 1-844-200-6205 (access code: 544126). A playback of the call will be available through May 18, 2022 by dialing 1-866-813-9403 (access code: 856811) and on the Company's website. Information which may be discussed in the conference call is provided in an earnings supplement presentation on the Company's website at http://ir.cpb.bank.

Central Pacific Financial Corp. is a Hawaii-based bank holding company with approximately $7.30 billion in assets as of March 31, 2022. Central Pacific Bank, its primary subsidiary, operates 30 branches and 65 ATMs in the state of Hawaii. For additional information, please visit the Company's website at http://www.cpb.bank.

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This document may contain FLS concerning: projections of revenues, expenses, income or loss, earnings or loss per share, capital expenditures, the payment or nonpayment of dividends, capital position, credit losses, net interest margin or other financial items; statements of plans, objectives and expectations of Central Pacific Financial Corp. or its management or Board of Directors, including those relating to business plans, use of capital resources, products or services and regulatory developments and regulatory actions; statements of future economic performance including anticipated performance results from our business initiatives; or any statements of the assumptions underlying or relating to any of the foregoing. Words such as "believes," "plans," "anticipates," "expects," "intends," "forecasts," "hopes," "targeting," "continue," "remain," "will," "should," "estimates," "may" and other similar expressions are intended to identify FLS but are not the exclusive means of identifying such statements.

While we believe that our FLS 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 differ materially from those statements or projections for a variety of reasons, including, but not limited to: the adverse effects of the COVID-19 pandemic virus (and ongoing pandemic variants) on local, national and international economies, including, but not limited to, the adverse impact on tourism and construction in the State of Hawaii, our borrowers, customers, third-party contractors, vendors and employees as well as the effects of government programs and initiatives in response to COVID-19; the impact of our participation in the Paycheck Protection Program ("PPP") and fulfillment of government guarantees on our PPP loans; the increase in inventory or adverse conditions in the real estate market and deterioration 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; our ability to achieve the objectives of our RISE2020 initiative; our ability to successfully implement and achieve the objectives of our Banking-as-a-Service ("BaaS") initiatives, including adoption of the initiatives by customers and risks faced by any of our bank collaborations including reputational and regulatory risk; the impact of local, national, and international economies and events (including natural disasters such as wildfires, volcanic eruptions, hurricanes, tsunamis, storms, earthquakes and pandemic viruses and diseases, including COVID-19) 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 domestic economic conditions, including any destabilization 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; 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 (the "Dodd-Frank Act"), changes in capital standards, other regulatory reform and federal and state legislation, including but not limited to regulations promulgated by the Consumer Financial Protection Bureau (the "CFPB"), government-sponsored enterprise reform, and any related rules and regulations which affect 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, the results of regulatory examinations or reviews and the effect of, and our ability to comply with, any regulations or regulatory orders or actions we are or may become subject to; ability to successfully implement our initiatives to lower our efficiency ratio; 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 (the "FRB" or the "Federal Reserve"); inflation, interest rate, securities market and monetary fluctuations, including the anticipated replacement of the London Interbank Offered Rate ("LIBOR") Index and the impact on our loans and debt which are tied to that index and uncertainties regarding potential alternative reference rates, including the Secured Overnight Financing Rate ("SOFR"); negative trends in our market capitalization and adverse changes in the price of the Company's common stock; political instability; acts of war or terrorism;  pandemic virus and disease, including COVID-19; changes in consumer spending, borrowings and savings habits; failure to maintain effective internal control over financial reporting or disclosure controls and procedures; cybersecurity and data privacy breaches and the consequence therefrom; the ability to address deficiencies in our internal controls over financial reporting or disclosure controls and procedures; 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 ("PCAOB"), the Financial Accounting Standards Board ("FASB") and other accounting standard setters and the cost and resources required to implement such changes; our ability to attract and retain key personnel; changes in our personnel, organization, compensation and benefit plans; and our success at managing the risks involved in the foregoing items.

For further information with respect to factors that could cause actual results to materially differ from the expectations or projections stated in the FLS, 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. We urge investors to consider all of these factors carefully in evaluating the FLS contained in this Form 8-K. FLS speak only as of the date on which such statements are made. We undertake no obligation to update any FLS to reflect events or circumstances after the date on which such statements are made, or to reflect the occurrence of unanticipated events except as required by law.