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Press Release

Central Pacific Financial Corp. Reports $13.1 Million First Quarter Earnings And Increases Quarterly Cash Dividend

Company Release - 4/26/2017 8:00 AM ET

HONOLULU, April 26, 2017 /PRNewswire/ --

  • Net income of $13.1 million, or fully diluted EPS of $0.42.
  • ROA of 0.96% and ROE of 10.24%.
  • Total loans increased by $20.8 million, or 0.6%, sequentially and 7.2% year-over-year
  • Total deposits increased by $169.2 million, or 3.7% sequentially and 6.2% year-over-year.

Central Pacific Financial Corp. (NYSE: CPF), (the "Company"), today reported net income  in the first quarter of 2017 of $13.1 million, or diluted earnings per share ("EPS") of $0.42, compared to net income in the first quarter of 2016 of $11.2 million, or EPS of $0.35, and net income in the fourth quarter of 2016 of $12.2 million, or EPS of $0.39.

"We are pleased to report another solid quarter with improved earnings and continued balance sheet growth," said Catherine Ngo, President and CEO. "The increase in our quarterly cash dividend, combined with our ongoing share repurchase program is a reflection of our commitment to creating value for our shareholders, and our confidence in the financial strength and long-term outlook of our business."

In April 2017, the Company's Board of Directors declared a quarterly cash dividend of $0.18 per share on its outstanding common shares. This represents a 12.5% increase from the $0.16 paid during the quarter. The dividend will be payable on June 15, 2017 to shareholders of record at the close of business on May 31, 2017.

In January 2017, the Company's Board of Directors authorized the repurchase of up to $30 million of its common stock from time to time in the open market or in privately negotiated transactions, pursuant to a newly authorized share repurchase program (the "2017 Repurchase Plan").

During the first quarter of 2017, the Company repurchased 113,750 shares of common stock, or approximately 0.4% of its common stock outstanding as of December 31, 2016. Total cost of the shares repurchased was $3.5 million, or an average cost per share of $31.03. The Company's remaining repurchase authority under the 2017 Repurchase Plan at March 31, 2017 is $26.5 million.

Earnings Highlights
Net interest income for the first quarter of 2017 was $41.3 million, compared to $39.2 million in the year-ago quarter and $39.7 million in the previous quarter. Net interest margin was 3.30%, compared to 3.33% in the year-ago quarter and 3.22% in the previous quarter. The increase in net interest income from the year-ago quarter was primarily attributable to the significant year-over-year growth in our loan portfolio, combined with interest recoveries on nonaccrual loans totaling $1.0 million in the current quarter, compared to less than $0.1 million in interest recoveries in the year-ago quarter. This increase was partially offset by increased funding costs related to time deposits due to the recent increases in the federal funds rate. The sequential quarter increases in net interest income and net interest margin were primarily attributable to the aforementioned loan interest recoveries, combined with lower premium amortization on investment securities totaling $0.7 million. These increases were partially offset by increased funding costs related to time deposits. Total deposit cost for the quarter ended March 31, 2017 was 0.18%.

Other operating income for the first quarter of 2017 totaled $10.0 million, compared to $8.7 million in the year-ago quarter and $13.8 million in the previous quarter. The increase from the year-ago quarter was primarily due to higher mortgage banking income of $0.7 million, combined with higher income from bank-owned life insurance of $0.5 million. The higher mortgage banking income was primarily attributable to lower amortization of mortgage servicing rights of $1.0 million due to slower prepayment activity. The higher income from bank-owned life insurance was primarily attributable to death benefit income totaling $0.6 million received in the current quarter. The sequential quarter decrease was primarily due to a $3.5 million gain on the sale of the Company's fee interest in a former branch location recognized in the fourth quarter of 2016, combined with lower mortgage banking income in the current quarter of $0.9 million resulting from lower net gain on sales of residential mortgage loans, partially offset by higher income from bank-owned life insurance of $0.8 million due to the aforementioned death benefit income received in the current quarter.

Other operating expense for the first quarter of 2017 totaled $31.5 million, which remained relatively unchanged from $31.4 million in the year-ago quarter but decreased from $37.5 million in the previous quarter. During the fourth quarter of 2016, the Company executed a defined benefit pension plan de-risking strategy whereby the Company purchased non-participating annuity contracts to settle the pension obligation for a portion of its plan participants. This resulted in the immediate recognition of $3.8 million in net actuarial losses (included in salaries and employee benefits) in the previous quarter. In addition to the higher salaries and employee benefits expense in the fourth quarter of 2016, the Company recognized a $0.7 million charge (included in other expenses) related to the early termination of a lease during the previous quarter.

The efficiency ratio for the first quarter of 2017 was 61.4%, a marked improvement from 65.5% in the year-ago quarter and 70.1% in the previous quarter. The efficiency ratio during the current quarter was positively impacted by the growth in net interest income and the death benefit income received during the quarter. The efficiency ratio during the previous quarter was negatively impacted by the aforementioned charges related to the pension obligation settlement and lease termination, partially offset by the $3.5 million gain on sale of property completed during the fourth quarter of 2016.

In the first quarter of 2017, the Company recorded income tax expense of $6.8 million, compared to $6.1 million in the year-ago quarter and $6.4 million in the previous quarter. The effective tax rate for the first quarter of 2017 was 34.2%, compared to 35.2% in the year-ago quarter and 34.5% in the previous quarter.

Balance Sheet Highlights
Total assets at March 31, 2017 of $5.44 billion increased by $201.0 million, or 3.8% from March 31, 2016, and increased by $58.9 million, or 1.1% from December 31, 2016.

Total loans and leases at March 31, 2017 of $3.55 billion increased by $236.8 million, or 7.2% and $20.8 million, or 0.6% from March 31, 2016 and December 31, 2016, respectively.  The increase in total loans and leases from March 31, 2016 was primarily attributable to strong organic growth in the Hawaii loan portfolios, offset by reductions in the U.S. mainland commercial and other consumer loan portfolios. The increase in total loans and leases from the fourth quarter of 2016 was primarily due to growth in the Hawaii commercial, residential mortgage, home equity, and commercial mortgage loan portfolios, partially offset by net decreases in the U.S. mainland commercial and other consumer loan portfolios.

Total deposits at March 31, 2017 of $4.78 billion increased by $280.8 million, or 6.2% from March 31, 2016, and increased by $169.2 million, or 3.7% from December 31, 2016.  Core deposits, which include demand deposits, savings and money market deposits, and time deposits less than $100,000, totaled $3.81 billion at March 31, 2017.  This represents an increase of $147.0 million, or 4.0% from March 31, 2016, and an increase of $97.4 million, or 2.6% from December 31, 2016.

Asset Quality
Nonperforming assets at March 31, 2017 totaled $8.8 million, or 0.16% of total assets, compared to $15.9 million, or 0.30% of total assets at March 31, 2016, and $9.2 million, or 0.17% of total assets at December 31, 2016.

Loans delinquent for 90 days or more still accruing interest totaled $0.2 million at March 31, 2017, compared to $0.8 million and $1.4 million at March 31, 2016 and December 31, 2016, respectively.

Net charge-offs in the first quarter of 2017 totaled $1.2 million, compared to net charge-offs of $0.4 million in the year-ago quarter, and net charge-offs of $0.1 million in the previous quarter. Net charge-offs increased in the current quarter due to fewer recoveries. The previous quarter included a $0.9 million recovery from a single commercial mortgage borrower.

In the first quarter of 2017, the Company recorded a credit to the provision for loan and lease losses of $0.1 million, compared to a credit of $0.7 million in the year-ago quarter and a credit of $2.6 million in the previous quarter. The allowance for loan and lease losses, as a percentage of total loans and leases at March 31, 2017 was 1.56%, compared to 1.88% at March 31, 2016 and 1.61% at December 31, 2016.

Capital
Total shareholders' equity was $511.5 million at March 31, 2017, compared to $509.4 million and $504.7 million at March 31, 2016 and December 31, 2016, respectively.

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, 2017, the Company's leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ratios were 10.7%, 15.2%, 16.5%, and 13.0%, respectively, compared to 10.6%, 14.2%, 15.5%, and 12.3%, respectively, at December 31, 2016.

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 May 26, 2017 by dialing 1-877-344-7529 (passcode: 10105178) and on the Company's website.

About Central Pacific Financial Corp.
Central Pacific Financial Corp. is a Hawaii-based bank holding company with approximately $5.4 billion in assets.  Central Pacific Bank, its primary subsidiary, operates 35 branches and 103 ATMs in the state of Hawaii, as of March 31, 2017.  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;  the impact of regulatory action on the Company and Central Pacific Bank and legislation affecting the financial services 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, including fintech businesses; 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; changes in our capital position; 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

(Dollars in thousands, except for per share amounts)


Mar 31,


Dec 31,


Sep 30,


Jun 30,


Mar 31,


2017


2016


2016


2016


2016

CONDENSED INCOME STATEMENT











Net interest income


$

41,255



$

39,704



$

39,426



$

39,609



$

39,211


Provision (credit) for loan and lease losses


(80)



(2,645)



(743)



(1,382)



(747)


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


41,335



42,349



40,169



40,991



39,958


Total other operating income (1)


10,014



13,769



9,954



9,937



8,656


Total other operating expense (1)


31,460



37,472



32,265



32,460



31,366


Income before taxes


19,889



18,646



17,858



18,468



17,248


Income tax expense


6,810



6,438



6,392



6,331



6,067


Net income


13,079



12,208



11,466



12,137



11,181


Basic earnings per common share


$

0.43



$

0.40



$

0.37



$

0.39



$

0.36


Diluted earnings per common share


0.42



0.39



0.37



0.39



0.35


Dividends declared per common share


0.16



0.16



0.16



0.14



0.14













PERFORMANCE RATIOS











Return on average assets (2)


0.96

%


0.92

%


0.87

%


0.93

%


0.87

%

Return on average shareholders' equity (2)


10.24



9.46



8.81



9.51



8.85


Return on average tangible shareholders' equity (2)


10.33



9.56



8.91



9.63



8.98


Average shareholders' equity to average assets


9.42



9.67



9.89



9.73



9.81


Efficiency ratio (3)


61.36



70.08



65.34



65.51



65.53


Net interest margin (2)


3.30



3.22



3.25



3.29



3.33


Dividend payout ratio (4)


38.10



41.03



43.24



35.90



40.00













SELECTED AVERAGE BALANCES











Average loans and leases, including loans held for sale


$

3,547,718



$

3,489,757



$

3,415,505



$

3,377,362



$

3,258,872


Average interest-earning assets


5,095,455



4,981,766



4,902,151



4,890,398



4,786,256


Average assets


5,422,529



5,335,909



5,266,588



5,248,088



5,148,744


Average deposits


4,762,874



4,558,589



4,486,064



4,459,019



4,468,070


Average interest-bearing liabilities


3,626,229



3,568,767



3,532,334



3,565,530



3,492,748


Average shareholders' equity


510,804



516,067



520,757



510,753



505,330


Average tangible shareholders' equity


506,366



511,004



515,020



504,366



498,271















Mar 31,


Dec 31,


Sep 30,


Jun 30,


Mar 31,

(dollars in thousands)


2017


2016


2016


2016


2016

REGULATORY CAPITAL











Central Pacific Financial Corp











   Leverage capital


$

577,081



$

562,460



$

567,891



$

560,674



$

547,195


   Tier 1 risk-based capital


577,081



562,460



567,891



560,674



547,195


   Total risk-based capital


624,735



612,202



616,858



609,012



594,801


  Common equity tier 1 capital


491,538



485,268



487,097



481,209



472,171


Central Pacific Bank











   Leverage capital


560,921



541,577



545,578



529,754



533,307


   Tier 1 risk-based capital


560,921



541,577



545,578



529,754



533,307


   Total risk-based capital


608,450



591,185



594,407



577,966



580,715


   Common equity tier 1 capital


560,921



541,577



545,578



529,754



533,307













REGULATORY CAPITAL RATIOS











Central Pacific Financial Corp











   Leverage capital ratio


10.7

%


10.6

%


10.9

%


10.8

%


10.8

%

   Tier 1 risk-based capital ratio


15.2



14.2



14.6



14.6



14.5


   Total risk-based capital ratio


16.5



15.5



15.9



15.9



15.8


   Common equity tier 1 capital ratio


13.0



12.3



12.5



12.5



12.5


Central Pacific Bank











   Leverage capital ratio


10.4



10.2



10.6



10.2



10.5


   Tier 1 risk-based capital ratio


14.8



13.7



14.1



13.8



14.2


   Total risk-based capital ratio


16.1



15.0



15.3



15.1



15.4


   Common equity tier 1 capital ratio


14.8



13.7



14.1



13.8



14.2















Mar 31,


Dec 31,


Sep 30,


Jun 30,


Mar 31,

(dollars in thousands, except for per share amounts)


2017


2016


2016


2016


2016

BALANCE SHEET











Loans and leases


$

3,545,718



$

3,524,890



$

3,439,654



$

3,403,947



$

3,308,968


Total assets


5,443,181



5,384,236



5,319,947



5,282,967



5,242,202


Total deposits


4,777,444



4,608,201



4,518,578



4,405,142



4,496,602


Long-term debt


92,785



92,785



92,785



92,785



92,785


Total shareholders' equity


511,536



504,650



519,466



517,607



509,358


Total shareholders' equity to total assets


9.40

%


9.37

%


9.76

%


9.80

%


9.72

%

Tangible common equity to tangible assets (5)


9.33

%


9.29

%


9.67

%


9.69

%


9.60

%












ASSET QUALITY











Allowance for loan and lease losses


$

55,369



$

56,631



$

59,384



$

60,764



$

62,149


Non-performing assets


8,834



9,187



11,666



14,907



15,944


Allowance to loans and leases outstanding


1.56

%


1.61

%


1.73

%


1.79

%


1.88

%

Allowance to non-performing assets


626.77



616.43



509.03



407.62



389.80













PER SHARE OF COMMON STOCK OUTSTANDING











Book value per common share


$

16.66



$

16.39



$

16.79



$

16.68



$

16.34


Tangible book value per common share


16.53



16.23



16.62



16.48



16.13


Closing market price per common share


30.54



31.42



25.19



23.60



21.77
























(1) Loan servicing fees, amortization of mortgage servicing rights, net gain on sale of residential mortgage loans, and unrealized gain (loss) on interest rate locks have been reclassified into mortgage banking income in the consolidated statements of income. Prior period amounts in the consolidated statements of income have been reclassified to conform to the current period presentation.

(2) Annualized.

(3) Efficiency ratio is defined as total operating expense divided by total revenue (net interest income and total other operating income). Prior period amounts have been revised to conform to current period which reflects reclassifications referred to in note (1).

(4) Dividend payout ratio is defined as dividends declared per share divided by diluted earnings per share.

(5) 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 in Table 2.

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures

(Unaudited)

TABLE 2




March 31,


December 31,


September 30,


June 30,


March 31,

(Dollars in thousands)


2017


2016


2016


2016


2016

Tangible Common Equity Ratio:











Total shareholders' equity


$

511,536



$

504,650



$

519,466



$

517,607



$

509,358


   Less: Other intangible assets


(4,012)



(4,680)



(5,349)



(6,018)



(6,686)


Tangible common equity


$

507,524



$

499,970



$

514,117



$

511,589



$

502,672













Total assets


$

5,443,181



$

5,384,236



$

5,319,947



$

5,282,967



$

5,242,202


   Less: Other intangible assets


(4,012)



(4,680)



(5,349)



(6,018)



(6,686)


Tangible assets


$

5,439,169



$

5,379,556



$

5,314,598



$

5,276,949



$

5,235,516













Tangible common equity to tangible assets


9.33

%


9.29

%


9.67

%


9.69

%


9.60

%

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)

TABLE 3




March 31,


December 31,


September 30,


June 30,


March 31,

(Dollars in thousands, except share data)


2017


2016


2016


2016


2016

ASSETS











Cash and due from banks


$

83,670



$

75,272



$

79,647



$

76,482



$

85,495


Interest-bearing deposits in other banks


22,363



9,069



23,727



14,184



7,180


Investment securities:











Available for sale


1,302,889



1,243,847



1,262,224



1,260,593



1,299,176


Held to maturity, fair value of: $208,181 at March 31, 2017, $214,366 at December 31, 2016, $230,529 at September 30, 2016, $238,066 at June 30, 2016, and $243,072 at March 31, 2016


211,426



217,668



226,573



234,230



241,597


Total investment securities


1,514,315



1,461,515



1,488,797



1,494,823



1,540,773


Loans held for sale


9,905



31,881



12,755



9,921



11,270


Loans and leases


3,545,718



3,524,890



3,439,654



3,403,947



3,308,968


Less allowance for loan and lease losses


55,369



56,631



59,384



60,764



62,149


Net loans and leases


3,490,349



3,468,259



3,380,270



3,343,183



3,246,819


Premises and equipment, net


48,303



48,258



48,242



48,370



48,322


Accrued interest receivable


14,819



15,675



14,554



15,339



14,818


Investment in unconsolidated subsidiaries


6,279



6,889



7,011



7,204



5,627


Other real estate owned


851



791



791



1,032



1,260


Mortgage servicing rights


15,847



15,779



15,638



15,778



16,800


Other intangible assets


4,012



4,680



5,349



6,018



6,686


Bank-owned life insurance


155,019



155,593



155,233



154,678



154,592


Federal Home Loan Bank stock


7,333



11,572



12,173



15,218



10,420


Other assets


70,116



79,003



75,760



80,737



92,140


Total assets


$

5,443,181



$

5,384,236



$

5,319,947



$

5,282,967



$

5,242,202


LIABILITIES AND EQUITY











Deposits:











Noninterest-bearing demand


$

1,290,632



$

1,265,246



$

1,194,557



$

1,152,666



$

1,140,741


Interest-bearing demand


898,306



862,991



849,128



846,589



849,880


Savings and money market


1,430,399



1,390,600



1,379,484



1,371,163



1,465,524


Time


1,158,107



1,089,364



1,095,409



1,034,724



1,040,457


Total deposits


4,777,444



4,608,201



4,518,578



4,405,142



4,496,602


Short-term borrowings


21,000



135,000



150,000



226,000



106,000


Long-term debt


92,785



92,785



92,785



92,785



92,785


Other liabilities


40,391



43,575



39,092



41,424



37,438


Total liabilities


4,931,620



4,879,561



4,800,455



4,765,351



4,732,825


Equity:











Preferred stock, no par value, authorized 1,000,000 shares; issued and outstanding none at:  March 31, 2017, December 31, 2016, September 30, 2016, June 30, 2016, and March 31, 2016











Common stock, no par value, authorized 185,000,000 shares; issued and outstanding:  30,701,219 at March 31, 2017, 30,796,243 at December 31, 2016, 30,930,598 at September 30, 2016, 31,036,895 at June 30, 2016, and 31,164,287 at March 31, 2016


527,403



530,932



534,856



538,434



544,029


Surplus


84,678



84,180



84,207



83,482



83,534


Accumulated deficit


(100,784)



(108,941)



(116,225)



(122,730)



(130,511)


Accumulated other comprehensive income (loss)


239



(1,521)



16,628



18,421



12,306


Total shareholders' equity


511,536



504,650



519,466



517,607



509,358


Non-controlling interest


25



25



26



9



19


Total equity


511,561



504,675



519,492



517,616



509,377


Total liabilities and equity


$

5,443,181



$

5,384,236



$

5,319,947



$

5,282,967



$

5,242,202


 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

TABLE 4




Three Months Ended



Mar 31,


Dec 31,


Sep 30,


Jun 30,


Mar 31,

(Dollars in thousands, except per share data)


2017


2016


2016


2016


2016

Interest income:











Interest and fees on loans and leases


$

34,957



$

33,973



$

33,384



$

32,878



$

31,793


Interest and dividends on investment securities:











   Taxable interest


8,135



7,203



7,296



7,953



8,396


   Tax-exempt interest


979



989



995



995



996


   Dividends


12



12



10



10



10


Interest on deposits in other banks


74



22



17



11



17


Dividends on Federal Home Loan Bank stock


56



56



63



23



37


   Total interest income


44,213



42,255



41,765



41,870



41,249


Interest expense:











Interest on deposits:











   Demand


140



129



126



123



111


   Savings and money market


257



257



254



269



263


   Time


1,717



1,175



1,044



957



898


Interest on short-term borrowings


31



191



160



177



50


Interest on long-term debt


813



799



755



735



716


   Total interest expense


2,958



2,551



2,339



2,261



2,038


   Net interest income


41,255



39,704



39,426



39,609



39,211


Provision (credit) for loan and lease losses


(80)



(2,645)



(743)



(1,382)



(747)


   Net interest income after provision for loan and lease losses


41,335



42,349



40,169



40,991



39,958


Other operating income:











Mortgage banking income (1)


1,943



2,845



2,561



1,423



1,240


Service charges on deposit accounts


2,036



2,065



1,954



1,908



1,964


Other service charges and fees


2,748



2,833



2,821



3,028



2,767


Income from fiduciary activities


864



858



880



857



840


Equity in earnings of unconsolidated subsidiaries


61



267



182



184



90


Fees on foreign exchange


163



116



129



126



148


Income from bank-owned life insurance


1,117



273



555



1,232



625


Loan placement fees


134



175



140



133



46


Net gains on sales of foreclosed assets


102



1



57



241



308


Gain on sale of premises and equipment




3,537








Other (refer to Table 5)


846



799



675



805



628


   Total other operating income


10,014



13,769



9,954



9,937



8,656


Other operating expense:











Salaries and employee benefits


17,387



21,254



17,459



17,850



16,937


Net occupancy


3,414



3,606



3,588



3,557



3,314


Equipment


842



967



852



769



811


Amortization of core deposit premium


668



669



669



668



669


Communication expense


900



868



948



919



959


Legal and professional services


1,792



1,821



1,699



1,723



1,613


Computer software expense


2,252



2,332



2,217



2,222



2,704


Advertising expense


392



562



772



433



634


Foreclosed asset expense


36



16



72



49



15


Other (refer to Table 5)


3,777



5,377



3,989



4,270



3,710


   Total other operating expense


31,460



37,472



32,265



32,460



31,366


   Income before income taxes


19,889



18,646



17,858



18,468



17,248


Income tax expense


6,810



6,438



6,392



6,331



6,067


   Net income


$

13,079



$

12,208



$

11,466



$

12,137



$

11,181


Per common share data:











Basic earnings per share


$

0.43



$

0.40



$

0.37



$

0.39



$

0.36


Diluted earnings per share


0.42



0.39



0.37



0.39



0.35


Cash dividends declared


0.16



0.16



0.16



0.14



0.14


Basic weighted average shares outstanding


30,714,895



30,770,528



30,943,756



31,060,593



31,263,433


Diluted weighted average shares outstanding


31,001,238



31,001,246



31,142,128



31,262,525



31,506,307




(1) Loan servicing fees, amortization of mortgage servicing rights, net gain on sale of residential mortgage loans, and unrealized gain (loss) on interest rate locks have been reclassified into mortgage banking income in the consolidated statements of income. Prior period amounts in the consolidated statements of income have been reclassified to conform to the current period presentation.

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Other Operating Income and Other Operating Expense - Detail

(Unaudited)

TABLE 5


The following table sets forth the components of mortgage banking income for the periods indicated:




Three Months Ended



Mar 31,


Dec 31,


Sep 30,


Jun 30,


Mar 31,

(Dollars in thousands)


2017


2016


2016


2016


2016

Mortgage banking income:











Loan servicing fees


$

1,358



$

1,340



$

1,357



$

1,362



$

1,362


Amortization of mortgage servicing rights


(520)



(781)



(1,021)



(1,755)



(1,509)


Net gains on sales of residential mortgage loans


1,312



2,108



2,212



1,845



1,466


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


(207)



178



13



(29)



(79)


   Total mortgage banking income


$

1,943



$

2,845



$

2,561



$

1,423



$

1,240



The following table sets forth the components of other operating income - other for the periods indicated:




Three Months Ended



Mar 31,


Dec 31,


Sep 30,


Jun 30,


Mar 31,

(Dollars in thousands)


2017


2016


2016


2016


2016

Other operating income - other:











Income recovered on nonaccrual loans previously charged-off


$

561



$

444



$

423



$

301



$

157


Other recoveries


37



19



24



249



21


Commissions on sale of checks


87



84



84



86



86


Other


161



252



144



169



364


   Total other operating income - other


$

846



$

799



$

675



$

805



$

628



The following table sets forth the components of other operating expense - other for the periods indicated:




Three Months Ended



Mar 31,


Dec 31,


Sep 30,


Jun 30,


Mar 31,

(Dollars in thousands)


2017


2016


2016


2016


2016

Other operating expense - other:











Charitable contributions


$

151



$

102



$

156



$

184



$

218


FDIC insurance assessment


424



420



430



563



639


Miscellaneous loan expenses


261



271



358



306



254


ATM and debit card expenses


450



444



451



448



428


Amortization of investments in low-income housing tax credit partnerships


233



271



259



258



257


Armored car expenses


258



219



258



201



201


Entertainment and promotions


158



449



198



223



231


Stationery and supplies


178



221



242



172



267


Directors' fees and expenses


207



208



215



199



205


Provision (credit) for residential mortgage loan repurchase losses








(36)



(351)


Increase (decrease) to the reserve for unfunded commitments


70



40



37



20



44


Branch consolidation and relocation costs




737








Other


1,387



1,995



1,385



1,732



1,317


   Total other operating expense - other


$

3,777



$

5,377



$

3,989



$

4,270



$

3,710


 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

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

(Unaudited)

TABLE 6




Three Months Ended


Three Months Ended


Three Months Ended



March 31, 2017


December 31, 2016


March 31, 2016



Average


Average




Average


Average




Average


Average



(Dollars in thousands)


Balance


Yield/Rate


Interest


Balance


Yield/Rate


Interest


Balance


Yield/Rate


Interest

ASSETS

Interest-earning assets:



















Interest-bearing deposits in other banks


$

39,910



0.75

%


$

74



$

15,458



0.57

%


$

22



$

13,990



0.49

%


$

17


Investment securities, excluding valuation allowance:



















   Taxable


1,329,915



2.45



8,147



1,293,291



2.23



7,215



1,331,717



2.52



8,406


   Tax-exempt


171,139



3.52



1,506



172,081



3.54



1,522



174,044



3.52



1,532


   Total investment securities


1,501,054



2.57



9,653



1,465,372



2.39



8,737



1,505,761



2.64



9,938


Loans and leases, incl. loans held for sale


3,547,718



3.98



34,957



3,489,757



3.88



33,973



3,258,872



3.92



31,793


Federal Home Loan Bank stock


6,773



3.31



56



11,179



2.02



56



7,633



1.92



37


   Total interest-earning assets


5,095,455



3.54



44,740



4,981,766



3.43



42,788



4,786,256



3.50



41,785


Noninterest-earning assets


327,074







354,143







362,488






   Total assets


$

5,422,529







$

5,335,909







$

5,148,744

























LIABILITIES AND EQUITY

Interest-bearing liabilities:



















Interest-bearing demand deposits


$

879,428



0.06

%


$

140



$

854,946



0.06

%


$

129



$

827,502



0.05

%


$

111


Savings and money market deposits


1,419,420



0.07



257



1,396,615



0.07



257



1,427,733



0.07



263


Time deposits under $100,000


193,638



0.38



180



198,145



0.38



188



211,622



0.37



197


Time deposits $100,000 and over


1,026,181



0.61



1,537



901,102



0.44



987



888,683



0.32



701


   Total interest-bearing deposits


3,518,667



0.24



2,114



3,350,808



0.19



1,561



3,355,540



0.15



1,272


Short-term borrowings


14,777



0.84



31



125,174



0.61



191



44,423



0.45



50


Long-term debt


92,785



3.55



813



92,785



3.43



799



92,785



3.10



716


   Total interest-bearing liabilities


3,626,229



0.33



2,958



3,568,767



0.28



2,551



3,492,748



0.23



2,038


Noninterest-bearing deposits


1,244,207







1,207,781







1,112,530






Other liabilities


41,264







43,268







38,111






   Total liabilities


4,911,700







4,819,816







4,643,389






Shareholders' equity


510,804







516,067







505,330






Non-controlling interest


25







26







25






   Total equity


510,829







516,093







505,355






   Total liabilities and equity


$

5,422,529







$

5,335,909







$

5,148,744

























Net interest income






$

41,782







$

40,237







$

39,747





















Interest rate spread




3.21

%






3.15

%






3.27

%






















Net interest margin




3.30

%






3.22

%






3.33

%



 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Loans and Leases by Geographic Distribution

(Unaudited)

TABLE 7




March 31,


December 31,


September 30,


June 30,


March 31,

(Dollars in thousands)


2017


2016


2016


2016


2016

HAWAII:











Commercial, financial and agricultural


$

395,915



$

373,006



$

367,527



$

360,102



$

358,432


Real estate:











   Construction


89,970



97,873



105,234



95,355



98,203


   Residential mortgage


1,237,150



1,217,234



1,160,741



1,167,428



1,147,446


   Home equity


370,856



361,209



351,256



334,347



311,756


   Commercial mortgage


776,098



767,586



742,584



716,452



646,013


Consumer:











   Automobiles


137,252



131,037



125,556



116,809



112,106


   Other consumer


162,987



177,122



163,703



161,065



155,749


Leases


598



677



756



843



936


Total loans and leases


3,170,826



3,125,744



3,017,357



2,952,401



2,830,641


Allowance for loan and lease losses


(49,146)



(49,350)



(50,948)



(52,375)



(52,068)


Net loans and leases


$

3,121,680



$

3,076,394



$

2,966,409



$

2,900,026



$

2,778,573













U.S. MAINLAND:











Commercial, financial and agricultural


$

107,133



$

137,434



$

140,457



$

143,965



$

176,659


Real estate:











   Construction


4,137



3,665



2,994



3,073



3,151


   Residential mortgage











   Home equity











   Commercial mortgage


117,690



117,853



120,133



126,132



127,023


Consumer:











   Automobiles


96,663



81,889



91,970



103,098



95,124


   Other consumer


49,269



58,305



66,743



75,278



76,370


Leases











Total loans and leases


374,892



399,146



422,297



451,546



478,327


Allowance for loan and lease losses


(6,223)



(7,281)



(8,436)



(8,389)



(10,081)


Net loans and leases


$

368,669



$

391,865



$

413,861



$

443,157



$

468,246













TOTAL:











Commercial, financial and agricultural


$

503,048



$

510,440



$

507,984



$

504,067



$

535,091


Real estate:











   Construction


94,107



101,538



108,228



98,428



101,354


   Residential mortgage


1,237,150



1,217,234



1,160,741



1,167,428



1,147,446


   Home equity


370,856



361,209



351,256



334,347



311,756


   Commercial mortgage


893,788



885,439



862,717



842,584



773,036


Consumer:











   Automobiles


233,915



212,926



217,526



219,907



207,230


   Other consumer


212,256



235,427



230,446



236,343



232,119


Leases


598



677



756



843



936


Total loans and leases


3,545,718



3,524,890



3,439,654



3,403,947



3,308,968


Allowance for loan and lease losses


(55,369)



(56,631)



(59,384)



(60,764)



(62,149)


Net loans and leases


$

3,490,349



$

3,468,259



$

3,380,270



$

3,343,183



$

3,246,819


 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Deposits

(Unaudited)

TABLE 8




March 31,


December 31,


September 30,


June 30,


March 31,

(Dollars in thousands)


2017


2016


2016


2016


2016

Noninterest-bearing demand


$

1,290,632



$

1,265,246



$

1,194,557



$

1,152,666



$

1,140,741


Interest-bearing demand


898,306



862,991



849,128



846,589



849,880


Savings and money market


1,430,399



1,390,600



1,379,484



1,371,163



1,465,524


Time deposits less than $100,000


191,611



194,730



198,055



202,733



207,757


Core deposits


3,810,948



3,713,567



3,621,224



3,573,151



3,663,902













Government time deposits


720,333



701,417



708,034



645,134



644,877


Other time deposits $100,000 and over


246,163



193,217



189,320



186,857



187,823


Total time deposits $100,000 and over


966,496



894,634



897,354



831,991



832,700


   Total deposits


$

4,777,444



$

4,608,201



$

4,518,578



$

4,405,142



$

4,496,602


 

CENTRAL PACIFIC FINANCIAL CORP AND SUBSIDIARIES

Nonperforming Assets, Past Due and Restructured Loans

(Unaudited)

TABLE 9




March 31,


December 31,


September 30,


June 30,


March 31,

(Dollars in thousands)


2017


2016


2016


2016


2016

Nonaccrual loans (including loans held for sale):











Commercial, financial and agricultural


$

1,030



$

1,877



$

2,005



$

2,132



$

2,244


Real estate:











   Residential mortgage


4,621



5,322



5,424



8,059



5,227


   Home equity


1,490



333



479



611



300


   Commercial mortgage


842



864



2,967



3,073



6,913


   Total nonaccrual loans


7,983



8,396



10,875



13,875



14,684













Other real estate owned ("OREO"):











Real estate:











   Residential mortgage


851



791



791



1,032



1,260


   Total OREO


851



791



791



1,032



1,260


   Total nonperforming assets ("NPAs")


8,834



9,187



11,666



14,907



15,944













Loans delinquent for 90 days or more:











Real estate:











   Residential mortgage






200






   Home equity




1,120





135



656


Consumer:











   Automobiles


133



208



131



78



125


   Other consumer


107



63



106



56




   Total loans delinquent for 90 days or more


240



1,391



437



269



781













Restructured loans still accruing interest:











Commercial, financial and agricultural


306










Real estate:











   Construction




21



51



745



776


   Residential mortgage


13,292



14,292



15,818



15,729



16,197


   Commercial mortgage


1,777



1,879



1,979



3,020



3,128


   Total restructured loans still accruing interest


15,375



16,192



17,848



19,494



20,101


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


$

24,449



$

26,770



$

29,951



$

34,670



$

36,826













Total nonaccrual loans as a percentage of loans and leases


0.23

%


0.24

%


0.32

%


0.41

%


0.44

%

Total NPAs as a percentage of loans and leases and OREO


0.25

%


0.26

%


0.34

%


0.44

%


0.48

%

Total NPAs and loans delinquent for 90 days or more as a percentage of loans and leases and OREO


0.26

%


0.30

%


0.35

%


0.45

%


0.51

%

Total NPAs, loans delinquent for 90 days or more, and restructured loans still accruing interest as a percentage of loans and leases and OREO


0.69

%


0.76

%


0.87

%


1.02

%


1.11

%












Quarter-to-quarter changes in NPAs:











Balance at beginning of quarter


$

9,187



$

11,666



$

14,907



$

15,944



$

16,230


Additions


1,881



39



650



4,334



1,303


Reductions:











Payments


(447)



(2,400)



(2,309)



(927)



(754)


Return to accrual status


(1,787)



(118)



(578)



(3,717)



(133)


Sales of NPAs






(1,032)



(865)



(702)


Charge-offs/valuation adjustments






28



138




Total reductions


(2,234)



(2,518)



(3,891)



(5,371)



(1,589)


Balance at end of quarter


$

8,834



$

9,187



$

11,666



$

14,907



$

15,944


 

CENTRAL PACIFIC FINANCIAL CORP AND SUBSIDIARIES

Allowance for Loan and Lease Losses

(Unaudited)

TABLE 10




Three Months Ended



Mar 31,


Dec 31,


Sep 30,


Jun 30,


Mar 31,

(Dollars in thousands)


2017


2016


2016


2016


2016

Allowance for loan and lease losses:











Balance at beginning of period


$

56,631



$

59,384



$

60,764



$

62,149



$

63,314













Provision (credit) for loan and lease losses


(80)



(2,645)



(743)



(1,382)



(747)













Charge-offs:











Commercial, financial and agricultural


500



510



465



272



352


Real estate:











   Commercial mortgage




209








Consumer:











   Automobiles


520



381



409



392



381


   Other consumer


977



1,077



940



743



731


   Total charge-offs


1,997



2,177



1,814



1,407



1,464













Recoveries:











Commercial, financial and agricultural


275



490



555



720



349


Real estate:











   Construction


21



24



91



9



9


   Residential mortgage


96



315



173



173



34


   Home equity


2



4



4



4



3


   Commercial mortgage


11



869



128



14



13


Consumer:











   Automobiles


194



214



115



365



194


   Other consumer


216



153



111



119



444


      Total recoveries


815



2,069



1,177



1,404



1,046


Net charge-offs (recoveries)


1,182



108



637



3



418


Balance at end of period


$

55,369



$

56,631



$

59,384



$

60,764



$

62,149













Average loans and leases, net of unearned


$

3,547,718



$

3,489,757



$

3,415,505



$

3,377,362



$

3,258,872













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


0.13

%


0.01

%


0.07

%


%


0.05

%












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


1.56

%


1.61

%


1.73

%


1.79

%


1.88

%

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/central-pacific-financial-corp-reports-131-million-first-quarter-earnings-and-increases-quarterly-cash-dividend-300445795.html

SOURCE Central Pacific Financial Corp.

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