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Press Release

Central Pacific Financial Corp. Reports Results For Second Quarter 2020

- Net income of $9.9 million, or fully diluted EPS of $0.35 for the second quarter, compared to net income of $8.3 million, or fully diluted EPS of $0.29 for the first quarter.

- Strong pre-tax pre-provision earnings of $23.5 million for the second quarter, compared to $19.4 million in the year-ago quarter and $20.5 million in the first quarter.

- Supported over 7,200 small businesses with SBA Paycheck Protection Program ("PPP") loan originations totaling $556.9 million, which largely contributed to the increase in total loans of $491.4 million, or 10.9% sequentially, and $756.3 million, or 17.8% year-over-year.

- Core deposits increased by $719.3 million, or 16.7% sequentially, and $925.2 million, or 22.6% year-over-year. The deposit of PPP funds into both new and existing deposit accounts largely contributed to the increase in core deposits.

- Cost of average total deposits of 0.20% in the second quarter declined by 16 basis points from the first quarter.

- We continue to execute on our RISE2020 initiative while navigating the challenging current landscape.

- Board of Directors declared a quarterly cash dividend of $0.23 per share.

Company Release - 7/29/2020 6:30 AM ET

HONOLULU, July 29, 2020 /PRNewswire/ -- Central Pacific Financial Corp. (NYSE: CPF) (the "Company"), parent company of Central Pacific Bank, today reported net income in the second quarter of 2020 of $9.9 million, or fully diluted earnings per share ("EPS") of $0.35, compared to net income in the second quarter of 2019 of $13.5 million, or EPS of $0.47, and net income in the first quarter of 2020 of $8.3 million, or EPS of $0.29. Our operating results continue to be impacted by a higher provision for credit loss expense due to deteriorating economic conditions brought on by the current COVID-19 pandemic. During the second quarter of 2020, the Company recorded a provision for credit loss expense of $10.6 million, compared to $1.4 million in the second quarter of 2019 and $9.3 million in the first quarter of 2020.

Central Pacific Financial Corp. Logo (PRNewsFoto/Central Pacific Financial Corp.)

"Central Pacific is strong and well-positioned to manage through the challenging operating environment. Our credit quality, capital and liquidity are solid, which enables us to support our customers and the community during this time of great need," said Paul Yonamine, Chairman and Chief Executive Officer.

"Through the Paycheck Protection Program, we've been able to help save thousands of local jobs in our community. We are proud of our employees that stepped up during this tremendous effort and continue to work diligently to help our customers navigate the current challenges," said Catherine Ngo, President.

On July 28, 2020, the Company's Board of Directors declared a quarterly cash dividend of $0.23 per share on its outstanding common shares. The dividend will be payable on September 15, 2020 to shareholders of record at the close of business on August 31, 2020.

Earnings Highlights
Net interest income for the second quarter of 2020 was $49.3 million, compared to $45.4 million in the year-ago quarter and $47.8 million in the previous quarter. Net interest margin for the second quarter of 2020 was 3.26%, compared to 3.33% in the year-ago quarter and 3.43% in the previous quarter. The increases in net interest income from the year-ago and sequential quarters were due to growth in the loan portfolio, primarily attributable to loans originated under the Paycheck Protection Program ("PPP"), combined with lower rates paid on interest-bearing liabilities, partially offset by lower yields earned on the loan and investment securities portfolios. Net interest income for the second quarter of 2020 included $2.5 million in PPP net interest income and net loan fees, which are accreted into income over the term of the loans and accelerated when the loans are forgiven or paid-off. The declines in net interest margin, yields earned on the loans and investment securities portfolios and rates paid on interest-bearing liabilities from the year-ago and sequential quarters is primarily attributable to the five rate cuts by the Federal Reserve from August 2019 through March 2020. During the quarter, the Company had an average PPP loan balance of $379.9 million, which earned approximately 2.61% in net interest income and net loan fees.

Other operating income for the second quarter of 2020 totaled $10.7 million, compared to $10.1 million in the year-ago quarter and $8.9 million in the previous quarter. The increase in other operating income from the year-ago quarter was primarily due to higher mortgage banking income of $1.9 million and higher income from bank-owned life insurance of $0.5 million. These increases were partially offset by lower other service charges and fees of $1.0 million and lower service charges on deposit accounts of $0.9 million as certain service charges were suspended during the quarter to support our customers through the pandemic. In addition, there was less transactional activity due to the pandemic. The increase in other operating income from the previous quarter was primarily due to higher mortgage banking income of $3.2 million, combined with higher income from bank-owned life insurance of $1.4 million, partially offset by lower other service charges and fees of $2.0 million and lower service charges on deposit accounts of $0.9 million. The lower other charges and fees was primarily due to $1.3 million in income related to an interest rate swap recognized in the previous quarter, combined with the aforementioned suspension of service charges and lower transaction activity. The higher mortgage banking income compared to the year-ago and sequential quarters was primarily due to higher gains on sales of residential mortgage loans of $3.6 million and $3.8 million, respectively, partially offset by higher amortization of mortgage servicing rights of $1.1 million and $0.1 million, respectively, and lower net servicing fees of $0.6 million and $0.2 million, respectively. The higher amortization of mortgage servicing rights was primarily attributable to the recent decline in market interest rates. The higher income from bank-owned life insurance compared to the year-ago and sequential quarters was primarily attributable to current quarter gains in the equity markets.

Other operating expense for the second quarter of 2020 totaled $36.4 million, which increased from $36.1 million in the year-ago quarter and increased from $36.2 million in the previous quarter. The increase from the year-ago quarter was primarily due to higher legal and professional services of $0.5 million and higher computer software expense of $0.5 million, partially offset by lower entertainment and promotions of $0.9 million (included in other). The lower entertainment and promotions was primarily due to expenses related to a core deposit gathering campaign in the year-ago quarter. The increase from the previous quarter was primarily due to higher salaries and employee benefits of $0.3 million and higher legal and professional services of $0.2 million, partially offset by lower advertising expense of $0.2 million.

The efficiency ratio for the second quarter of 2020 was 60.76%, compared to 65.09% in the year-ago quarter and 63.90% in the previous quarter.

In the second quarter of 2020, the Company recorded income tax expense of $3.0 million, compared to $4.4 million in the year-ago quarter and $2.8 million in the previous quarter. The effective tax rate for the second quarter of 2020 was 23.0%, compared to 24.6% in the year-ago quarter and 25.3% in the previous quarter. The decrease in the effective tax rate was primarily due to higher tax-exempt bank-owned life insurance income in the current quarter, compared to the year-ago and sequential quarters.

Balance Sheet Highlights
Total assets at June 30, 2020 of $6.63 billion increased by $713.0 million, or 12.0% from June 30, 2019, and increased by $524.4 million, or 8.6% from March 31, 2020.

Total loans at June 30, 2020 of $5.00 billion increased by $756.3 million, or 17.8%, and $491.4 million, or 10.9% from June 30, 2019 and March 31, 2020, respectively. The year-over-year increase in total loans was driven by the origination of PPP loans totaling $526.4 million, net of deferred fees and costs, combined with broad-based growth in almost all other loan categories. The sequential quarter increase in total loans was primarily due to PPP loans and an increase in residential mortgage loans of $25.0 million, partially offset by decreases in other commercial and consumer loans.

Total deposits at June 30, 2020 of $5.79 billion increased by $817.8 million, or 16.4% from June 30, 2019, and increased by $658.6 million, or 12.8% from March 31, 2020.  The sequential quarter increase in total deposits was primarily attributable to the increases in noninterest-bearing demand deposits of $420.5 million, savings and money market deposits of $252.5 million and interest-bearing demand deposits of $49.0 million. This increase was offset by a decrease in total time deposits of $63.3 million. Core deposits, which include demand deposits, savings and money market deposits, and time deposits less than $100,000, totaled $5.02 billion at June 30, 2020.  This represents an increase of $925.2 million, or 22.6% from June 30, 2019, and $719.3 million, or 16.7% from March 31, 2020. The deposit of PPP funds into both new and existing deposit accounts largely contributed to the increase in core deposits. The Company's loan-to-deposit ratio was 86.4% at June 30, 2020, compared to 85.3% at June 30, 2019 and 87.9% at March 31, 2020.

Asset Quality
Nonperforming assets at June 30, 2020 totaled $4.7 million, or 0.07% of total assets, compared to $1.3 million, or 0.02% of total assets at June 30, 2019, and $3.6 million, or 0.06% of total assets at March 31, 2020. During the second quarter of 2020, the Company had $1.8 million in additions to nonperforming loans.

Loans delinquent for 90 days or more still accruing interest totaled $1.2 million at June 30, 2020, compared to $0.3 million and $1.6 million at June 30, 2019 and March 31, 2020, respectively.

Loan payment forbearances or deferrals were made for borrowers impacted by the COVID-19 pandemic with loan balances totaling $567.9 million or 12.7% of the total loan portfolio, excluding PPP loans, as of June 30, 2020.

Net charge-offs in the second quarter of 2020 totaled $2.9 million, compared to net charge-offs of $0.4 million in the year-ago quarter, and net charge-offs of $1.2 million in the previous quarter.

In the second quarter of 2020, the Company recorded a provision for credit losses on loans of $10.6 million, compared to a provision of $1.4 million in the year-ago quarter and a provision of $9.3 million in the previous quarter. In addition, the Company recorded a provision for off-balance sheet credit exposures (included in other operating expense) of $0.6 million, compared to a provision of $0.5 million in the year-ago quarter and a provision of $1.8 million in the previous quarter. The increase in the provision for credit losses from the year-ago and sequential quarters was primarily due to negative economic conditions brought on by the COVID-19 pandemic. The allowance for credit losses, as a percentage of total loans at June 30, 2020 was 1.35%, compared to 1.14% at June 30, 2019 and 1.32% at March 31, 2020. Excluding the PPP loans, the allowance for credit losses, as a percentage of total loans at June 30, 2020 was 1.50%.

Capital
Total shareholders' equity was $544.3 million at June 30, 2020, compared to $515.7 million and $533.8 million at June 30, 2019 and March 31, 2020, 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 June 30, 2020, the Company's leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ratios were 8.9%, 12.5%, 13.6%, and 11.4%, respectively, compared to 9.5%, 12.3%, 13.4%, and 11.3%, respectively, at March 31, 2020.

Conference Call
The Company's management will host a conference call today at 1:00 p.m. Eastern Time (7:00 a.m. Hawaii Time) to discuss the quarterly results. Individuals are encouraged to listen to the live webcast of the presentation by visiting the investor relations page of the Company's website at http://ir.centralpacificbank.com. Alternatively, investors may participate in the live call by dialing 1-877-505-7644. A playback of the call will be available through August 29, 2020 by dialing 1-877-344-7529 (passcode: 10146483) 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.centralpacificbank.com.

About Central Pacific Financial Corp.
Central Pacific Financial Corp. is a Hawaii-based bank holding company with approximately $6.6 billion in assets.  Central Pacific Bank, its primary subsidiary, operates 35 branches (nine of which are temporarily closed to protect the health and well-being of the Company's employees and customers from COVID-19) and 76 ATMs in the state of Hawaii, as of June 30, 2020.  For additional information, please visit the Company's website at http://www.cpb.bank.

Forward-Looking Statements
This document may contain forward-looking statements 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 RISE2020 initiative; 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 forward-looking statements but are not the exclusive means of identifying such statements.

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 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 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 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 successfully implement our RISE2020 initiative; the impact of local, national, and international economies and events (including natural disasters such as wildfires, volcanic eruptions, hurricanes, tsunamis, storms, earthquakes and pandemic virus and disease, 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 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; 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, 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 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 forward-looking statements, 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 forward-looking statements contained in this Form 8-K. Forward-looking statements speak only as of the date on which such statements are made. We undertake no obligation to update any forward-looking statements 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.

 

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Financial Highlights

(Unaudited)

TABLE 1




Three Months Ended


Six Months Ended

(Dollars in thousands,


June 30,


March 31,


December 31,


September 30,


June 30,


June 30,

except for per share amounts)


2020


2020


2019


2019


2019


2020


2019

CONDENSED INCOME
STATEMENT















Net interest income


$

49,259



$

47,830



$

47,934



$

45,649



$

45,378



$

97,089



$

90,491


Provision for credit losses [1]


10,640



9,329



2,098



1,532



1,404



19,969



2,687


Net interest income after
provision for credit losses [1]


38,619



38,501



45,836



44,117



43,974



77,120



87,804


Total other operating income


10,692



8,886



9,768



10,266



10,094



19,578



21,767


Total other operating expense


36,427



36,240



36,242



34,934



36,107



72,667



70,455


Income before taxes


12,884



11,147



19,362



19,449



17,961



24,031



39,116


Income tax expense


2,967



2,821



5,165



4,895



4,427



5,788



9,545


Net income


9,917



8,326



14,197



14,554



13,534



18,243



29,571


Basic earnings per common
share


$

0.35



$

0.30



$

0.50



$

0.51



$

0.47



$

0.65



$

1.03


Diluted earnings per common
share


0.35



0.29



0.50



0.51



0.47



0.65



1.03


Dividends declared per
common share


0.23



0.23



0.23



0.23



0.23



0.46



0.44

















PERFORMANCE RATIOS















Return on average assets (ROA)
[2]


0.61

%


0.55

%


0.95

%


0.99

%


0.92

%


0.58

%


1.01

%

Return on average shareholders'
equity (ROE) [2]


7.34



6.21



10.70



11.11



10.73



6.77



11.84


Average shareholders' equity to
average assets


8.36



8.93



8.87



8.87



8.62



8.64



8.57


Efficiency ratio [1] [3]


60.76



63.90



62.81



62.48



65.09



62.29



62.76


Net interest margin (NIM) [2]


3.26



3.43



3.43



3.30



3.33



3.34



3.33


Dividend payout ratio [4]


65.71



79.31



46.00



45.10



48.94



70.77



42.72

















SELECTED AVERAGE BALANCES















Average loans, including loans
held for sale


$

4,902,905



$

4,462,347



$

4,412,247



$

4,293,455



$

4,171,558



$

4,682,626



$

4,127,917


Average interest-earning assets


6,073,361



5,621,043



5,595,142



5,527,532



5,485,977



5,847,202



5,475,237


Average assets


6,468,129



6,007,237



5,978,797



5,907,207



5,856,465



6,237,592



5,833,326


Average deposits


5,614,595



5,121,696



4,998,897



4,987,414



4,977,781



5,368,056



4,978,124


Average interest-bearing liabilities


4,082,699



3,917,332



3,947,924



3,920,304



3,897,619



4,000,016



3,859,784


Average shareholders' equity


540,802



536,721



530,464



524,083



504,749



538,762



499,720


 

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Financial Highlights

(Unaudited)

TABLE 1 (CONTINUED)




June 30,


March 31,


December 31,


September 30,


June 30,

(dollars in thousands)


2020


2020


2019


2019


2019

REGULATORY CAPITAL











Central Pacific Financial Corp











Leverage capital


$

571,976



$

567,947



$

568,529



$

561,478



$

556,403


Tier 1 risk-based capital


571,976



567,947



568,529



561,478



556,403


Total risk-based capital


622,393



618,504



617,772



611,076



606,567


Common equity tier 1 capital


521,976



517,947



518,529



511,478



506,403


Central Pacific Bank











Leverage capital


559,461



556,895



556,077



550,913



544,480


Tier 1 risk-based capital


559,461



556,895



556,077



550,913



544,480


Total risk-based capital


609,811



607,402



605,320



600,511



594,644


Common equity tier 1 capital


559,461



556,895



556,077



550,913



544,480













REGULATORY CAPITAL RATIOS











Central Pacific Financial Corp











Leverage capital ratio


8.9

%


9.5

%


9.5

%


9.5

%


9.5

%

Tier 1 risk-based capital ratio


12.5



12.3



12.6



12.6



12.7


Total risk-based capital ratio


13.6



13.4



13.6



13.7



13.9


Common equity tier 1 capital ratio


11.4



11.3



11.5



11.5



11.6


Central Pacific Bank











Leverage capital ratio


8.7



9.3



9.3



9.4



9.3


Tier 1 risk-based capital ratio


12.2



12.1



12.3



12.4



12.5


Total risk-based capital ratio


13.3



13.2



13.4



13.5



13.6


Common equity tier 1 capital ratio


12.2



12.1



12.3



12.4



12.5




June 30,


March 31,


December 31,


September 30,


June 30,

(dollars in thousands, except for per share amounts)


2020


2020


2019


2019


2019

BALANCE SHEET











Total loans, net of deferred fees and costs


$

5,003,438



$

4,511,998



$

4,449,540



$

4,367,862



$

4,247,113


Total assets


6,632,972



6,108,548



6,012,672



5,976,716



5,920,006


Total deposits


5,794,685



5,136,069



5,120,023



5,037,659



4,976,849


Long-term debt


167,491



101,547



101,547



101,547



101,547


Total shareholders' equity


544,271



533,781



528,520



525,227



515,695


Total shareholders' equity to total assets


8.21

%


8.74

%


8.79

%


8.79

%


8.71

%












ASSET QUALITY











Allowance for credit losses ("ACL") [1]


$

67,339



$

59,645



$

47,971



$

48,167



$

48,267


Non-performing assets


4,741



3,647



1,719



1,360



1,258


ACL to total loans [1]


1.35

%


1.32

%


1.08

%


1.10

%


1.14

%

ACL to total loans, excluding PPP loans [1]


1.50

%


1.32

%


1.08

%


1.10

%


1.14

%

ACL to non-performing assets [1]


1,420.35

%


1,635.45

%


2,790.63

%


3,541.69

%


3,836.80

%












PER SHARE OF COMMON STOCK OUTSTANDING











Book value per common share


$

19.33



$

18.99



$

18.68



$

18.47



$

18.05
























[1] The Company adopted ASU 2016-13, "Financial Instruments-Credit Losses" ("CECL"), effective January 1, 2020 using the modified retrospective approach. Results for the
reporting periods beginning after January 1, 2020 are presented under CECL, while prior period amounts continue to be reported under previous GAAP.

[2] ROA, ROE and ROTE are annualized based on a 30/360 day convention. Annualized net interest income and expense in the NIM calculation are based on the day count interest
payment conventions at the interest-earning asset or interest-bearing liability level (i.e. 30/360, actual/actual).

[3] Efficiency ratio is defined as total operating expense divided by total revenue (net interest income and total other operating income).

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



 

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited) 

TABLE 2




June 30,


March 31,


December 31,


September 30,


June 30,

(Dollars in thousands, except share data)


2020


2020


2019


2019


2019

ASSETS











Cash and due from financial institutions


$

102,132



$

81,972



$

78,418



$

87,395



$

83,534


Interest-bearing deposits in other financial institutions


41,201



11,021



24,554



7,803



15,173


Investment securities:











Available-for-sale debt securities, at fair value


1,168,594



1,184,023



1,126,983



1,186,875



1,254,743


Equity securities, at fair value


1,209



1,002



1,127



1,058



1,034


Total investment securities


1,169,803



1,185,025



1,128,110



1,187,933



1,255,777


Loans held for sale


10,443



3,910



9,083



7,016



6,848


Loans, net of deferred fees and costs


5,003,438



4,511,998



4,449,540



4,367,862



4,247,113


Less allowance for credit losses [1]


67,339



59,645



47,971



48,167



48,267


Loans, net of allowance for credit losses


4,936,099



4,452,353



4,401,569



4,319,695



4,198,846


Premises and equipment, net


55,032



50,447



46,343



44,095



43,600


Accrued interest receivable


19,590



16,851



16,500



16,220



17,260


Investment in unconsolidated subsidiaries


16,428



16,721



17,115



17,001



17,247


Other real estate owned




100



164



466



276


Mortgage servicing rights


12,771



13,345



14,718



15,058



15,266


Bank-owned life insurance


161,758



159,637



159,656



158,939



158,294


Federal Home Loan Bank ("FHLB") stock


9,229



18,109



14,983



17,183



17,824


Right of use lease asset


50,039



51,198



52,348



52,588



53,678


Other assets


48,447



47,859



49,111



45,324



36,383


Total assets


$

6,632,972



$

6,108,548



$

6,012,672



$

5,976,716



$

5,920,006


LIABILITIES AND SHAREHOLDERS' EQUITY











Deposits:











Noninterest-bearing demand


$

1,851,012



$

1,430,540



$

1,450,532



$

1,399,200



$

1,351,190


Interest-bearing demand


1,067,483



1,018,508



1,043,010



998,037



1,002,706


Savings and money market


1,945,744



1,693,280



1,600,028



1,593,738



1,573,805


Time


930,446



993,741



1,026,453



1,046,684



1,049,148


Total deposits


5,794,685



5,136,069



5,120,023



5,037,659



4,976,849


FHLB advances and other short-term borrowings




222,000



150,000



205,000



221,000


Long-term debt


167,491



101,547



101,547



101,547



101,547


Lease liability


50,440



51,541



52,632



52,807



53,829


Other liabilities


76,050



63,561



59,950



54,476



51,086


Total liabilities


6,088,666



5,574,718



5,484,152



5,451,489



5,404,311


Shareholders' equity:











Preferred stock, no par value, authorized 1,000,000 shares;
issued and outstanding:  none at June 30, 2020, March 31,
2020, December 31, 2019, September 30, 2019, and June 30,
2019











Common stock, no par value, authorized 185,000,000 shares;
issued and outstanding:  28,154,159 at June 30, 2020,
 28,115,353 at March 31, 2020, 28,289,257 at December 31,
2019, 28,441,341 at September 30, 2019, and 28,567,777 at
June 30, 2019


442,699



442,853



447,602



452,278



456,293


Additional paid-in capital


93,007



92,284



91,611



90,604



89,724


Accumulated deficit [1]


(16,986)



(20,428)



(19,102)



(26,782)



(34,780)


Accumulated other comprehensive income (loss)


25,551



19,072



8,409



9,127



4,458


Total shareholders' equity


544,271



533,781



528,520



525,227



515,695


Non-controlling interest


35



49








Total equity


544,306



533,830



528,520



525,227



515,695


Total liabilities and shareholders' equity


$

6,632,972



$

6,108,548



$

6,012,672



$

5,976,716



$

5,920,006













[1] The Company adopted ASU 2016-13, "Financial Instruments-Credit Losses" ("CECL"), effective January 1, 2020 using the modified retrospective approach.
Results for the reporting periods beginning after January 1, 2020 are presented under CECL, while prior period amounts continue to be reported under previous
GAAP.













 

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited) 

TABLE 3




Three Months Ended


Six Months Ended



June 30,


March 31,


December 31,


September 30,


June 30,


June 30,

(Dollars in thousands, except per share data)


2020


2020


2019


2019


2019


2020


2019

Interest income:















Interest and fees on loans


$

45,915



$

46,204



$

47,488



$

45,861



$

45,540



$

92,119



$

89,308


Interest and dividends on investment securities:















Taxable investment securities


6,310



6,757



6,486



7,178



7,530



13,067



15,790


Tax-exempt investment securities


599



668



656



708



814



1,267



1,680


Dividend income on investment securities


17



17



17



14



14



34



32


Interest on deposits in other financial institutions


3



36



54



33



46



39



114


Dividend income on FHLB stock


106



132



456



186



161



238



322


Total interest income


52,950



53,814



55,157



53,980



54,105



106,764



107,246


Interest expense:















Interest on deposits:















Demand


114



176



202



207



199



290



391


Savings and money market


567



1,118



1,253



1,549



1,507



1,685



2,298


Time


2,124



3,268



3,653



4,432



4,867



5,392



9,959


Interest on short-term borrowings


74



508



1,139



1,130



1,123



582



2,016


Interest on long-term debt


812



914



976



1,013



1,031



1,726



2,091


Total interest expense


3,691



5,984



7,223



8,331



8,727



9,675



16,755


Net interest income


49,259



47,830



47,934



45,649



45,378



97,089



90,491


Provision for credit losses


10,640



9,329



2,098



1,532



1,404



19,969



2,687


Net interest income after provision for credit
losses


38,619



38,501



45,836



44,117



43,974



77,120



87,804


Other operating income:















Mortgage banking income


3,566



337



1,410



1,994



1,708



3,903



3,281


Service charges on deposit accounts


1,149



2,050



2,159



2,125



2,041



3,199



4,122


Other service charges and fees


2,916



4,897



4,095



3,894



3,909



7,813



7,124


Income from fiduciary activities


1,270



1,297



1,175



1,126



1,129



2,567



2,094


Equity in earnings of unconsolidated subsidiaries


104



26



92



86



71



130



79


Net gain (loss) on sales of investment securities








36








Income from bank-owned life insurance


1,424



(19)



594



645



914



1,405



1,866


Net gain (loss) on sales of foreclosed assets


(6)





(162)



17





(6)




Other (refer to Table 4)


269



298



405



343



322



567



3,201


Total other operating income


10,692



8,886



9,768



10,266



10,094



19,578



21,767


Other operating expense:















Salaries and employee benefits


20,622



20,347



21,207



20,631



20,563



40,969



40,452


Net occupancy


3,645



3,672



3,619



3,697



3,525



7,317



6,983


Equipment


1,043



1,097



1,142



1,067



1,138



2,140



2,144


Communication expense


774



837



906



1,008



903



1,611



1,637


Legal and professional services


2,238



2,028



2,123



1,933



1,728



4,266



3,298


Computer software expense


3,035



2,943



2,942



2,713



2,560



5,978



5,157


Advertising expense


923



1,092



527



711



712



2,015



1,423


Foreclosed asset expense




67



28



15



49



67



208


Other (refer to Table 4)


4,147



4,157



3,748



3,159



4,929



8,304



9,153


Total other operating expense


36,427



36,240



36,242



34,934



36,107



72,667



70,455


Income before income taxes


12,884



11,147



19,362



19,449



17,961



24,031



39,116


Income tax expense


2,967



2,821



5,165



4,895



4,427



5,788



9,545


Net income


$

9,917



$

8,326



$

14,197



$

14,554



$

13,534



$

18,243



$

29,571


Per common share data:















Basic earnings per share


$

0.35



$

0.30



$

0.50



$

0.51



$

0.47



$

0.65



$

1.03


Diluted earnings per share


0.35



0.29



0.50



0.51



0.47



0.65



1.03


Cash dividends declared


0.23



0.23



0.23



0.23



0.23



0.46



0.44


Basic weighted average shares outstanding


28,040,802



28,126,400



28,259,294



28,424,898



28,546,564



28,083,602



28,651,852


Diluted weighted average shares outstanding


28,095,230



28,277,753



28,448,243



28,602,338



28,729,510



28,190,132



28,847,786

















Note: Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period

 

 


CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Other Operating Income and Other Operating Expense - Detail

 (Unaudited) 

TABLE 4


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




Three Months Ended


Six Months Ended



June 30,


March 31,


December 31,


September 30,


June 30,


June 30,

(Dollars in thousands)


2020


2020


2019


2019


2019


2020


2019

Other operating income - other:















Income recovered on nonaccrual loans previously charged-off


$

37



$

23



$

80



$

73



$

85



$

60



$

167


Other recoveries


26



40



36



42



26



66



52


Commissions on sale of checks


56



81



75



75



79



137



159


Gain on sale of MasterCard stock














2,555


Other


150



154



214



153



132



304



268


Total other operating income - other


$

269



$

298



$

405



$

343



$

322



$

567



$

3,201

















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








Three Months Ended


Six Months Ended



June 30,


March 31,


December 31,


September 30,


June 30,


June 30,

(Dollars in thousands)


2020


2020


2019


2019


2019


2020


2019

Other operating expense - other:















Charitable contributions


$

10



$

187



$

122



$

230



$

175



$

197



$

329


FDIC insurance assessment


475







5



362



475



863


Miscellaneous loan expenses


399



300



361



274



317



699



611


ATM and debit card expenses


584



634



672



660



620



1,218



1,270


Armored car expenses


229



294



186



220