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Central Pacific Financial Corp. Reports Earnings Of $15.8 Million For The Fourth Quarter And $59.5 Million For The 2018 Year

- Net income of $15.8 million, or fully diluted EPS of $0.54 for the fourth quarter, representing an increase of 268.3% and 285.7%, respectively, from the year-ago quarter.

- Net income of $59.5 million, or fully diluted EPS of $2.01 for the year, representing an increase of 44.4% and 50.0%, respectively, from last year.

- ROA of 1.10% and ROE of 12.90% for the fourth quarter. ROA of 1.05% and ROE of 12.22% for the year.

- Total loans increased by $100.3 million in the fourth quarter, or 2.5% sequentially and 8.2% year-over-year.

- Net interest margin increased by 8 basis points in the fourth quarter and 1 basis point from the year-ago quarter.

HONOLULU, Jan. 30, 2019 /PRNewswire/ -- Central Pacific Financial Corp. (CPF), (the "Company"), today reported net income in the fourth quarter of 2018 of $15.8 million, or diluted earnings per share ("EPS") of $0.54, compared to net income in the fourth quarter of 2017 of $4.3 million, or EPS of $0.14, and net income in the third quarter of 2018 of $15.2 million, or EPS of $0.52. Net income in the fourth quarter of 2017 included an estimated one-time, non-cash charge to income tax expense of $7.4 million, representing a $0.25 decrease in EPS, due to the revaluation of the Company's net deferred tax assets ("DTA") resulting from the reduction in the corporate Federal income tax rate in connection with the enactment of H.R.1, commonly referred to as the Tax Cuts and Jobs Act ("Tax Reform"). Net income for the year ended December 31, 2018 totaled $59.5 million, or diluted EPS of $2.01, compared to net income for the year ended December 31, 2017 of $41.2 million, or EPS of $1.34.

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

"We had a strong end to the year with significant loan growth and both ROA and ROE improvements. We plan to carry this momentum into 2019 as we drive forward our strategic initiatives to continue to enhance shareholder value." said Paul Yonamine, Chairman and Chief Executive Officer.  "Strong loan growth has been a consistent driver of our performance throughout the year while our asset quality remained strong. Our solid financial performance in 2018 is reflective of the excellent team effort and dedication from our employees." said Catherine Ngo, President.

In January 2019, the Company's Board of Directors declared a quarterly cash dividend of $0.21 per share on its outstanding common shares. The dividend will be payable on March 15, 2019 to shareholders of record at the close of business on February 28, 2019.

During the fourth quarter of 2018, the Company repurchased 305,867 shares of common stock, at a total cost of $8.1 million, or an average cost per share of $26.35. During the year ended December 31, 2018, the Company repurchased 1,155,157 shares of common stock, or approximately 3.8% of its common stock outstanding as of December 31, 2017. Total cost of the shares repurchased during the year ended December 31, 2018 was $32.8 million, or an average cost per share of $28.42. The Company's remaining repurchase authority under its common stock repurchase program at December 31, 2018 is $20.7 million. During the year ended December 31, 2018, the Company returned $57.0 million in capital to its shareholders through cash dividends and share repurchases.

Earnings Highlights
Net interest income for the fourth quarter of 2018 was $44.7 million, compared to $42.8 million in the year-ago quarter and $43.3 million in the previous quarter. Net interest margin for the fourth quarter of 2018 was 3.28%, compared to 3.27% in the year-ago quarter and 3.20% in the previous quarter. The increases in net interest income and net interest margin from the year-ago and sequential quarters were primarily due to growth in the loan portfolio, combined with increases in the yields earned on the loan and investment securities portfolios. In addition, the Company received $0.5 million in interest recoveries on nonaccrual loans during the current and year-ago quarters, compared to $0.2 million in the previous quarter. These increases were partially offset by higher deposit and borrowing costs from the year-ago period, primarily attributable to the recent increases in the federal funds rate. Rates paid on total interest-bearing deposits remained relatively flat from the previous quarter.

To improve net interest income and net interest margin, on December 17, 2018 and January 7, 2019, the Company redeemed in whole and at par, $20 million on each date (for an aggregate of $40 million) of floating rate trust preferred securities and the underlying floating rate junior subordinated debentures. The subordinated debentures were reported as long-term debt on the Company's balance sheet with a weighted average interest rate of 5.24%. After the redemptions, the Company has a total of $50 million of floating rate trust preferred securities and underlying floating rate junior subordinated debentures remaining, reported as long-term debt with a current weighted average interest rate of 5.01%.

Other operating income for the fourth quarter of 2018 totaled $9.4 million, compared to $9.0 million in the year-ago quarter and $10.8 million in the previous quarter. The increase from the year-ago quarter was primarily due to higher commissions and fees on investment services of $0.6 million (included in other service charges and fees) and lower amortization of mortgage servicing rights of  $0.3 million (included in mortgage banking income). These increases were partially offset by a loss on sale of investment securities of $0.3 million in the current quarter, combined with a gain on sale of investment securities of $0.2 million in the year ago quarter, and lower income from bank-owned life insurance of $0.4 million. The sequential quarter decrease was primarily due to lower income from bank-owned life insurance of $0.8 million, lower income recovered on nonaccrual loans previously charged-off of $0.3 million (included in other), and the aforementioned loss on sale of investment securities of $0.3 million recorded during the quarter. The lower income from bank-owned life insurance was primarily attributable to the decline in the stock market during the fourth quarter, combined with death benefit income of $0.4 million recorded in the previous quarter.

Other operating expense for the fourth quarter of 2018 totaled $33.6 million, which decreased from $34.4 million in the year-ago quarter and decreased from $34.0 million in the previous quarter. The decrease from the year-ago and sequential quarters were primarily due to lower amortization of core deposit premium of $0.7 million as the intangible asset was fully amortized as of last quarter-end, or September 30, 2018. In addition, the Company recorded a net credit to the reserves for residential mortgage repurchase losses and unfunded loan commitments totaling $0.6 million (included in other) in the current quarter, compared to a net increase to the reserves totaling $0.1 million and $0.3 million (included in other) in the year-ago and previous quarters, respectively.

The efficiency ratio for the fourth quarter of 2018 was 62.21%, compared to 66.32% in the year-ago quarter and 62.84% in the previous quarter. The improvements in the efficiency ratio from the year-ago and sequential quarters were primarily due to the aforementioned improvements in net interest income and other operating expense.

In the fourth quarter of 2018, the Company recorded income tax expense of $6.0 million, compared to $13.4 million in the year-ago quarter and $5.0 million in the previous quarter. The effective tax rate for the fourth quarter of 2018 was 27.6%, compared to 75.7% in the year-ago quarter and 24.7% in the previous quarter. As previously discussed, income tax expense and effective tax rate in the fourth quarter of 2017 was impacted by the enactment of Tax Reform.

Balance Sheet Highlights
Total assets at December 31, 2018 of $5.81 billion increased by $183.3 million, or 3.3% from December 31, 2017, and increased by $78.4 million, or 1.4% from September 30, 2018.

Total loans and leases at December 31, 2018 of $4.08 billion increased by $307.8 million, or 8.2% and $100.3 million, or 2.5% from December 31, 2017 and September 30, 2018, respectively. The increase in total loans and leases from December 31, 2017 was primarily attributable to strong organic growth in the Hawaii loan portfolios totaling $274.3 million, combined with a net increase in the U.S. mainland loan portfolios totaling $33.7 million. The increase in total loans and leases from the third quarter of 2018 was primarily due to strong organic growth in the Hawaii loan portfolios (excluding the Hawaii construction loan portfolio) totaling $88.3 million, combined with a net increase in the U.S. mainland loan portfolios totaling $13.6 million.

Total deposits at December 31, 2018 of $4.95 billion decreased by $9.9 million, or 0.2% from December 31, 2017, and decreased by $57.2 million, or 1.1% from September 30, 2018.  The year-over-year and sequential quarter declines in total deposits were primarily attributable to decreases in government time deposits of $55.8 million and $65.1 million, respectively. Core deposits, which include demand deposits, savings and money market deposits, and time deposits less than $100,000, totaled $4.02 billion at December 31, 2018.  This represents an increase of $24.7 million, or 0.6% from December 31, 2017, and remained relatively unchanged from September 30, 2018. The Company's loan-to-deposit ratio was 82.5% at December 31, 2018, compared to 76.1% at December 31, 2017 and 79.5% at September 30, 2018. During the quarter, short-term and long-term Federal Home Loan Bank borrowings increased to replace government time deposits and fund loan growth.

Asset Quality
Nonperforming assets at December 31, 2018 totaled $2.7 million, or 0.05% of total assets, compared to $3.6 million, or 0.06% of total assets at December 31, 2017, and $3.0 million, or 0.05% of total assets at September 30, 2018.

Loans delinquent for 90 days or more still accruing interest totaled $0.5 million at December 31, 2018, compared to $0.6 million and $0.3 million at December 31, 2017 and September 30, 2018, respectively.

Net recoveries in the fourth quarter of 2018 totaled $2.5 million, compared to net charge-offs of $1.0 million in the year-ago quarter, and net charge-offs of $1.3 million in the previous quarter. Net recoveries in the fourth quarter of 2018 included a $4.5 million recovery on a U.S. mainland land loan.

In the fourth quarter of 2018, the Company recorded a credit to the provision for loan and lease losses of $1.4 million, compared to a credit of $0.2 million in the year-ago quarter and a credit of $0.1 million in the previous quarter. The aforementioned $4.5 million recovery contributed to the credit to the provision for loan and lease losses in the current quarter. The allowance for loan and lease losses, as a percentage of total loans and leases at December 31, 2018 was 1.17%, compared to 1.33% at December 31, 2017 and 1.18% at September 30, 2018.

Capital
Total shareholders' equity was $491.7 million at December 31, 2018, compared to $500.0 million and $478.2 million at December 31, 2017 and September 30, 2018, 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 December 31, 2018, the Company's leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ratios were 9.9%, 13.5%, 14.7%, and 11.9%, respectively, compared to 10.3%, 14.2%, 15.4%, and 12.0%, respectively, at September 30, 2018. The decline in the ratios was primarily due to  the aforementioned redemption of $20 million in floating rate trust preferred securities and the underlying floating rate junior subordinated debentures which was treated as capital.

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 (8:00 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 March 2, 2019 by dialing 1-877-344-7529 (passcode:10127971) and on the Company's website.

About Central Pacific Financial Corp.
Central Pacific Financial Corp. is a Hawaii-based bank holding company with approximately $5.8 billion in assets.  Central Pacific Bank, its primary subsidiary, operates 35 branches and 78 ATMs in the state of Hawaii, as of December 31, 2018.  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 or actions 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, volcanoes, 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; failure to maintain effective internal control over financial reporting or disclosure controls and procedures; 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 the Tax Cuts and Jobs Act; 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, including changes 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 directors, 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 and 10-K/A 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


Year Ended

(Dollars in thousands,

except for per share amounts)


Dec 31,


Sep 30,


Jun 30,


Mar 31,


Dec 31,


Dec 31,


2018


2018


2018


2018


2017


2018


2017

CONDENSED INCOME STATEMENT















Net interest income


$

44,679



$

43,325



$

42,672



$

42,322



$

42,824



$

172,998



$

167,703


Provision (credit) for loan and lease losses


(1,386)



(59)



532



(211)



(186)



(1,124)



(2,674)


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


46,065



43,384



42,140



42,533



43,010



174,122



170,377


Total other operating income


9,400



10,820



9,630



8,954



9,043



38,804



36,496


Total other operating expense [1]


33,642



34,025



33,611



33,404



34,397



134,682



131,073


Income before taxes [1]


21,823



20,179



18,159



18,083



17,656



78,244



75,800


Income tax expense [1]


6,031



4,986



3,935



3,806



13,368



18,758



34,596


Net income


15,792



15,193



14,224



14,277



4,288



59,486



41,204


Basic earnings per common share


$

0.54



$

0.52



$

0.48



$

0.48



$

0.14



$

2.02



$

1.36


Diluted earnings per common share


0.54



0.52



0.48



0.48



0.14



2.01



1.34


Dividends declared per common share


0.21



0.21



0.21



0.19



0.18



0.82



0.70

















PERFORMANCE RATIOS















Return on average assets (ROA) [2]


1.10

%


1.06

%


1.00

%


1.01

%


0.31

%


1.05

%


0.75

%

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


12.90



12.54



11.83



11.60



3.35



12.22



8.03


Return on average tangible shareholders' equity (ROTE) [2]


12.90



12.55



11.85



11.64



3.37



12.24



8.08


Average shareholders' equity to average assets


8.53



8.49



8.49



8.73



9.12



8.56



9.32


Efficiency ratio [1] [3]


62.21



62.84



64.26



65.15



66.32



63.59



64.19


Net interest margin (NIM) [2]


3.28



3.20



3.20



3.21



3.27



3.22



3.28


Dividend payout ratio [4]


38.89



40.38



43.75



39.58



128.57



40.80



52.24

















SELECTED AVERAGE BALANCES















Average loans and leases, including loans held for sale


$

4,022,376



$

3,941,511



$

3,836,739



$

3,789,338



$

3,719,684



$

3,898,250



$

3,622,033


Average interest-earning assets


5,451,052



5,418,924



5,376,115



5,334,276



5,279,360



5,395,477



5,182,832


Average assets


5,739,228



5,709,825



5,663,697



5,638,205



5,605,728



5,688,076



5,511,006


Average deposits


4,938,560



5,063,061



5,041,164



5,000,108



4,936,743



5,010,698



4,849,153


Average interest-bearing liabilities


3,769,920



3,802,028



3,776,053



3,746,012



3,686,222



3,773,647



3,631,886


Average shareholders' equity


489,510



484,737



480,985



492,184



511,277



486,841



513,416


Average tangible shareholders' equity


489,510



484,391



479,959



490,453



508,886



486,071



510,029


 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES


Financial Highlights


(Unaudited)

TABLE 1 (CONTINUED)




Dec 31,


Sep 30,


Jun 30,


Mar 31,


Dec 31,

(dollars in thousands)


2018


2018


2018


2018


2017

REGULATORY CAPITAL











Central Pacific Financial Corp.











Leverage capital


$

570,260



$

590,627



$

586,799



$

579,221



$

578,607


Tier 1 risk-based capital


570,260



590,627



586,799



579,221



578,607


Total risk-based capital


619,419



639,157



636,755



629,179



628,068


Common equity tier 1 capital


500,260



500,627



496,799



489,221



490,861


Central Pacific Bank











Leverage capital


533,166



571,949



569,128



568,409



565,412


Tier 1 risk-based capital


533,166



571,949



569,128



568,409



565,412


Total risk-based capital


582,325



620,479



619,084



618,240



614,732


Common equity tier 1 capital


533,166



571,949



569,128



568,409



565,412













REGULATORY CAPITAL RATIOS











Central Pacific Financial Corp.











Leverage capital ratio


9.9

%


10.3

%


10.3

%


10.3

%


10.4

%

Tier 1 risk-based capital ratio


13.5



14.2



14.4



14.5



14.7


Total risk-based capital ratio


14.7



15.4



15.7



15.8



15.9


Common equity tier 1 capital ratio


11.9



12.0



12.2



12.3



12.4


Central Pacific Bank











Leverage capital ratio


9.3



10.0



10.0



10.1



10.1


Tier 1 risk-based capital ratio


12.7



13.8



14.0



14.3



14.4


Total risk-based capital ratio


13.8



15.0



15.3



15.5



15.6


Common equity tier 1 capital ratio


12.7



13.8



14.0



14.3



14.4















Dec 31,


Sep 30,


Jun 30,


Mar 31,


Dec 31,

(dollars in thousands, except for per share amounts)


2018


2018


2018


2018


2017

BALANCE SHEET











Loans and leases


$

4,078,366



$

3,978,027



$

3,881,581



$

3,816,146



$

3,770,615


Total assets


5,807,026



5,728,640



5,681,519



5,651,287



5,623,708


Total deposits


4,946,490



5,003,680



4,979,099



4,980,431



4,956,354


Long-term debt


122,166



92,785



92,785



92,785



92,785


Total shareholders' equity


491,725



478,151



480,668



484,108



500,011


Total shareholders' equity to total assets


8.47

%


8.35

%


8.46

%


8.57

%


8.89

%

Tangible common equity to tangible assets [5]


8.47

%


8.35

%


8.45

%


8.54

%


8.86

%












ASSET QUALITY











Allowance for loan and lease losses


$

47,916



$

46,826



$

48,181



$

49,217



$

50,001


Non-performing assets


2,737



3,026



3,509



3,438



3,626


Allowance to loans and leases outstanding


1.17

%


1.18

%


1.24

%


1.29

%


1.33

%

Allowance to non-performing assets


1,750.68

%


1,547.46

%


1,373.07

%


1,431.56

%


1,378.96

%












PER SHARE OF COMMON STOCK OUTSTANDING











Book value per common share


$

16.97



$

16.34



$

16.30



$

16.30



$

16.65


Tangible book value per common share


16.97



16.34



16.28



16.25



16.59

























[1] Financial information for prior quarters has been revised to reflect the reclassification of amortization of investments in low-income housing tax credit (LIHTC) partnerships from total other operating expense to income tax expense, in connection with a change in accounting policy adopted in the fourth quarter of 2018 related to the Company's investments in LIHTC partnerships.

[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.

[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


The following table sets forth a reconciliation of our tangible common equity ratio for each of the dates indicated:




December 31,


September 30,


June 30,


March 31,


December 31,

(Dollars in thousands)


2018


2018


2018


2018


2017

Tangible Common Equity Ratio:











Total shareholders' equity


$

491,725



$

478,151



$

480,668



$

484,108



$

500,011


  Less: Other intangible assets






(669)



(1,337)



(2,006)


Tangible common equity


$

491,725



$

478,151



$

479,999



$

482,771



$

498,005













Total assets


$

5,807,026



$

5,728,640



$

5,681,519



$

5,651,287



$

5,623,708


Less: Other intangible assets






(669)



(1,337)



(2,006)


Tangible assets


$

5,807,026



$

5,728,640



$

5,680,850



$

5,649,950



$

5,621,702













Tangible common equity to tangible assets


8.47

%


8.35

%


8.45

%


8.54

%


8.86

%

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES


Consolidated Balance Sheets


(Unaudited)

TABLE 3




Dec 31,


Sep 30,


Jun 30,


Mar 31,


Dec 31,

(Dollars in thousands, except share data)


2018


2018


2018


2018


2017

ASSETS











Cash and due from financial institutions


$

80,569



$

82,668



$

75,547



$

59,905



$

75,318


Interest-bearing deposits in other financial institutions


21,617



7,051



13,948



5,875



6,975


Investment securities:











Available-for-sale debt securities, at fair value [1]


1,205,478



1,233,002



1,279,969



1,326,092



1,304,066


Held-to-maturity debt securities, at fair value of: $144,272 at December 31, 2018, $146,466 at September 30, 2018, $152,330 at June 30, 2018, $171,399 at March 31, 2018, and $189,201 at December 31, 2017


148,508



152,852



158,156



177,078



191,753


Equity securities, at fair value [1]


826



885



844



753



825


Total investment securities


1,354,812



1,386,739



1,438,969



1,503,923



1,496,644


Loans held for sale


6,647



4,460



9,096



7,492



16,336


Loans and leases


4,078,366



3,978,027



3,881,581



3,816,146



3,770,615


Less allowance for loan and lease losses


47,916



46,826



48,181



49,217



50,001


Loans and leases, net of allowance for loan and lease losses


4,030,450



3,931,201



3,833,400



3,766,929



3,720,614


Premises and equipment, net


45,285



46,184



47,004



47,436



48,348


Accrued interest receivable


17,000



16,755



16,606



16,070



16,581


Investment in unconsolidated subsidiaries


14,008



15,283



9,362



6,478



7,088


Other real estate owned


414



414



595



595



851


Mortgage servicing rights


15,596



15,634



15,756



15,821



15,843


Core deposit premium






669



1,337



2,006


Bank-owned life insurance


157,440



157,085



156,945



156,611



156,293


Federal Home Loan Bank stock


16,645



10,965



10,246



9,007



7,761


Other assets


46,543



54,201



53,376



53,808



53,050


Total assets


$

5,807,026



$

5,728,640



$

5,681,519



$

5,651,287



$

5,623,708


LIABILITIES AND EQUITY











Deposits:











Noninterest-bearing demand


$

1,436,967



$

1,403,534



$

1,365,010



$

1,349,029



$

1,395,556


Interest-bearing demand


954,011



935,130



952,991



946,464



933,054


Savings and money market


1,448,257



1,503,465



1,502,284



1,533,483



1,481,876


Time


1,107,255



1,161,551



1,158,814



1,151,455



1,145,868


Total deposits


4,946,490



5,003,680



4,979,099



4,980,431



4,956,354


Federal Home Loan Bank advances and other short-term borrowings


197,000



105,000



87,000



56,000



32,000


Long-term debt


122,166



92,785



92,785



92,785



92,785


Other liabilities


49,645



49,024



41,967



37,963



42,534


Total liabilities


5,315,301



5,250,489



5,200,851



5,167,179



5,123,673


Equity:











Preferred stock, no par value, authorized 1,000,000 shares; issued and outstanding none at:  December 31, 2018, September 30, 2018, June 30, 2018, March 31, 2018, and December 31, 2017











Common stock, no par value, authorized 185,000,000 shares; issued and outstanding:  28,967,715 at December 31, 2018, 29,270,398 at September 30, 2018, 29,489,954 at June 30, 2018, 29,707,122 at March 31, 2018, and 30,024,222 at December 31, 2017


470,660



478,721



485,402



493,794



503,988


Additional paid-in capital


88,876



87,939



86,949



86,497



86,098


Accumulated deficit


(51,718)



(61,406)



(70,435)



(78,454)



(89,036)


Accumulated other comprehensive income (loss)


(16,093)



(27,103)



(21,248)



(17,729)



(1,039)


Total shareholders' equity


491,725



478,151



480,668



484,108



500,011


Non-controlling interest










24


Total equity


491,725



478,151



480,668



484,108



500,035


Total liabilities and equity


$

5,807,026



$

5,728,640



$

5,681,519



$

5,651,287



$

5,623,708













[1] Financial information for prior quarters has been revised to reflect the impact of the adoption of ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES


Consolidated Statements of Income


(Unaudited)

TABLE 4




Three Months Ended


Year Ended



Dec 31,


Sep 30,


Jun 30,


Mar 31,


Dec 31,


Dec 31,

(Dollars in thousands, except per share data)


2018


2018


2018


2018


2017


2018


2017

Interest income:















Interest and fees on loans and leases


$

42,836



$

40,531



$

38,699



$

37,390



$

37,447



$

159,456



$

144,224


Interest and dividends on investment securities:















Taxable investment securities


8,451



8,490



8,717



8,843



8,777



34,501



33,933


Tax-exempt investment securities


910



920



933



933



955



3,696



3,874


Dividend income on investment securities


17



26



3



15



13



61



49


Interest on deposits in other financial institutions


55



109



117



84



58



365



356


Dividend income on Federal Home Loan Bank stock


70



60



40



45



26



215



126


Total interest income


52,339



50,136



48,509



47,310



47,276



198,294



182,562


Interest expense:















Interest on deposits:















Demand


180



181



193



180



170



734



641


Savings and money market


579



593



459



369



302



2,000



1,099


Time


4,567



4,744



4,034



3,425



2,967



16,770



9,457


Interest on short-term borrowings


999



146



48



43



97



1,236



183


Interest on long-term debt


1,335



1,147



1,103



971



916



4,556



3,479


Total interest expense


7,660



6,811



5,837



4,988



4,452



25,296



14,859


Net interest income


44,679



43,325



42,672



42,322



42,824



172,998



167,703


Provision (credit) for loan and lease losses ("Provision")


(1,386)



(59)



532



(211)



(186)



(1,124)



(2,674)


Net interest income after Provision


46,065



43,384



42,140



42,533



43,010



174,122



170,377


Other operating income:















Mortgage banking income (refer to Table 5)


1,770



1,923



1,775



1,847



1,531



7,315



6,962


Service charges on deposit accounts


2,237



2,189



1,977



2,003



2,130



8,406



8,468


Other service charges and fees


3,426



3,286



3,377



3,034



2,532



13,123



11,518


Income from fiduciary activities


1,113



1,159



1,017



956



935



4,245



3,674


Equity in earnings of unconsolidated subsidiaries


82



71



37



43



214



233



602


Fees on foreign exchange


197



220



277



211



135



905



529


Net gains (losses) on sales of investment securities


(279)









230



(279)



(1,410)


Income from bank-owned life insurance


243



1,055



501



318



614



2,117



3,388


Loan placement fees


215



115



220



197



170



747



536


Net gains on sales of foreclosed assets














205


Other (refer to Table 5)


396



802



449



345



552



1,992



2,024


Total other operating income


9,400



10,820



9,630



8,954



9,043



38,804



36,496


Other operating expense:















Salaries and employee benefits


19,053



19,011



18,783



18,505



18,759



75,352



72,286


Net occupancy


3,649



3,488



3,360



3,266



3,418



13,763



13,571


Equipment


1,079



1,048



1,044



1,068



1,007



4,239



3,785


Amortization of core deposit premium




669



668



669



668



2,006



2,674


Communication expense


863



903



746



898



924



3,410



3,659


Legal and professional services


2,212



1,528



1,769



1,821



2,091



7,330



7,724


Computer software expense


2,597



2,672



2,305



2,267



2,404



9,841



9,192


Advertising expense


834



612



617



612



1,000



2,675



2,408


Foreclosed asset expense


37



212



31



294



28



574



151


Other (refer to Table 5) [1]


3,318



3,882



4,288



4,004



4,098



15,492



15,623


Total other operating expense [1]


33,642



34,025



33,611



33,404



34,397



134,682



131,073


Income before income taxes [1]


21,823



20,179



18,159



18,083



17,656



78,244



75,800


Income tax expense [1]


6,031



4,986



3,935



3,806



13,368



18,758



34,596


Net income


$

15,792



$

15,193



$

14,224



$

14,277



$

4,288



$

59,486



$

41,204


Per common share data:















Basic earnings per share


$

0.54



$

0.52



$

0.48



$

0.48



$

0.14



$

2.02



$

1.36


Diluted earnings per share


0.54



0.52



0.48



0.48



0.14



2.01



1.34


Cash dividends declared


0.21



0.21



0.21



0.19



0.18



0.82



0.70


Basic weighted average shares outstanding


29,033,261



29,297,465



29,510,175



29,807,572



30,027,366



29,409,683



30,400,511


Diluted weighted average shares outstanding


29,217,480



29,479,812



29,714,942



30,041,351



30,271,910



29,609,907



30,638,140

















[1] Financial information for prior quarters has been revised to reflect the reclassification of amortization of investments in LIHTC partnerships from total other operating expense to income tax expense, in connection with a change in accounting policy adopted in the fourth quarter of 2018 related to the Company's investments in LIHTC partnerships.

 

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


Year Ended



Dec 31,


Sep 30,


Jun 30,


Mar 31,


Dec 31,


December 31,

(Dollars in thousands)


2018


2018


2018


2018


2017


2018


2017

Mortgage banking income:















Loan servicing fees


$

1,290



$

1,269



$

1,289



$

1,311



$

1,316



$

5,159



$

5,337


Amortization of mortgage servicing rights


(446)



(519)



(437)



(457)



(745)



(1,859)



(2,288)


Net gains on sales of residential mortgage loans


1,072



1,082



959



972



968



4,085



4,069


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


(146)



91



(36)



21



(8)



(70)



(156)


Total mortgage banking income


$

1,770



$

1,923



$

1,775



$

1,847



$

1,531



$

7,315



$

6,962


















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




Three Months Ended


Year Ended



Dec 31,


Sep 30,


...