Central Pacific Financial Corp. Reports $18.0 Million First Quarter Earnings And Increases Cash Dividend

HONOLULU, April 28, 2021 /PRNewswire/ -- Central Pacific Financial Corp. CPF (the "Company"), parent company of Central Pacific Bank (the "Bank"), today reported net income in the first quarter of 2021 of $18.0 million, or fully diluted earnings per share ("EPS") of $0.64, compared to net income in the first quarter of 2020 of $8.3 million, or EPS of $0.29, and net income in the fourth quarter of 2020 of $12.2 million, or EPS of $0.43.

"Central Pacific Financial Corp.'s first quarter 2021 results are the highest quarterly pre-tax income we have reported since 2007. With this strong start to 2021, combined with the Hawaii economy continuing to recover, we are pleased to announce an increase to our quarterly cash dividend," said Paul Yonamine, Chairman and Chief Executive Officer. "We believe our RISE2020 investments have positioned us well, and we remain highly committed to continuing to deliver results and achievement of our financial targets."

"In the first quarter, we continued to provide significant support for small businesses with the origination of over 3,600 Paycheck Protection Program ("PPP") loans totaling over $290 million," said Catherine Ngo, President. "At the same time, we have maintained solid liquidity, capital and asset quality positions."

On April 27, 2021, the Company's Board of Directors declared a quarterly cash dividend of $0.24 per share on its outstanding common shares. This represents a 4.3% increase from the dividend paid of $0.23 per share in the first quarter of 2021 and will be payable on June 15, 2021 to shareholders of record at the close of business on May 28, 2021. On January 26, 2021, the Company's Board of Directors approved a new share repurchase authorization of up to $25 million of its common stock. The Company did not repurchase any shares during the first quarter of 2021.

Earnings Highlights

Net interest income for the first quarter of 2021 was $49.8 million, compared to $47.8 million in the year-ago quarter and $51.5 million in the previous quarter. Net interest margin for the first quarter of 2021 was 3.19%, compared to 3.43% in the year-ago quarter and 3.32% in the previous quarter. The sequential quarter decrease in net interest income and net interest margin is primarily due to a decrease in net interest income and net loan fees on PPP loans, combined with decreases in yields earned on the Company's loan and investment securities portfolios. Net interest income for the first quarter of 2021 included $5.2 million in net interest income and net loan fees on PPP loans, which are accreted into income over the term of the loans and accelerated when the loans are forgiven or paid-off, compared to $6.3 million in the previous quarter. During the first quarter, approximately $100.6 million in PPP loans were forgiven which resulted in the immediate recognition of $2.4 million in net loan fees, compared to approximately $118.9 million in PPP loans which were forgiven in the previous quarter and resulted in the immediate recognition of $3.0 million in net loan fees. Net deferred fees on PPP loans totaled $20.3 million and $9.6 million at March 31, 2021 and  December 31, 2020, respectively. Additional information on average balances, interest income and expenses and yields and rates is presented in Table 5.

Other operating income for the first quarter of 2021 totaled $10.7 million, compared to $8.9 million in the year-ago quarter and $14.1 million in the previous quarter. The decrease in other operating income from the previous quarter was primarily due to the lower mortgage banking income of $2.5 million, combined with lower income from bank-owned life insurance of $0.4 million. Additional information on other operating income is presented in Tables 3 and 4.

Other operating expense for the first quarter of 2021 totaled $37.8 million, compared to $34.4 million in the year-ago quarter and $44.7 million in the previous quarter. Other operating expense in the previous quarter was elevated due to $5.9 million in nonrecurring expenses, which included:  employee incentives and other benefit programs of $2.0 million, branch consolidation costs of $1.3 million, litigation settlements of $0.8 million, Federal Home Loan Bank ("FHLB") advance prepayment fee $0.7 million, loss on disposal of fixed assets of $0.6 million and other nonrecurring expenses totaling $0.5 million. In addition, in the first quarter of 2021 the Company deferred $0.8 million in salaries and employee benefits related to the origination of PPP loans. These decreases in other operating expense from the previous quarter were partially offset by higher advertising expense of $0.9 million in the first quarter of 2021. Additional information on other operating expense is presented in Tables 3 and 4.

The efficiency ratio for the first quarter of 2021 was 62.54%, compared to 60.73% in the year-ago quarter and 68.20% in the previous quarter. The decrease in the efficiency ratio from the previous quarter was primarily due to the aforementioned nonrecurring items in other operating expense recorded in the previous quarter.

In the first quarter of 2021, the Company recorded income tax expense of $5.5 million, compared to $2.8 million in the year-ago quarter and $3.8 million in the previous quarter. The effective tax rate for the first quarter of 2021 was 23.2%, compared to 25.3% in the year-ago quarter and 23.7% in the previous quarter.

Balance Sheet Highlights

Total assets at March 31, 2021 of $6.98 billion increased by $870.7 million, or 14.3% from March 31, 2020, and increased by $384.7 million, or 5.8% from December 31, 2020.

Total loans at March 31, 2021 of $5.14 billion increased by $625.9 million, or 13.9% from March 31, 2020, and increased by $173.7 million, or 3.5% from December 31, 2020. The sequential quarter increase in total loans was primarily due to increases in PPP loans of $181.4 million, construction loans of $12.6 million, home equity loans of $8.2 million and commercial mortgage loans of $8.0 million, partially offset by decreases in other commercial loans of $30.9 million. Excluding PPP loans, total loans decreased slightly by $7.7 million, or 0.2% from the previous quarter. In the first quarter of 2021, the Company originated $292.7 million in PPP loans, which were offset by paydowns of PPP loans totaling $100.6 million. Loans by geographic distribution are summarized in Table 6.

Total deposits at March 31, 2021 of $6.21 billion increased by $1.07 billion, or 20.9% from March 31, 2020, and increased by $412.8 million, or 7.1% from December 31, 2020. The sequential quarter increase in total deposits was primarily attributable to the deposit of PPP funds and other government stimulus, and included increases in noninterest-bearing demand deposits of $280.2 million, interest-bearing demand deposits of $62.7 million, and savings and money market deposits of $72.3 million. These increases were offset by a decrease in total time deposits of $2.3 million. Core deposits, which include demand deposits, savings and money market deposits, and time deposits up to $250,000, totaled $5.55 billion at March 31, 2021. This represents an increase of $1.14 billion, or 25.9% from March 31, 2020, and an increase of $410.3 million, or 8.0% from December 31, 2020. The Company's loan-to-deposit ratio was 82.8% at March 31, 2021, compared to 87.9% at March 31, 2020 and 85.7% at December 31, 2020. Deposit balances are summarized in Table 7.

Asset Quality

Nonperforming assets at March 31, 2021 totaled $7.2 million, or 0.10% of total assets, compared to $3.6 million, or 0.06% of total assets at March 31, 2020, and $6.2 million, or 0.09% of total assets at December 31, 2020.

Loans delinquent for 90 days or more still accruing interest totaled $4.8 million at March 31, 2021, compared to $1.6 million and $0.8 million at March 31, 2020 and December 31, 2020, respectively. Additional information on nonperforming assets, past due and restructured loans is presented in Table 8.

Loans on payment forbearance or deferrals granted to borrowers impacted by the COVID-19 pandemic declined significantly to $39.5 million or 0.8% of the total loan portfolio (or 0.9% excluding PPP loans), as of March 31, 2021, compared to $120.2 million or 2.4% of the total loan portfolio (or 2.6% excluding PPP loans), as of December 31, 2020. Additional information on loans on payment forbearance or deferrals is presented in Table 10.

Net charge-offs in the first quarter of 2021 totaled $0.7 million, compared to net charge-offs of $1.2 million in the year-ago quarter, and net charge-offs of $1.8 million in the previous quarter.

In the first quarter of 2021, the Company recorded a credit to the provision for credit losses on loans of $0.8 million, compared to a provision of $11.1 million in the year-ago quarter and a provision of $4.9 million in the previous quarter. The credit to the provision for credit losses in the first quarter of 2021 included a credit to the provision for credit losses on loans of $1.0 million, offset by a provision for credit losses on off-balance sheet credit exposures of $0.2 million. The credit to the provision for credit losses on loans in the first quarter of 2021 was driven by an improved economic forecast as the State recovers from the COVID-19 pandemic. The allowance for credit losses, as a percentage of total loans at March 31, 2021 was 1.59%, compared to 1.32% at March 31, 2020 and 1.68% at December 31, 2020. Excluding the PPP loans, the allowance for credit losses, as a percentage of total loans at March 31, 2021 was 1.80%, compared to 1.83% at December 31, 2020. Additional information on the allowance for credit losses is presented in Table 9.

Capital

Total shareholders' equity was $542.9 million at March 31, 2021, compared to $533.8 million and $546.7 million at March 31, 2020 and December 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 March 31, 2021, the Company's leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ratios were 8.9%, 13.1%, 15.4%, and 12.0%, respectively, compared to 8.8%, 12.9%, 15.2%, and 11.8%, respectively, at December 31, 2020.

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.cpb.bank. Alternatively, investors may participate in the live call by dialing 1-877-505-7644. A playback of the call will be available through May 28, 2021 by dialing 1-877-344-7529 (passcode: 10155139) and on the Company's website. Information which may be discussed in the conference call is provided in an earnings supplement presentation on the Company's website at http://ir.cpb.bank.

About Central Pacific Financial Corp.

Central Pacific Financial Corp. is a Hawaii-based bank holding company with approximately $7.0 billion in assets.  Central Pacific Bank, its primary subsidiary, operates 31 branches and 69 ATMs in the state of Hawaii, as of March 31, 2021.  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 impact of our participation in the Paycheck Protection Program ("PPP") and fulfillment of government guarantees on our PPP loans; the increase in inventory or adverse conditions in the real estate market and deterioration in the construction industry; adverse changes in the financial performance and/or condition of our borrowers and, as a result, increased loan delinquency rates, deterioration in asset quality, and losses in our loan portfolio; our ability to 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

(Dollars in thousands,



Mar 31,



Dec 31,



Sep 30,



Jun 30,



Mar 31,

except for per share amounts)



2021



2020



2020



2020



2020

CONDENSED INCOME STATEMENT





















Net interest income



$

49,804





$

51,474





$

49,120





$

49,259





$

47,830



(Credit) provision for credit losses [1]



(821)





4,898





14,873





11,213





11,127



Net interest income after (credit) provision for credit losses [1]



50,625





46,576





34,247





38,046





36,703



Total other operating income



10,711





14,057





11,563





10,692





8,886



Total other operating expense [1]



37,846





44,690





36,751





35,854





34,442



Income before taxes



23,490





15,943





9,059





12,884





11,147



Income tax expense



5,452





3,772





2,200





2,967





2,821



Net income



18,038





12,171





6,859





9,917





8,326



Basic earnings per common share



$

0.64





$

0.43





$

0.24





$

0.35





$

0.30



Diluted earnings per common share



0.64





0.43





0.24





0.35





0.29



Dividends declared per common share



0.23





0.23





0.23





0.23





0.23

























PERFORMANCE RATIOS





















Return on average assets (ROA) [2]



1.07

%



0.74

%



0.42

%



0.61

%



0.55

%

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



13.07





8.87





4.99





7.34





6.21



Average shareholders' equity to average assets



8.19





8.29





8.36





8.36





8.93



Efficiency ratio  [3]



62.54





68.20





60.56





59.81





60.73



Net interest margin (NIM) [2]



3.19





3.32





3.19





3.26





3.43



Dividend payout ratio [4]



35.94





53.49





95.83





65.71





79.31

























SELECTED AVERAGE BALANCES





















Average loans, including loans held for sale



$

5,079,874





$

5,034,717





$

5,016,955





$

4,902,905





$

4,462,347



Average interest-earning assets



6,305,786





6,202,228





6,160,381





6,073,361





5,621,043



Average assets



6,738,825





6,621,127





6,574,492





6,468,129





6,007,237



Average deposits



5,958,742





5,755,257





5,728,147





5,614,595





5,121,696



Average interest-bearing liabilities



4,161,452





4,163,396





4,118,726





4,082,699





3,917,332



Average shareholders' equity



551,976





548,663





549,378





540,802





536,721



































































CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES



Financial Highlights



(Unaudited)

TABLE 1 (CONTINUED)









Mar 31,



Dec 31,



Sep 30,



Jun 30,



Mar 31,

(dollars in thousands)



2021



2020



2020



2020



2020

REGULATORY CAPITAL





















Central Pacific Financial Corp





















Leverage capital



$

594,655





$

581,358





$

573,636





$

571,976





$

567,947



Tier 1 risk-based capital



594,655





581,358





573,636





571,976





567,947



Total risk-based capital



699,899





686,130





623,157





622,393





618,504



Common equity tier 1 capital



544,655





531,358





523,636





521,976





517,947



Central Pacific Bank





















Leverage capital



632,702





620,372





559,750





559,461





556,895



Tier 1 risk-based capital



632,702





620,372





559,750





559,461





556,895



Total risk-based capital



682,847





670,087





609,203





609,811





607,402



Common equity tier 1 capital



632,702





620,372





559,750





559,461





556,895

























REGULATORY CAPITAL RATIOS





















Central Pacific Financial Corp





















Leverage capital ratio



8.9

%



8.8

%



8.8

%



8.9

%



9.5

%

Tier 1 risk-based capital ratio



13.1





12.9





12.8





12.5





12.3



Total risk-based capital ratio



15.4





15.2





13.9





13.6





13.4



Common equity tier 1 capital ratio



12.0





11.8





11.6





11.4





11.3



Central Pacific Bank





















Leverage capital ratio



9.4





9.4





8.6





8.7





9.3



Tier 1 risk-based capital ratio



13.9





13.7





12.5





12.2





12.1



Total risk-based capital ratio



15.0





14.9





13.6





13.3





13.2



Common equity tier 1 capital ratio



13.9





13.7





12.5





12.2





12.1



































































CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES



Financial Highlights



(Unaudited)

TABLE 1 (CONTINUED)

















































Mar 31,



Dec 31,



Sep 30,



Jun 30,



Mar 31,

(dollars in thousands, except for per share amounts)



2021



2020



2020



2020



2020

BALANCE SHEET





















Total loans, net of deferred fees and costs



$

5,137,849





$

4,964,113





$

5,030,626





$

5,003,438





$

4,511,998



Total assets



6,979,265





6,594,583





6,648,142





6,632,972





6,108,548



Total deposits



6,208,950





5,796,118





5,678,929





5,794,685





5,136,069



Long-term debt



105,436





105,385





101,547





167,491





101,547



Total shareholders' equity



542,865





546,685





543,903





544,271





533,781



Total shareholders' equity to total assets



7.78

%



8.29

%



8.18

%



8.21

%



8.74

%























ASSET QUALITY





















Allowance for credit losses ("ACL") [1] [2]



$

81,553





$

83,269





$

80,542





$

67,339





$

59,645



Non-performing assets ("NPA")



7,194





6,192





13,187





4,741





3,647



ACL to total loans [1]



1.59

%



1.68

%



1.60

%



1.35

%



1.32

%

ACL to total loans, excluding PPP loans [1]



1.80

%



1.83

%



1.79

%



1.50

%



1.32

%

ACL to non-performing assets [1]



1,133.63

%



1,344.78

%



610.77

%



1,420.35

%



1,635.45

%

NPA to total assets



0.10

%



0.09

%



0.20

%



0.07

%



0.06

%























PER SHARE OF COMMON STOCK OUTSTANDING





















Book value per common share



$

19.19





$

19.40





$

19.30





$

19.33





$

18.99



Closing market price per common share



26.68





19.01





13.57





16.03





15.90

























[1] As of January 1, 2021, the provision for credit losses on off-balance sheet credit exposures (previously included in other operating expense) is included in the provision for credit losses line on the consolidated statements of income. Prior period amounts have been reclassified to conform to the current period presentation. The allowance for off-balance sheet credit exposures continues to be included in other liabilities

[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









Mar 31,



Dec 31,



Sep 30,



Jun 30,



Mar 31,

(Dollars in thousands, except share data)



2021



2020



2020



2020



2020

ASSETS





















Cash and due from financial institutions



$

93,358





$

97,546





$

89,665





$

102,132





$

81,972



Interest-bearing deposits in other financial institutions



166,533





6,521





5,489





41,201





11,021



Investment securities:





















Available-for-sale debt securities, at fair value



1,216,341





1,182,609





1,166,319





1,168,594





1,184,023



Equity securities, at fair value



1,435





1,351





1,204





1,209





1,002



Total investment securities



1,217,776





1,183,960





1,167,523





1,169,803





1,185,025



Loans held for sale



5,234





16,687





23,962





10,443





3,910



Loans, net of deferred fees and costs



5,137,849





4,964,113





5,030,626





5,003,438





4,511,998



Less allowance for credit losses



81,553





83,269





80,542





67,339





59,645



Loans, net of allowance for credit losses



5,056,296





4,880,844





4,950,084





4,936,099





4,452,353



Premises and equipment, net



72,599





65,278





61,095





55,032





50,447



Accrued interest receivable



19,440





20,224





21,478





19,590





16,851



Investment in unconsolidated subsidiaries



31,487





29,968





30,239





16,428





16,721



Other real estate owned











128









100



Mortgage servicing rights



11,094





11,865





12,429





12,771





13,345



Bank-owned life insurance



167,110





163,161





161,743





161,758





159,637



Federal Home Loan Bank ("FHLB") stock



8,155





8,237





17,468





9,229





18,109



Right of use lease asset



44,727





45,857





44,896





50,039





51,198



Other assets



85,456





64,435





61,943





48,447





47,859



Total assets



$

6,979,265





$

6,594,583





$

6,648,142





$

6,632,972





$

6,108,548



LIABILITIES AND SHAREHOLDERS' EQUITY





















Deposits:





















Noninterest-bearing demand



$

2,070,428





$

1,790,269





$

1,762,476





$

1,851,012





$

1,430,540



Interest-bearing demand



1,237,574





1,174,888





1,114,123





1,067,483





1,018,508



Savings and money market



2,004,368





1,932,043





1,881,104





1,945,744





1,693,280



Time



896,580





898,918





921,226





930,446





993,741



Total deposits



6,208,950





5,796,118





5,678,929





5,794,685





5,136,069



FHLB advances and other short-term borrowings







22,000





206,000









222,000



Long-term debt



105,436





105,385





101,547





167,491





101,547



Lease liability



46,033





47,191





45,355





50,440





51,541



Other liabilities



75,933





77,156





72,369





76,050





63,561



Total liabilities



6,436,352





6,047,850





6,104,200





6,088,666





5,574,718



Shareholders' equity:





















Preferred stock, no par value, authorized 1,000,000 shares; issued and outstanding:  none at March 31, 2021, December 31, 2020, September 30, 2020, June 30, 2020, and March 31, 2020





















Common stock, no par value, authorized 185,000,000 shares; issued and outstanding:  28,282,530 at March 31, 2021, 28,183,340 at December 31, 2020, 28,179,798 at September 30, 2020, 28,154,159 at June 30, 2020, and 28,115,353 at March 31, 2020



443,505





442,635





442,635





442,699





442,853



Additional paid-in capital



95,721





94,842





94,336





93,007





92,284



Retained earnings (accumulated deficit)



628





(10,920)





(16,609)





(16,986)





(20,428)



Accumulated other comprehensive income



3,011





20,128





23,541





25,551





19,072



Total shareholders' equity



542,865





546,685





543,903





544,271





533,781



Non-controlling interest



48





48





39





35





49



Total equity



542,913





546,733





543,942





544,306





533,830



Total liabilities and shareholders' equity



$

6,979,265





$

6,594,583





$

6,648,142





$

6,632,972





$

6,108,548

























 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES



Consolidated Statements of Income



(Unaudited)

TABLE 3









Three Months Ended





March 31,



December 31,



September 30,



June 30,



March 31,

(Dollars in thousands, except per share data)



2021



2020



2020



2020



2020

Interest income:





















Interest and fees on loans



$

46,074





$

48,259





$

45,751





$

45,915





$

46,204



Interest and dividends on investment securities:





















Taxable investment securities



5,106





5,002





5,233





6,310





6,757



Tax-exempt investment securities



514





504





621





599





668



Dividend income on investment securities



18





18





17





17





17



Interest on deposits in other financial institutions



10





4





3





3





36



Dividend income on FHLB stock



59





114





128





106





132



Total interest income



51,781





53,901





51,753





52,950





53,814



Interest expense:





















Interest on deposits:





















Demand



86





105





115





114





176



Savings and money market



274





314





417





567





1,118



Time



588





813





1,284





2,124





3,268



Interest on short-term borrowings



2





65





71





74





508



Interest on long-term debt



1,027





1,130





746





812





914



Total interest expense



1,977





2,427





2,633





3,691





5,984



Net interest income



49,804





51,474





49,120





49,259





47,830



(Credit) provision for credit losses



(821)





4,898





14,873





11,213





11,127



Net interest income after (credit) provision for credit losses



50,625





46,576





34,247





38,046





36,703



Other operating income:





















Mortgage banking income



2,970





5,434





4,345





3,566





337



Service charges on deposit accounts



1,478





1,560





1,475





1,149





2,050



Other service charges and fees



3,790





3,709





3,345





2,916





4,897



Income from fiduciary activities



1,231





1,113





1,149





1,270





1,297



Net gain (loss) on sales of investment securities







151





(352)











Income from bank-owned life insurance



797





1,219





1,179





1,424





(19)



Other (refer to Table 4)



445





871





422





367





324



Total other operating income



10,711





14,057





11,563





10,692





8,886



Other operating expense:





















Salaries and employee benefits



19,827





23,090





20,375





20,329





20,054



Net occupancy



3,764





4,011





3,834





3,645





3,672



Equipment



1,000





1,157





1,234





1,043





1,097



Communication expense



769





758





856





774





837



Legal and professional services



2,377





2,507





2,262





2,238





2,028



Computer software expense



3,783





3,625





3,114





3,035





2,943



Advertising expense



1,658





756





1,020





923





1,092



Other (refer to Table 4)



4,668





8,786





4,056





3,867





2,719



Total other operating expense



37,846





44,690





36,751





35,854





34,442



Income before income taxes



23,490





15,943





9,059





12,884





11,147



Income tax expense



5,452





3,772





2,200





2,967





2,821



Net income



$

18,038





$

12,171





$

6,859





$

9,917





$

8,326



Per common share data:





















Basic earnings per share



$

0.64





$

0.43





$

0.24





$

0.35





$

0.30



Diluted earnings per share



0.64





0.43





0.24





0.35





0.29



Cash dividends declared



0.23





0.23





0.23





0.23





0.23



Basic weighted average shares outstanding



28,108,648





28,071,151





28,060,020





28,040,802





28,126,400



Diluted weighted average shares outstanding



28,313,014





28,177,366





28,111,664





28,095,230





28,277,753

























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





Mar 31,



Dec 31,



Sep 30,



Jun 30,



Mar 31,

(Dollars in thousands)



2021



2020



2020



2020



2020

Other operating income - other:





















Equity in earnings of unconsolidated subsidiaries



$

107





$

181





$

104





$

104





$

26



Net loss on sales of foreclosed assets







(9)









(6)







Income recovered on nonaccrual loans previously charged-off



35





73





47





37





23



Other recoveries



28





38





22





26





40



Commissions on sale of checks



77





69





73





56





81



Other



198





519





176





150





154



Total other operating income - other



$

445





$

871





$

422





$

367





$

324

























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





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)



2021



2020



2020



2020



2020

Other operating expense - other:





















Pension plan and SERP expense



$

247





$

313





$

354





$

293





$

293



Foreclosed asset expense



3





(2)





6









67



Charitable contributions



21





63





12





10





187



FDIC insurance assessment



440





733





649





475







Miscellaneous loan expenses



370





512





497





399





300



ATM and debit card expenses



665





498





573





584





634



Armored car expenses



192





251





192





229





294



Entertainment and promotions



199





220





132





165





280



Stationery and supplies



213





196





226





220





248



Directors' fees and expenses



217





213





213





196





241



Directors' deferred compensation plan expense



902





706





(237)





103





(1,483)



Branch consolidation costs







1,310





321











Litigation settlement







750















FHLB advance prepayment fee







747















Loss on disposal of fixed assets



32





552















Other



1,167





1,724





1,118





1,193





1,658



Total other operating expense - other



$

4,668





$

8,786





$

4,056





$

3,867





$

2,719

























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



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



(Unaudited)

TABLE 5









Three Months Ended



Three Months Ended



Three Months Ended





March 31, 2021



December 31, 2020



March 31, 2020





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 financial institutions



$

43,442





0.10

%



$

10





$

16,786





0.10

%



$

4





$

11,082





1.29

%



$

36



Investment securities, excluding valuation allowance:





































Taxable



1,081,271





1.90





5,124





1,048,665





1.91





5,020





1,027,695





2.64





6,774



Tax-exempt



93,665





2.78





651





90,452





2.83





638





105,330





3.21





845



Total investment securities



1,174,936





1.97





5,775





1,139,117





1.99





5,658





1,133,025





2.69





7,619



Loans, including loans held for sale



5,079,874





3.66





46,074





5,034,717





3.82





48,259





4,462,347





4.16





46,204



Federal Home Loan Bank stock



7,534





3.13





59





11,608





3.91





114





14,589





3.61





132



Total interest-earning assets



6,305,786





3.32





51,918





6,202,228





3.48





54,035





5,621,043





3.85





53,991



Noninterest-earning assets



433,039













418,899













386,194











Total assets



$

6,738,825













$

6,621,127













$

6,007,237

















































LIABILITIES AND EQUITY

Interest-bearing liabilities:





































Interest-bearing demand deposits



$

1,186,963





0.03

%



$

86





$

1,149,759





0.04

%



$

105





$

1,013,795





0.07

%



$

176



Savings and money market deposits



1,972,800





0.06





274





1,902,876





0.07





314





1,651,751





0.27





1,118



Time deposits up to $250,000



236,828





0.41





241





246,573





0.57





351





266,549





0.89





591



Time deposits over $250,000



657,004





0.21





347





662,389





0.28





462





743,877





1.45





2,677



Total interest-bearing deposits



4,053,595





0.09





948





3,961,597





0.12





1,232





3,675,972





0.50





4,562



Federal Home Loan Bank advances and other short-term borrowings



2,456





0.30





2





76,968





0.33





65





139,813





1.46





508



Long-term debt



105,402





3.95





1,027





124,830





3.60





1,130





101,547





3.62





914



Total interest-bearing liabilities



4,161,453





0.19





1,977





4,163,395





0.23





2,427





3,917,332





0.61





5,984



Noninterest-bearing deposits



1,905,147













1,793,660













1,445,724











Other liabilities



120,247













115,407













107,458











Total liabilities



6,186,847













6,072,462













5,470,514











Shareholders' equity



551,976













548,663













536,721











Non-controlling interest



2













2













2











Total equity



551,978













548,665













536,723











Total liabilities and equity



$

6,738,825













$

6,621,127













$

6,007,237

















































Net interest income











$

49,941













$

51,608













$

48,007









































Interest rate spread







3.13

%











3.25

%











3.24

%











































Net interest margin







3.19

%











3.32

%











3.43

%



















































































 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES



Loans by Geographic Distribution



(Unaudited)

TABLE 6









March 31,



December 31,



September 30,



June 30,



March 31,

(Dollars in thousands)



2021



2020



2020



2020



2020

HAWAII:





















Commercial, financial and agricultural:





















SBA Paycheck Protection Program



$

548,880





$

375,879





$

485,286





$

483,827





$



Other



399,154





426,670





414,754





431,887





454,817



Real estate:





















Construction



137,976





125,407





118,247





103,518





100,617



Residential mortgage



1,687,513





1,690,212





1,680,060





1,657,558





1,632,536



Home equity



559,514





551,266





534,056





510,962





504,686



Commercial mortgage



911,216





898,055





914,144





912,422





917,886



Consumer



319,032





332,430





342,203





350,414





367,960



Total loans, net of deferred fees and costs



4,563,285





4,399,919





4,488,750





4,450,588





3,978,502



Allowance for credit losses



(70,961)





(73,152)





(71,575)





(59,765)





(51,646)



Loans, net of allowance for credit losses



$

4,492,324





$

4,326,767





$

4,417,175





$

4,390,823





$

3,926,856

























U.S. MAINLAND: [1]





















Commercial, financial and agricultural:





















SBA Paycheck Protection Program



$

48,939





$

40,496





$

43,295





$

42,581





$



Other



115,035





118,421





113,316





115,971





120,507



Real estate:





















Commercial mortgage



253,122





258,273





227,121





217,747





221,251



Consumer



157,468





147,004





158,144





176,551





191,738



Total loans, net of deferred fees and costs



574,564





564,194





541,876





552,850





533,496



Allowance for credit losses



(10,592)





(10,117)





(8,967)





(7,574)





(7,999)



Loans, net of allowance for credit losses



$

563,972





$

554,077





$

532,909





$

545,276





$

525,497

























TOTAL:





















Commercial, financial and agricultural:





















SBA Paycheck Protection Program



$

597,819





$

416,375





$

528,581





$

526,408





$



Other



514,189





545,091





528,070





547,858





575,324



Real estate:





















Construction



137,976





125,407





118,247





103,518





100,617



Residential mortgage



1,687,513





1,690,212





1,680,060





1,657,558





1,632,536



Home equity



559,514





551,266





534,056





510,962





504,686



Commercial mortgage



1,164,338





1,156,328





1,141,265





1,130,169





1,139,137



Consumer



476,500





479,434





500,347





526,965





559,698



Total loans, net of deferred fees and costs



5,137,849





4,964,113





5,030,626





5,003,438





4,511,998



Allowance for credit losses



(81,553)





(83,269)





(80,542)





(67,339)





(59,645)



Loans, net of allowance for credit losses



$

5,056,296





$

4,880,844





$

4,950,084





$

4,936,099





$

4,452,353

























[1] U.S. Mainland includes territories of the United States

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES



Deposits



(Unaudited)

TABLE 7









March 31,



December 31,



September 30,



June 30,



March 31,

(Dollars in thousands)



2021



2020



2020



2020



2020

Noninterest-bearing demand



$

2,070,428





$

1,790,269





$

1,762,476





$

1,851,012





$

1,430,540



Interest-bearing demand



1,237,574





1,174,888





1,114,123





1,067,483





1,018,508



Savings and money market



2,004,368





1,932,043





1,881,104





1,945,744





1,693,280



Time deposits less than $100,000



145,497





149,063





157,051





159,739





162,399



Other time deposits $100,000 to $250,000 [1]



88,814





90,149





95,918





96,633





100,047



Core deposits



5,546,681





5,136,412





5,010,672





5,120,611





4,404,774

























Government time deposits



500,194





500,344





500,762





509,927





523,343



Other time deposits greater than $250,000



162,075





159,362





167,495





164,147





207,952



Total time deposits greater than $250,000



662,269





659,706





668,257





674,074





731,295



Total deposits



$

6,208,950





$

5,796,118





$

5,678,929





$

5,794,685





$

5,136,069

























[1] As of January 1, 2021, other time deposits $100,000 to $250,000 have been included in core deposits. Prior period amounts have been reclassified to conform to current period presentation

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES



Nonperforming Assets, Past Due and Restructured Loans



(Unaudited)

TABLE 8









March 31,



December 31,



September 30,



June 30,



March 31,

(Dollars in thousands)



2021



2020



2020



2020



2020

Nonaccrual loans: [1]





















Commercial, financial and agricultural - Other



$

1,412





$

1,461





$

1,536





$

934





$

667



Real estate:





















Residential mortgage



4,553





4,115





4,032





3,215





2,287



Home equity



439





524





533





538





545



Commercial mortgage











6,889











Consumer



790





92





69





54





48



Total nonaccrual loans



7,194





6,192





13,059





4,741





3,547



Other real estate owned ("OREO"):





















Real estate:





















Residential mortgage











128











Home equity



















100



Total OREO











128









100



Total nonperforming assets ("NPAs")



7,194





6,192





13,187





4,741





3,647



Loans delinquent for 90 days or more still accruing interest: [1]





















Real estate:





















Residential mortgage



4,522





567





588





726





1,221



Consumer



262





240





321





444





352



Total loans delinquent for 90 days or more still accruing interest



4,784





807





909





1,170





1,573



Restructured loans still accruing interest: [1]





















Commercial, financial and agricultural - Other



63





100





137





172





113



Real estate:





















Residential mortgage



5,473





5,718





5,178





5,290





5,431



Commercial mortgage



1,698





1,761





1,825





1,888





1,709



Consumer



198





207





214





145







Total restructured loans still accruing interest



7,432





7,786





7,354





7,495





7,253



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



$

19,410





$

14,785





$

21,450





$

13,406





$

12,473

























Total nonaccrual loans as a percentage of total loans



0.14

%



0.12

%



0.26

%



0.09

%



0.08

%

Total NPAs as a percentage of total loans and OREO



0.14

%



0.12

%



0.26

%



0.09

%



0.08

%

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



0.23

%



0.14

%



0.28

%



0.12

%



0.12

%

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



0.38

%



0.30

%



0.43

%



0.27

%



0.28

%























Quarter-to-quarter changes in NPAs:





















Balance at beginning of quarter



$

6,192





$

13,187





$

4,741





$

3,647





$

1,719



Additions



2,257





1,370





9,060





1,771





2,056



Reductions:





















Payments



(292)





(3,186)





(393)





(367)





(60)



Return to accrual status



(99)





(548)









(123)







Sales of NPAs







(4,353)









(94)







Charge-offs, valuation and other adjustments



(864)





(278)





(221)





(93)





(68)



Total reductions



(1,255)





(8,365)





(614)





(677)





(128)



Balance at end of quarter



$

7,194





$

6,192





$

13,187





$

4,741





$

3,647

























[1] Section 4013 of the CARES Act and the revised Interagency Statement are being applied to loan modifications related to the COVID-19 pandemic as eligible and applicable. These loan modifications are not included in the delinquent or restructured loan balances presented above

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES



Allowance for Credit Losses on Loans



(Unaudited)

TABLE 9









Three Months Ended





Mar 31,



Dec 31,



Sep 30,



Jun 30,



Mar 31,

(Dollars in thousands)



2021



2020



2020



2020



2020

Allowance for credit  losses ("ACL"):





















ACL at beginning of period



$

83,269





$

80,542





$

67,339





$

59,645





$

47,971



Adoption of ASU 2016-13



















3,566



Adjusted ACL at beginning of period



83,269





80,542





67,339





59,645





51,537

























(Credit) provision for credit losses on loans [1] [2]



(974)





4,496





14,465





10,640





9,329

























Charge-offs:





















Commercial, financial and agricultural - Other



609





676





810





1,103





437



Real estate:





















Residential mortgage











11





52







Commercial mortgage











75











Consumer



1,098





1,856





1,492





2,626





2,217



Leases





















Total charge-offs



1,707





2,532





2,388





3,781





2,654

























Recoveries:





















Commercial, financial and agricultural - Other



89





189





321





305





342



Real estate:





















Construction



















131



Residential mortgage



106





15





13





20





181



Home equity



9





2













31



Commercial mortgage



8





1





12





1





2



Consumer



753





556





780





509





746



Total recoveries



965





763





1,126





835





1,433



Net charge-offs



742





1,769





1,262





2,946





1,221



ACL at end of period



$

81,553





$

83,269





$

80,542





$

67,339





$

59,645

























Average loans, net of deferred fees and costs



$

5,079,874





$

5,034,717





$

5,016,955





$

4,902,905





$

4,462,347



Annualized ratio of net charge-offs to average loans



0.06

%



0.14

%



0.10

%



0.24

%



0.11

%























[1] The Company recorded a reserve on accrued interest receivable for loans on payment forbearance or deferral, which were granted to borrowers impacted by the COVID-19 pandemic. This reserve was recorded as a contra-asset against accrued interest receivable with the offset to provision for credit losses. The provision for credit losses presented in this table excludes the provision for credit losses on accrued interest receivable of $0.187 million

[2] As of January 1, 2021, the provision for credit losses on off-balance sheet credit exposures (previously included in other operating expense) is included in the provision for credit losses line on the consolidated statements of income.  The allowance for off-balance sheet credit exposures continues to be included in other liabilities. For roll-forward purposes, in this table we exclude the provision for credit losses on off-balance sheet credit exposures

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES



Reconciliation of Non-GAAP Financial Measures



(Unaudited)

TABLE 10





The Company believes that pre-tax, pre-provision ("PTPP") earnings, a non-GAAP financial measure, is useful as a tool to help evaluate the ability to provide for credit costs through operations. The following tables set forth a reconciliation of our PTPP earnings and our PTPP earnings to average assets for each of the periods indicated:







Three Months Ended





Mar 31,



Dec 31,



Sep 30,



Jun 30,



Mar 31,

(Dollars in thousands)



2021



2020



2020



2020



2020

Net income



$

18,038





$

12,171





$

6,859





$

9,917





$

8,326



Add: Income tax expense



5,452





3,772





2,200





2,967





2,821



Income before taxes



23,490





15,943





9,059





12,884





11,147



Add: (Credit) provision for credit losses



(821)





4,898





14,873





11,213





11,127



PTPP earnings



$

22,669





$

20,841





$

23,932





$

24,097





$

22,274











Three Months Ended





Mar 31,



Dec 31,



Sep 30,



Jun 30,



Mar 31,

(Dollars in thousands)



2021



2020



2020



2020



2020

Net income



$

18,038





$

12,171





$

6,859





$

9,917





$

8,326



Net income (annualized)



72,152





48,684





27,436





39,668





33,304



PTPP earnings



22,669





20,841





23,932





24,097





22,274



PTPP earnings (annualized)



90,676





83,364





95,728





96,388





89,096



Average assets



6,738,825





6,621,127





6,574,492





6,468,129





6,007,237



Return on average assets



1.07

%



0.74

%



0.42

%



0.61

%



0.55

%

PTPP earnings to average assets



1.35

%



1.26

%



1.46

%



1.49

%



1.48

%





The following table sets forth a reconciliation of the ratios of our allowance for credit losses ("ACL") to total loans and ACL to total loans, excluding SBA Paycheck Protection Program ("PPP") loans, for each of the periods indicated:







Mar 31,



Dec 31,



Sep 30,



Jun 30,



Mar 31,

(Dollars in thousands)



2021



2020



2020



2020



2020

ACL



$

81,553





$

83,269





$

80,542





$

67,339





$

59,645

























Total loans



$

5,137,849





$

4,964,113





$

5,030,626





$

5,003,438





$

4,511,998



PPP loans



597,819





416,375





528,581





526,408







Total loans, excluding PPP loans



$

4,540,030





$

4,547,738





4,502,045





4,477,030





$

4,511,998

























Ratio of ACL to total loans



1.59

%



1.68

%



1.60

%



1.35

%



1.32

%

Ratio of ACL to total loans, excluding PPP loans



1.80

%



1.83

%



1.79

%



1.50

%



1.32

%

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES



Reconciliation of Non-GAAP Financial Measures



(Unaudited)

TABLE 10 (CONTINUED)





The following table sets forth a reconciliation of the ratios of our loans on payment forbearance or deferrals to total loans and loans on payment forbearance or deferrals to total loans, excluding PPP loans, for each of the periods indicated:







Mar 31,



Dec 31,



Sep 30,



Jun 30,





2021



2020



2020



2020

Loans on payment forbearance or deferrals



$

39,499





$

120,206





$

290,841





$

567,860



Total loans



5,137,849





4,964,113





5,030,626





5,003,438



Total loans, excluding PPP loans



4,540,030





4,547,738





4,502,045





4,477,030



Ratio of loans on payment forbearance or deferrals to total loans



0.77

%



2.42

%



5.78

%



11.35

%

Ratio of loans on payment forbearance or deferrals to total loans, excluding PPP loans



0.87

%



2.64

%



6.46

%



12.68

%



















 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/central-pacific-financial-corp-reports-18-0-million-first-quarter-earnings-and-increases-cash-dividend-301278692.html

SOURCE Central Pacific Financial Corp.

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