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Central Pacific Financial Reports Third Quarter Earnings of $13.1 Million

  • Net income of $13.1 million, or $0.49 per diluted share for the quarter.
  • ROA of 0.70%, ROE of 10.95% and NIM of 2.88% for the quarter.
  • Total loans of $5.51 billion decreased by $12.0 million in the third quarter.
  • Ratio of nonperforming assets to total assets of 0.09% at September 30, 2023.
  • Total deposits of $6.87 billion increased by $69.0 million in the third quarter. Total deposit cost was 1.08% in the third quarter.
  • Solid liquidity position with $438.7 million in cash on balance sheet and $2.47 billion in total other liquidity sources, including available borrowing capacity and unpledged investment securities at September 30, 2023.
  • Ratio of total available sources of liquidity to uninsured and uncollateralized deposits of 122% at September 30, 2023.
  • Board of Directors approved quarterly cash dividend of $0.26 per share.

Central Pacific Financial Corp. (NYSE: CPF) (the "Company"), parent company of Central Pacific Bank (the "Bank" or "CPB"), today reported net income of $13.1 million, or fully diluted earnings per share ("EPS") of $0.49 for the third quarter of 2023, compared to net income of $14.5 million, or EPS of $0.53 in the previous quarter and net income of $16.7 million, or EPS of $0.61 in the year-ago quarter.

Pre-provision net revenue ("PPNR"), or net income excluding provision for credit losses and income taxes, totaled $22.4 million in the third quarter of 2023, compared to PPNR of $23.3 million in the previous quarter and $23.0 million in the year-ago quarter.

"In the third quarter, Central Pacific continued our focus on maintaining strong liquidity and capital given the ongoing market uncertainties," said Arnold Martines, President and Chief Executive Officer. "We are pleased with our success in growing our deposit portfolio while managing our total deposit costs. Our asset quality remained strong, our loan portfolio is well-diversified and we continue to effectively manage our expenses. Finally, we remain committed to supporting the communities impacted by the Lahaina wildfires through financial and in-kind support to aid recovery efforts."

Earnings Highlights

Net interest income was $51.9 million for the third quarter of 2023, which decreased by $0.8 million, or 1.5% from the previous quarter, and decreased by $3.4 million, or 6.2% from the year-ago quarter. The sequential quarter decrease in net interest income was primarily due to higher average balances and rates paid on interest-bearing deposits, which outpaced the higher average yield earned on loans.

Net interest margin ("NIM") was 2.88% for the third quarter of 2023, which decreased by 8 basis points ("bps") from the previous quarter and decreased by 29 bps from the year-ago quarter. The sequential quarter decrease in NIM was primarily due to higher average rates paid on deposits, which outpaced the higher average yield earned on loans.

The Company recorded a provision for credit losses of $4.9 million in the third quarter of 2023, compared to a provision of $4.3 million in the previous quarter and a provision of $0.4 million in the year-ago quarter. The provision in the third quarter consisted of a provision for credit losses on loans of $4.5 million and a provision for credit losses on off-balance sheet credit exposures of $0.4 million.

Other operating income totaled $10.0 million for the third quarter of 2023, compared to $10.4 million in the previous quarter and $9.6 million in the year-ago quarter. The decrease from the previous quarter was primarily due to lower income from bank-owned life insurance of $0.8 million, partially offset by higher other service charges and fees of $0.2 million and higher income from fiduciary activities of $0.2 million.

Other operating expense totaled $39.6 million for the third quarter of 2023, compared to $39.9 million in the previous quarter and $42.0 million in the year-ago quarter. Lower salaries and employee benefits of $1.8 million was partially offset by higher net occupancy of $0.4 million, higher directors' deferred compensation plan expense (included in other) of $0.3 million, higher armored car expense (included in other) of $0.2 million, and a net loss on sale of loans (included in other) of $0.2 million.

The efficiency ratio was 63.91% for the third quarter of 2023, compared to 63.17% in the previous quarter and 64.62% in the year-ago quarter.

The effective tax rate was 24.9% for the third quarter of 2023, compared to 23.6% in the previous quarter and 26.2% in the year-ago quarter.

Balance Sheet Highlights

Total assets of $7.64 billion at September 30, 2023 increased by $70.3 million, or 0.9% from $7.57 billion at June 30, 2023, and increased by $300.3 million, or 4.1% from $7.34 billion at September 30, 2022. The Company had $438.7 million in cash on its balance sheet and $2.47 billion in total other liquidity sources, including available borrowing capacity and unpledged investment securities at September 30, 2023. Total available sources of liquidity as a percentage of uninsured and uncollateralized deposits was 122% at September 30, 2023.

Total loans, net of deferred fees and costs, of $5.51 billion at September 30, 2023 decreased by $12.0 million, or 0.2% from $5.52 billion at June 30, 2023, and increased by $86.5 million, or 1.6% from $5.42 billion at September 30, 2022. Average yields earned on loans during the third quarter of 2023 was 4.49%, compared to 4.37% in the previous quarter and 3.84% in the year-ago quarter.

Total deposits of $6.87 billion at September 30, 2023 increased by $69.0 million or 1.0% from $6.81 billion at June 30, 2023, and increased by $318.3 million, or 4.9% from $6.56 billion at September 30, 2022. Core deposits, which include demand deposits, savings and money market deposits and time deposits up to $250,000, totaled $5.99 billion at September 30, 2023, and increased by $8.6 million, or 0.1% from $5.98 billion at June 30, 2023. Average rates paid on total deposits during the third quarter of 2023 was 1.08%, compared to 0.84% in the previous quarter and 0.14% in the year-ago quarter. At September 30, 2023, approximately 65% of the Company's total deposits were FDIC-insured or fully collateralized.

Asset Quality

Nonperforming assets totaled $6.7 million, or 0.09% of total assets at September 30, 2023, compared to $11.1 million, or 0.15% of total assets at June 30, 2023 and $4.2 million, or 0.06% of total assets at September 30, 2022. The decline in nonperforming assets from the previous quarter was primarily attributable to two Hawaii construction loans to a single borrower totaling $4.9 million that were paid off in full.

Net charge-offs totaled $3.9 million in the third quarter of 2023, compared to net charge-offs of $3.4 million in the previous quarter, and net charge-offs of $1.6 million in the year-ago quarter. Annualized net charge-offs as a percentage of average loans was 0.28%, 0.24% and 0.12% during the three months ended September 30, 2023, June 30, 2023 and September 30, 2022, respectively.

The allowance for credit losses, as a percentage of total loans was 1.17% at September 30, 2023, compared to 1.16% at June 30, 2023, and 1.19% at September 30, 2022.

Capital

Total shareholders' equity was $468.6 million at September 30, 2023, compared to $476.3 million and $438.5 million at June 30, 2023 and September 30, 2022, respectively.

During the third quarter of 2023, the Company repurchased 4,500 shares of common stock, at a total cost of $0.1 million, or an average cost per share of $16.07. During the nine months ended September 30, 2023, the Company repurchased 130,010 shares of common stock, at a total cost of $2.6 million, or an average cost per share of $20.24. As of September 30, 2023, $23.4 million in share repurchase authorization remained available under the Company's share repurchase program.

The Company's leverage, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 capital ratios were 8.7%, 11.9%, 14.1%, and 11.0%, respectively, at September 30, 2023, compared to 8.7%, 11.8%, 13.9%, and 10.9%, respectively, at June 30, 2023.

On October 24, 2023, the Company's Board of Directors declared a quarterly cash dividend of $0.26 per share on its outstanding common shares. The dividend will be payable on December 15, 2023 to shareholders of record at the close of business on November 30, 2023.

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 1-888-510-2553 (access code: 9816541). A playback of the call will be available through November 24, 2023 by dialing 1-800-770-2030 (access code: 9816541) 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 $7.64 billion in assets as of September 30, 2023. Central Pacific Bank, its primary subsidiary, operates 27 branches and 58 ATMs in the State of Hawaii. For additional information, please visit the Company's website at http://www.cpb.bank.

Equal Housing Lender

Member FDIC

NYSE Listed: CPF

Forward-Looking Statements ("FLS")

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

While we believe that our FLS and the assumptions underlying them are reasonably based, such statements and assumptions are by their nature subject to risks and uncertainties, and thus could later prove to be inaccurate or incorrect. Accordingly, actual results could differ materially from those statements or projections for a variety of reasons, including, but not limited to: the effects of inflation and rising interest rates; the adverse effects of recent bank failures and the potential impact of such developments on customer confidence, deposit behavior, liquidity and regulatory responses thereto; the adverse effects of the COVID-19 pandemic virus (and ongoing pandemic variants) on local, national and international economies, including, but not limited to, the adverse impact on tourism and construction in the State of Hawaii, our borrowers, customers, third-party contractors, vendors and employees; supply chain disruptions; the increase in inventory or adverse conditions in the real estate market and deterioration in the construction industry; adverse changes in the financial performance and/or condition of our borrowers and, as a result, increased loan delinquency rates, deterioration in asset quality, and losses in our loan portfolio; our ability to achieve the objectives of our RISE2020 initiative; our ability to successfully implement and achieve the objectives of our Banking-as-a-Service ("BaaS") initiatives, including adoption of the initiatives by customers and risks faced by any of our bank collaborations including reputational and regulatory risk; the impact of local, national, and international economies and events (including natural disasters such as wildfires, volcanic eruptions, hurricanes, tsunamis, storms, earthquakes and pandemic viruses and diseases) 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 and lawsuits we are or may become subject to, or regulatory or other governmental inquiries and proceedings and the resolution thereof, the results of regulatory examinations or reviews and the effect of, and our ability to comply with, any regulations or regulatory orders or actions we are or may become subject to; ability to successfully implement our initiatives to lower our efficiency ratio; the effects of and changes in trade, monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System (the "FRB" or the "Federal Reserve"); securities market and monetary fluctuations, including the replacement of the London Interbank Offered Rate ("LIBOR") Index and the impact on our loans and debt which are tied to that index and uncertainties regarding potential alternative reference rates, including the Secured Overnight Financing Rate ("SOFR"); negative trends in our market capitalization and adverse changes in the price of the Company's common stock; political instability; acts of war or terrorism; changes in consumer spending, borrowings and savings habits; cybersecurity and data privacy breaches and the consequence therefrom; failure to maintain effective internal control over financial reporting or disclosure controls and procedures; the ability to address deficiencies in our internal controls over financial reporting or disclosure controls and procedures; technological changes and developments; changes in the competitive environment among financial holding companies and other financial service providers; the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board ("PCAOB"), the Financial Accounting Standards Board ("FASB") and other accounting standard setters and the cost and resources required to implement such changes; our ability to attract and retain key personnel; changes in our personnel, organization, compensation and benefit plans; and our success at managing the risks involved in the foregoing items.

For further information with respect to factors that could cause actual results to materially differ from the expectations or projections stated in the FLS, please see the Company's publicly available Securities and Exchange Commission filings, including the Company's Form 10-K for the last fiscal year and, in particular, the discussion of "Risk Factors" set forth therein. We urge investors to consider all of these factors carefully in evaluating the FLS contained in this document. FLS speak only as of the date on which such statements are made. We undertake no obligation to update any FLS to reflect events or circumstances after the date on which such statements are made, or to reflect the occurrence of unanticipated events except as required by law.

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Financial Highlights

(Unaudited)

TABLE 1

 

Three Months Ended

 

Nine Months Ended

(Dollars in thousands,

Sep 30,

 

Jun 30,

 

Mar 31,

 

Dec 31,

 

Sep 30,

 

Sep 30,

except for per share amounts)

2023

 

2023

 

2023

 

2022

 

2022

 

2023

 

2022

CONDENSED INCOME STATEMENT

 

 

 

 

 

 

 

Net interest income

$

51,928

 

$

52,734

 

$

54,196

 

$

56,285

 

$

55,365

 

$

158,858

 

$

159,278

 

Provision (credit) for credit losses

 

4,874

 

 

4,319

 

 

1,852

 

 

571

 

 

362

 

 

11,045

 

 

(1,844

)

Total other operating income

 

10,047

 

 

10,435

 

 

11,009

 

 

11,601

 

 

9,629

 

 

31,491

 

 

36,318

 

Total other operating expense

 

39,611

 

 

39,903

 

 

42,107

 

 

40,434

 

 

41,998

 

 

121,621

 

 

125,552

 

Income tax expense

 

4,349

 

 

4,472

 

 

5,059

 

 

6,700

 

 

5,919

 

 

13,880

 

 

18,141

 

Net income

 

13,141

 

 

14,475

 

 

16,187

 

 

20,181

 

 

16,715

 

 

43,803

 

 

53,747

 

Basic earnings per share

$

0.49

 

$

0.54

 

$

0.60

 

$

0.74

 

$

0.61

 

$

1.62

 

$

1.96

 

Diluted earnings per share

 

0.49

 

 

0.53

 

 

0.60

 

 

0.74

 

 

0.61

 

 

1.62

 

 

1.94

 

Dividends declared per share

 

0.26

 

 

0.26

 

 

0.26

 

 

0.26

 

 

0.26

 

 

0.78

 

 

0.78

 

 

 

 

 

 

 

 

 

PERFORMANCE RATIOS

 

 

 

 

 

 

 

Return on average assets (ROA) [1]

 

0.70

%

 

0.78

%

 

0.87

%

 

1.09

%

 

0.91

%

 

0.78

%

 

0.98

%

Return on average shareholders’ equity (ROE) [1]

 

10.95

 

 

12.12

 

 

13.97

 

 

18.30

 

 

14.49

 

 

12.33

 

 

14.62

 

Average shareholders’ equity to average assets

 

6.39

 

 

6.40

 

 

6.23

 

 

5.97

 

 

6.30

 

 

6.34

 

 

6.69

 

Efficiency ratio [2]

 

63.91

 

 

63.17

 

 

64.58

 

 

59.56

 

 

64.62

 

 

63.89

 

 

64.19

 

Net interest margin (NIM) [1]

 

2.88

 

 

2.96

 

 

3.08

 

 

3.17

 

 

3.17

 

 

2.98

 

 

3.06

 

Dividend payout ratio [3]

 

53.06

 

 

49.06

 

 

43.33

 

 

35.14

 

 

42.62

 

 

48.15

 

 

40.21

 

 

 

 

 

 

 

 

 

SELECTED AVERAGE BALANCES

 

 

 

 

 

 

 

Average loans, including loans held for sale

$

5,507,248

 

$

5,543,398

 

$

5,525,988

 

$

5,498,800

 

$

5,355,088

 

$

5,525,476

 

$

5,231,098

 

Average interest-earning assets

 

7,199,866

 

 

7,155,606

 

 

7,112,377

 

 

7,103,841

 

 

6,991,773

 

 

7,156,270

 

 

6,969,326

 

Average assets

 

7,510,537

 

 

7,463,629

 

 

7,443,767

 

 

7,389,712

 

 

7,320,751

 

 

7,472,890

 

 

7,323,596

 

Average deposits

 

6,738,071

 

 

6,674,650

 

 

6,655,660

 

 

6,673,922

 

 

6,535,321

 

 

6,689,762

 

 

6,580,502

 

Average interest-bearing liabilities

 

4,999,820

 

 

4,908,120

 

 

4,820,660

 

 

4,708,045

 

 

4,538,893

 

 

4,910,190

 

 

4,470,461

 

Average shareholders’ equity

 

480,118

 

 

477,711

 

 

463,556

 

 

441,084

 

 

461,328

 

 

473,856

 

 

490,140

 

[1]

ROA and ROE 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).

[2]

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

[3]

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

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Financial Highlights

(Unaudited)

TABLE 1 (CONTINUED)

 

 

 

Sep 30,

 

Jun 30,

 

Mar 31,

 

Dec 31,

 

Sep 30,

 

 

2023

 

2023

 

2023

 

2022

 

2022

REGULATORY CAPITAL RATIOS

 

 

 

 

 

 

 

 

 

 

Central Pacific Financial Corp.

 

 

 

 

 

 

 

 

 

 

Leverage ratio

 

8.7

%

 

8.7

%

 

8.6

%

 

8.5

%

 

8.7

%

Tier 1 risk-based capital ratio

 

11.9

 

 

11.8

 

 

11.5

 

 

11.3

 

 

11.5

 

Total risk-based capital ratio

 

14.1

 

 

13.9

 

 

13.6

 

 

13.5

 

 

13.7

 

Common equity tier 1 capital ratio

 

11.0

 

 

10.9

 

 

10.6

 

 

10.5

 

 

10.6

 

Central Pacific Bank

 

 

 

 

 

 

 

 

 

 

Leverage ratio

 

9.1

 

 

9.1

 

 

9.0

 

 

9.0

 

 

9.1

 

Tier 1 risk-based capital ratio

 

12.4

 

 

12.3

 

 

12.0

 

 

11.9

 

 

12.2

 

Total risk-based capital ratio

 

13.7

 

 

13.5

 

 

13.2

 

 

13.1

 

 

13.4

 

Common equity tier 1 capital ratio

 

12.4

 

 

12.3

 

 

12.0

 

 

11.9

 

 

12.2

 

 

 

Sep 30,

 

Jun 30,

 

Mar 31,

 

Dec 31,

 

Sep 30,

(dollars in thousands, except for per share amounts)

 

2023

 

2023

 

2023

 

2022

 

2022

BALANCE SHEET

 

 

 

 

 

 

 

 

 

 

Total loans, net of deferred fees and costs

 

$

5,508,710

 

 

$

5,520,683

 

 

$

5,557,397

 

 

$

5,555,466

 

 

$

5,422,212

 

Total assets

 

 

7,637,924

 

 

 

7,567,592

 

 

 

7,521,247

 

 

 

7,432,763

 

 

 

7,337,631

 

Total deposits

 

 

6,874,745

 

 

 

6,805,737

 

 

 

6,746,968

 

 

 

6,736,223

 

 

 

6,556,434

 

Long-term debt

 

 

156,041

 

 

 

155,981

 

 

 

155,920

 

 

 

105,859

 

 

 

105,799

 

Total shareholders’ equity

 

 

468,598

 

 

 

476,279

 

 

 

470,926

 

 

 

452,871

 

 

 

438,468

 

Total shareholders’ equity to total assets

 

 

6.14

%

 

 

6.29

%

 

 

6.26

%

 

 

6.09

%

 

 

5.98

%

 

 

 

 

 

 

 

 

 

 

 

ASSET QUALITY

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses (ACL)

 

$

64,517

 

 

$

63,849

 

 

$

63,099

 

 

$

63,738

 

 

$

64,382

 

Nonaccrual loans

 

 

6,652

 

 

 

11,061

 

 

 

5,313

 

 

 

5,251

 

 

 

4,220

 

Non-performing assets (NPA)

 

 

6,652

 

 

 

11,061

 

 

 

5,313

 

 

 

5,251

 

 

 

4,220

 

Ratio of ACL to total loans

 

 

1.17

%

 

 

1.16

%

 

 

1.14

%

 

 

1.15

%

 

 

1.19

%

Ratio of NPA to total assets

 

 

0.09

%

 

 

0.15

%

 

 

0.07

%

 

 

0.07

%

 

 

0.06

%

 

 

 

 

 

 

 

 

 

 

 

PER SHARE OF COMMON STOCK OUTSTANDING

 

 

 

 

 

 

 

 

 

 

Book value per common share

 

$

17.33

 

 

$

17.61

 

 

$

17.44

 

 

$

16.76

 

 

$

16.08

 

Closing market price per common share

 

 

16.68

 

 

 

15.71

 

 

 

17.90

 

 

 

20.28

 

 

 

20.69

 

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)

TABLE 2

 

Sep 30,

 

Jun 30,

 

Mar 31,

 

Dec 31,

 

Sep 30,

(Dollars in thousands, except share data)

2023

 

2023

 

2023

 

2022

 

2022

ASSETS

 

 

 

 

 

Cash and due from financial institutions

$

108,818

 

$

129,071

 

$

108,535

 

$

97,150

 

$

116,365

 

Interest-bearing deposits in other financial institutions

 

329,913

 

 

181,913

 

 

90,247

 

 

14,894

 

 

22,332

 

Investment securities:

 

 

 

 

 

Available-for-sale debt securities, at fair value

 

625,253

 

 

664,071

 

 

687,188

 

 

671,794

 

 

686,681

 

Held-to-maturity debt securities, at amortized cost; fair value of: $531,887 at September 30, 2023, $581,222 at June 30, 2023, $599,300 at March 31, 2023, $596,780 at December 31, 2022, and $590,880 at September 30, 2022

 

640,053

 

 

649,946

 

 

658,596

 

 

664,883

 

 

662,827

 

Total investment securities

 

1,265,306

 

 

1,314,017

 

 

1,345,784

 

 

1,336,677

 

 

1,349,508

 

Loans held for sale, at fair value

 

 

 

2,593

 

 

 

 

1,105

 

 

1,701

 

Loans, net of deferred fees and costs

 

5,508,710

 

 

5,520,683

 

 

5,557,397

 

 

5,555,466

 

 

5,422,212

 

Less: allowance for credit losses

 

64,517

 

 

63,849

 

 

63,099

 

 

63,738

 

 

64,382

 

Loans, net of allowance for credit losses

 

5,444,193

 

 

5,456,834

 

 

5,494,298

 

 

5,491,728

 

 

5,357,830

 

Premises and equipment, net

 

97,378

 

 

96,479

 

 

93,761

 

 

91,634

 

 

89,979

 

Accrued interest receivable

 

21,529

 

 

20,463

 

 

20,473

 

 

20,345

 

 

18,134

 

Investment in unconsolidated entities

 

42,523

 

 

45,218

 

 

45,953

 

 

46,641

 

 

36,769

 

Mortgage servicing rights

 

8,797

 

 

8,843

 

 

8,943

 

 

9,074

 

 

9,216

 

Bank-owned life insurance

 

168,543

 

 

168,136

 

 

168,244

 

 

167,967

 

 

167,761

 

Federal Home Loan Bank of Des Moines ("FHLB") stock

 

10,995

 

 

10,960

 

 

11,960

 

 

9,146

 

 

13,546

 

Right-of-use lease assets

 

32,294

 

 

33,247

 

 

34,237

 

 

34,985

 

 

35,978

 

Other assets

 

107,635

 

 

99,818

 

 

98,812

 

 

111,417

 

 

118,512

 

Total assets

$

7,637,924

 

$

7,567,592

 

$

7,521,247

 

$

7,432,763

 

$

7,337,631

 

LIABILITIES

 

 

 

 

 

Deposits:

 

 

 

 

 

Noninterest-bearing demand

$

1,969,523

 

$

2,009,387

 

$

2,028,087

 

$

2,092,823

 

$

2,138,083

 

Interest-bearing demand

 

1,345,843

 

 

1,359,978

 

 

1,386,913

 

 

1,453,167

 

 

1,441,302

 

Savings and money market

 

2,209,550

 

 

2,184,652

 

 

2,184,675

 

 

2,199,028

 

 

2,194,991

 

Time

 

1,349,829

 

 

1,251,720

 

 

1,147,293

 

 

991,205

 

 

782,058

 

Total deposits

 

6,874,745

 

 

6,805,737

 

 

6,746,968

 

 

6,736,223

 

 

6,556,434

 

FHLB advances and other short-term borrowings

 

 

 

 

 

25,000

 

 

5,000

 

 

115,000

 

Long-term debt, net of unamortized debt issuance costs of: $506 at September 30, 2023, $566 at June 30, 2023, $627 at March 31, 2023, $688 at December 31, 2022 and $748 at September 30, 2022

 

156,041

 

 

155,981

 

 

155,920

 

 

105,859

 

 

105,799

 

Lease liabilities

 

33,186

 

 

34,111

 

 

35,076

 

 

35,889

 

 

36,941

 

Other liabilities

 

105,354

 

 

95,484

 

 

87,357

 

 

96,921

 

 

84,989

 

Total liabilities

 

7,169,326

 

 

7,091,313

 

 

7,050,321

 

 

6,979,892

 

 

6,899,163

 

EQUITY

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

Preferred stock, no par value, authorized 1,000,000 shares; issued and outstanding: none at September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022, and September 30, 2022

 

 

 

 

 

 

 

 

 

 

Common stock, no par value, authorized 185,000,000 shares; issued and outstanding: 27,043,169 at September 30, 2023, 27,045,792 at June 30, 2023, 27,005,545 at March 31, 2023, 27,025,070 at December 31, 2022, and 27,262,879 at September 30, 2022

 

405,439

 

 

405,511

 

 

405,866

 

 

408,071

 

 

412,994

 

Additional paid-in capital

 

102,550

 

 

101,997

 

 

101,188

 

 

101,346

 

 

100,426

 

Retained earnings

 

110,156

 

 

104,046

 

 

96,600

 

 

87,438

 

 

74,301

 

Accumulated other comprehensive loss

 

(149,547

)

 

(135,275

)

 

(132,728

)

 

(143,984

)

 

(149,253

)

Total shareholders' equity

 

468,598

 

 

476,279

 

 

470,926

 

 

452,871

 

 

438,468

 

Total liabilities and equity

$

7,637,924

 

$

7,567,592

 

$

7,521,247

 

$

7,432,763

 

$

7,337,631

 

 

 

 

 

 

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

TABLE 3

 

Three Months Ended

 

Nine Months Ended

 

Sep 30,

 

Jun 30,

 

Mar 31,

 

Dec 31,

 

Sep 30,

 

Sep 30,

(Dollars in thousands, except per share data)

2023

 

2023

 

2023

 

2022

 

2022

 

2023

 

2022

Interest income:

 

 

 

 

 

 

 

Interest and fees on loans

$

62,162

 

$

60,455

 

$

58,269

 

$

56,682

 

$

51,686

 

$

180,886

 

$

143,598

 

Interest and dividends on investment securities:

 

 

 

 

 

 

 

Taxable investment securities

 

7,016

 

 

7,145

 

 

7,336

 

 

7,104

 

 

6,933

 

 

21,497

 

 

20,937

 

Tax-exempt investment securities

 

709

 

 

727

 

 

790

 

 

776

 

 

805

 

 

2,226

 

 

2,428

 

Dividends on investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

21

 

Interest on deposits in other financial institutions

 

2,412

 

 

877

 

 

277

 

 

370

 

 

107

 

 

3,566

 

 

370

 

Dividend income on FHLB stock

 

113

 

 

120

 

 

136

 

 

105

 

 

138

 

 

369

 

 

265

 

Total interest income

 

72,412

 

 

69,324

 

 

66,808

 

 

65,037

 

 

59,669

 

 

208,544

 

 

167,619

 

Interest expense:

 

 

 

 

 

 

 

Interest on deposits:

 

 

 

 

 

 

 

Demand

 

460

 

 

411

 

 

363

 

 

333

 

 

217

 

 

1,234

 

 

473

 

Savings and money market

 

6,464

 

 

4,670

 

 

3,386

 

 

2,488

 

 

1,054

 

 

14,520

 

 

1,700

 

Time

 

11,268

 

 

8,932

 

 

6,264

 

 

4,063

 

 

1,092

 

 

26,464

 

 

2,051

 

Interest on short-term borrowings

 

 

 

378

 

 

761

 

 

393

 

 

660

 

 

1,139

 

 

662

 

Interest on long-term debt

 

2,292

 

 

2,199

 

 

1,838

 

 

1,475

 

 

1,281

 

 

6,329

 

 

3,455

 

Total interest expense

 

20,484

 

 

16,590

 

 

12,612

 

 

8,752

 

 

4,304

 

 

49,686

 

 

8,341

 

Net interest income

 

51,928

 

 

52,734

 

 

54,196

 

 

56,285

 

 

55,365

 

 

158,858

 

 

159,278

 

Provision (credit) for credit losses

 

4,874

 

 

4,319

 

 

1,852

 

 

571

 

 

362

 

 

11,045

 

 

(1,844

)

Net interest income after provision (credit) for credit losses

 

47,054

 

 

48,415

 

 

52,344

 

 

55,714

 

 

55,003

 

 

147,813

 

 

161,122

 

Other operating income:

 

 

 

 

 

 

 

Mortgage banking income

 

765

 

 

690

 

 

526

 

 

667

 

 

831

 

 

1,981

 

 

3,143

 

Service charges on deposit accounts

 

2,193

 

 

2,137

 

 

2,111

 

 

2,172

 

 

2,138

 

 

6,441

 

 

6,025

 

Other service charges and fees

 

5,203

 

 

4,994

 

 

4,985

 

 

4,972

 

 

4,955

 

 

15,182

 

 

14,053

 

Income from fiduciary activities

 

1,234

 

 

1,068

 

 

1,321

 

 

1,058

 

 

1,165

 

 

3,623

 

 

3,507

 

Net (loss) gain on sales of investment securities

 

(135

)

 

 

 

 

 

 

 

 

 

(135

)

 

8,506

 

Income from bank-owned life insurance

 

379

 

 

1,185

 

 

1,291

 

 

2,187

 

 

167

 

 

2,855

 

 

(322

)

Other

 

408

 

 

361

 

 

775

 

 

545

 

 

373

 

 

1,544

 

 

1,406

 

Total other operating income

 

10,047

 

 

10,435

 

 

11,009

 

 

11,601

 

 

9,629

 

 

31,491

 

 

36,318

 

Other operating expense:

 

 

 

 

 

 

 

Salaries and employee benefits

 

19,015

 

 

20,848

 

 

22,023

 

 

22,692

 

 

22,778

 

 

61,886

 

 

66,089

 

Net occupancy

 

4,725

 

 

4,310

 

 

4,474

 

 

3,998

 

 

4,743

 

 

13,509

 

 

12,965

 

Equipment

 

1,112

 

 

932

 

 

946

 

 

996

 

 

1,085

 

 

2,990

 

 

3,242

 

Communication

 

809

 

 

791

 

 

778

 

 

696

 

 

712

 

 

2,378

 

 

2,262

 

Legal and professional services

 

2,359

 

 

2,469

 

 

2,886

 

 

2,677

 

 

2,573

 

 

7,714

 

 

8,115

 

Computer software

 

4,473

 

 

4,621

 

 

4,606

 

 

3,996

 

 

4,138

 

 

13,700

 

 

10,844

 

Advertising

 

968

 

 

942

 

 

933

 

 

701

 

 

1,150

 

 

2,843

 

 

3,450

 

Other

 

6,150

 

 

4,990

 

 

5,461

 

 

4,678

 

 

4,819

 

 

16,601

 

 

18,585

 

Total other operating expense

 

39,611

 

 

39,903

 

 

42,107

 

 

40,434

 

 

41,998

 

 

121,621

 

 

125,552

 

Income before income taxes

 

17,490

 

 

18,947

 

 

21,246

 

 

26,881

 

 

22,634

 

 

57,683

 

 

71,888

 

Income tax expense

 

4,349

 

 

4,472

 

 

5,059

 

 

6,700

 

 

5,919

 

 

13,880

 

 

18,141

 

Net income

$

13,141

 

$

14,475

 

$

16,187

 

$

20,181

 

$

16,715

 

$

43,803

 

$

53,747

 

Per common share data:

 

 

 

 

 

 

 

Basic earnings per share

$

0.49

 

$

0.54

 

$

0.60

 

$

0.74

 

$

0.61

 

$

1.62

 

$

1.96

 

Diluted earnings per share

 

0.49

 

 

0.53

 

 

0.60

 

 

0.74

 

 

0.61

 

 

1.62

 

 

1.94

 

Cash dividends declared

 

0.26

 

 

0.26

 

 

0.26

 

 

0.26

 

 

0.26

 

 

0.78

 

 

0.78

 

Basic weighted average shares outstanding

 

27,042,762

 

 

27,024,043

 

 

26,999,138

 

 

27,134,970

 

 

27,356,614

 

 

27,022,141

 

 

27,487,237

 

Diluted weighted average shares outstanding

 

27,079,484

 

 

27,071,478

 

 

27,122,012

 

 

27,303,249

 

 

27,501,212

 

 

27,081,541

 

 

27,666,197

 

 

 

 

 

 

 

 

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

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

(Unaudited)

TABLE 4

 

 

Three Months Ended

 

Three Months Ended

 

Three Months Ended

 

September 30, 2023

 

June 30, 2023

 

September 30, 2022

 

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

$

177,780

5.38

%

$

2,412

$

69,189

5.08

%

$

877

$

19,802

2.14

%

$

107

Investment securities:

 

 

 

 

 

 

 

 

 

Taxable

 

1,354,039

2.07

 

 

7,016

 

1,379,319

2.07

 

 

7,145

 

1,445,781

1.92

 

 

6,934

Tax-exempt [1]

 

149,824

2.40

 

 

897

 

151,979

2.42

 

 

920

 

158,052

2.57

 

 

1,018

Total investment securities

 

1,503,863

2.10

 

 

7,913

 

1,531,298

2.11

 

 

8,065

 

1,603,833

1.98

 

 

7,952

Loans, including loans held for sale

 

5,507,248

4.49

 

 

62,162

 

5,543,398

4.37

 

 

60,455

 

5,355,088

3.84

 

 

51,686

FHLB stock

 

10,975

4.09

 

 

113

 

11,721

4.10

 

 

120

 

13,050

4.23

 

 

138

Total interest-earning assets

 

7,199,866

4.01

 

 

72,600

 

7,155,606

3.89

 

 

69,517

 

6,991,773

3.41

 

 

59,883

Noninterest-earning assets

 

310,671

 

 

 

308,023

 

 

 

328,978

 

 

Total assets

$

7,510,537

 

 

$

7,463,629

 

 

$

7,320,751

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

Interest-bearing demand deposits

$

1,339,294

0.14

%

$

460

$

1,367,878

0.12

%

$

411

$

1,450,434

0.06

%

$

217

Savings and money market deposits

 

2,209,835

1.16

 

 

6,464

 

2,172,680

0.86

 

 

4,670

 

2,208,037

0.19

 

 

1,054

Time deposits up to $250,000

 

449,844

3.38

 

 

3,827

 

390,961

2.98

 

 

2,907

 

228,707

0.42

 

 

245

Time deposits over $250,000

 

844,842

3.49

 

 

7,441

 

790,864

3.06

 

 

6,025

 

443,178

0.76

 

 

847

Total interest-bearing deposits

 

4,843,815

1.49

 

 

18,192

 

4,722,383

1.19

 

 

14,013

 

4,330,356

0.22

 

 

2,363

FHLB advances and other short-term borrowings

 

 

 

 

29,791

5.09

 

 

378

 

102,777

2.55

 

 

660

Long-term debt

 

156,005

5.83

 

 

2,292

 

155,946

5.65

 

 

2,199

 

105,760

4.80

 

 

1,281

Total interest-bearing liabilities

 

4,999,820

1.63

 

 

20,484

 

4,908,120

1.36

 

 

16,590

 

4,538,893

0.38

 

 

4,304

Noninterest-bearing deposits

 

1,894,256

 

 

 

1,952,267

 

 

 

2,204,965

 

 

Other liabilities

 

136,343

 

 

 

125,531

 

 

 

115,565

 

 

Total liabilities

 

7,030,419

 

 

 

6,985,918

 

 

 

6,859,423

 

 

Shareholders’ equity

 

480,118

 

 

 

477,711

 

 

 

461,328

 

 

Non-controlling interest

 

 

 

 

 

 

 

 

 

Total equity

 

480,118

 

 

 

477,711

 

 

 

461,328

 

 

Total liabilities and equity

$

7,510,537

 

 

$

7,463,629

 

 

$

7,320,751

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

$

52,116

 

 

$

52,927

 

 

$

55,579

 

 

 

 

 

 

 

 

 

 

Interest rate spread

 

2.38

%

 

 

2.53

%

 

 

3.03

%

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

 

2.88

%

 

 

2.96

%

 

 

3.17

%

 

[1]

Interest income and resultant yield information for tax-exempt investment securities is expressed on a taxable-equivalent basis using a federal statutory tax rate of 21%.

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

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

(Unaudited)

TABLE 5

 

 

Nine Months Ended

 

Nine Months Ended

 

September 30, 2023

 

September 30, 2022

 

Average

 

Average

 

 

 

Average

 

Average

 

 

(Dollars in thousands)

Balance

 

Yield/Rate

 

Interest

 

Balance

 

Yield/Rate

 

Interest

ASSETS

Interest-earning assets:

 

 

 

 

 

 

Interest-bearing deposits in other financial institutions

$

91,202

5.23

%

$

3,566

$

94,076

0.53

%

$

370

Investment securities:

 

 

 

 

 

 

Taxable

 

1,376,294

2.08

 

 

21,497

 

1,473,989

1.90

 

 

20,958

Tax-exempt [1]

 

151,611

2.48

 

 

2,818

 

160,144

2.56

 

 

3,073

Total investment securities

 

1,527,905

2.12

 

 

24,315

 

1,634,133

1.96

 

 

24,031

Loans, including loans held for sale

 

5,525,476

4.37

 

 

180,886

 

5,231,098

3.67

 

 

143,598

FHLB stock

 

11,687

4.21

 

 

369

 

10,019

3.53

 

 

265

Total interest-earning assets

 

7,156,270

3.90

 

 

209,136

 

6,969,326

3.22

 

 

168,264

Noninterest-earning assets

 

316,620

 

 

 

354,270

 

 

Total assets

$

7,472,890

 

 

$

7,323,596

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

Interest-bearing liabilities:

 

 

 

 

 

 

Interest-bearing demand deposits

$

1,373,831

0.12

%

$

1,234

$

1,437,034

0.04

%

$

473

Savings and money market deposits

 

2,188,585

0.89

 

 

14,520

 

2,208,449

0.10

 

 

1,700

Time deposits up to $250,000

 

394,464

2.92

 

 

8,604

 

223,343

0.33

 

 

548

Time deposits over $250,000

 

775,615

3.08

 

 

17,860

 

461,180

0.44

 

 

1,503

Total interest-bearing deposits

 

4,732,495

1.19

 

 

42,218

 

4,330,006

0.13

 

 

4,224

FHLB advances and other short-term borrowings

 

31,182

4.88

 

 

1,139

 

34,756

2.55

 

 

662

Long-term debt

 

146,513

5.78

 

 

6,329

 

105,699

4.37

 

 

3,455

Total interest-bearing liabilities

 

4,910,190

1.35

 

 

49,686

 

4,470,461

0.25

 

 

8,341

Noninterest-bearing deposits

 

1,957,267

 

 

 

2,250,496

 

 

Other liabilities

 

131,577

 

 

 

112,478

 

 

Total liabilities

 

6,999,034

 

 

 

6,833,435

 

 

Shareholders’ equity

 

473,856

 

 

 

490,140

 

 

Non-controlling interest

 

 

 

 

21

 

 

Total equity

 

473,856

 

 

 

490,161

 

 

Total liabilities and equity

$

7,472,890

 

 

$

7,323,596

 

 

 

 

 

 

 

 

 

Net interest income

 

 

$

159,450

 

 

$

159,923

 

 

 

 

 

 

 

Interest rate spread

 

2.55

%

 

 

2.97

%

 

 

 

 

 

 

 

 

Net interest margin

 

2.98

%

 

 

3.06

%

 

[1]

Interest income and resultant yield information for tax-exempt investment securities is expressed on a taxable-equivalent basis using a federal statutory tax rate of 21%.

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Loans by Geographic Distribution

(Unaudited)

TABLE 6

 

 

Sep 30,

 

Jun 30,

 

Mar 31,

 

Dec 31,

 

Sep 30,

(Dollars in thousands)

 

2023

 

2023

 

2023

 

2022

 

2022

HAWAII:

 

 

 

 

 

 

 

 

 

 

Commercial and industrial:

 

 

 

 

 

 

 

 

 

 

Small Business Administration Paycheck Protection Program ("SBA PPP")

 

$

1,410

 

$

1,565

 

$

1,821

 

$

2,555

 

$

5,208

Other

 

 

405,023

 

 

373,036

 

 

375,158

 

 

383,665

 

 

358,805

Real estate:

 

 

 

 

 

 

 

 

 

 

Construction

 

 

174,057

 

 

168,012

 

 

154,303

 

 

150,208

 

 

138,724

Residential mortgage

 

 

1,930,740

 

 

1,942,906

 

 

1,941,230

 

 

1,940,999

 

 

1,923,068

Home equity

 

 

753,980

 

 

750,760

 

 

743,908

 

 

739,380

 

 

719,399

Commercial mortgage

 

 

1,045,625

 

 

1,037,826

 

 

1,030,086

 

 

1,029,708

 

 

1,002,874

Consumer

 

 

338,248

 

 

327,790

 

 

342,922

 

 

346,789

 

 

347,388

Total loans, net of deferred fees and costs

 

 

4,649,083

 

 

4,601,895

 

 

4,589,428

 

 

4,593,304

 

 

4,495,466

Less: Allowance for credit losses

 

 

48,105

 

 

44,828

 

 

44,062

 

 

45,169

 

 

47,814

Loans, net of allowance for credit losses

 

$

4,600,978

 

$

4,557,067

 

$

4,545,366

 

$

4,548,135

 

$

4,447,652

 

 

 

 

 

 

 

 

 

 

 

U.S. MAINLAND: [1]

 

 

 

 

 

 

 

 

 

 

Commercial and industrial:

 

 

 

 

 

 

 

 

 

 

Other

 

 

157,373

 

 

170,557

 

 

179,906

 

 

160,282

 

 

158,474

Real estate:

 

 

 

 

 

 

 

 

 

 

Construction

 

 

37,455

 

 

32,807

 

 

27,171

 

 

16,515

 

 

12,872

Commercial mortgage

 

 

319,802

 

 

329,736

 

 

331,546

 

 

333,367

 

 

332,872

Consumer

 

 

344,997

 

 

385,688

 

 

429,346

 

 

451,998

 

 

422,528

Total loans, net of deferred fees and costs

 

 

859,627

 

 

918,788

 

 

967,969

 

 

962,162

 

 

926,746

Less: Allowance for credit losses

 

 

16,412

 

 

19,021

 

 

19,037

 

 

18,569

 

 

16,568

Loans, net of allowance for credit losses

 

$

843,215

 

$

899,767

 

$

948,932

 

$

943,593

 

$

910,178

 

 

 

 

 

 

 

 

 

 

 

TOTAL:

 

 

 

 

 

 

 

 

 

 

Commercial and industrial:

 

 

 

 

 

 

 

 

 

 

SBA PPP

 

$

1,410

 

$

1,565

 

$

1,821

 

$

2,555

 

$

5,208

Other

 

 

562,396

 

 

543,593

 

 

555,064

 

 

543,947

 

 

517,279

Real estate:

 

 

 

 

 

 

 

 

 

 

Construction

 

 

211,512

 

 

200,819

 

 

181,474

 

 

166,723

 

 

151,596

Residential mortgage

 

 

1,930,740

 

 

1,942,906

 

 

1,941,230

 

 

1,940,999

 

 

1,923,068

Home equity

 

 

753,980

 

 

750,760

 

 

743,908

 

 

739,380

 

 

719,399

Commercial mortgage

 

 

1,365,427

 

 

1,367,562

 

 

1,361,632

 

 

1,363,075

 

 

1,335,746

Consumer

 

 

683,245

 

 

713,478

 

 

772,268

 

 

798,787

 

 

769,916

Total loans, net of deferred fees and costs

 

 

5,508,710

 

 

5,520,683

 

 

5,557,397

 

 

5,555,466

 

 

5,422,212

Less: Allowance for credit losses

 

 

64,517

 

 

63,849

 

 

63,099

 

 

63,738

 

 

64,382

Loans, net of allowance for credit losses

 

$

5,444,193

 

$

5,456,834

 

$

5,494,298

 

$

5,491,728

 

$

5,357,830

[1]

U.S. Mainland includes territories of the United States.

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Deposits

(Unaudited)

TABLE 7

 

 

 

Sep 30,

 

Jun 30,

 

Mar 31,

 

Dec 31,

 

Sep 30,

(Dollars in thousands)

 

2023

 

2023

 

2023

 

2022

 

2022

Noninterest-bearing demand deposits

 

$

1,969,523

 

$

2,009,387

 

$

2,028,087

 

$

2,092,823

 

$

2,138,083

Interest-bearing demand deposits

 

 

1,345,843

 

 

1,359,978

 

 

1,386,913

 

 

1,453,167

 

 

1,441,302

Savings and money market deposits

 

 

2,209,550

 

 

2,184,652

 

 

2,184,675

 

 

2,199,028

 

 

2,194,991

Time deposits up to $250,000

 

 

465,543

 

 

427,864

 

 

372,150

 

 

330,148

 

 

261,961

Core deposits

 

 

5,990,459

 

 

5,981,881

 

 

5,971,825

 

 

6,075,166

 

 

6,036,337

 

 

 

 

 

 

 

 

 

 

 

Government time deposits

 

 

400,130

 

 

383,426

 

 

360,501

 

 

290,057

 

 

195,057

Other time deposits greater than $250,000

 

 

484,156

 

 

440,430

 

 

414,642

 

 

371,000

 

 

325,040

Total time deposits greater than $250,000

 

 

884,286

 

 

823,856

 

 

775,143

 

 

661,057

 

 

520,097

Total deposits

 

$

6,874,745

 

$

6,805,737

 

$

6,746,968

 

$

6,736,223

 

$

6,556,434

 

 

 

 

 

 

 

 

 

 

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Nonperforming Assets and Accruing Loans 90+ Days Past Due

(Unaudited)

TABLE 8

 

Sep 30,

 

Jun 30,

 

Mar 31,

 

Dec 31,

 

Sep 30,

(Dollars in thousands)

2023

 

2023

 

2023

 

2022

 

2022

Nonaccrual loans:

 

 

 

 

 

Commercial and industrial:

 

 

 

 

 

Other

$

352

 

$

319

 

$

264

 

$

297

 

$

277

 

Real estate:

 

 

 

 

 

Construction

 

 

 

4,851

 

 

 

 

 

 

 

Residential mortgage

 

4,949

 

 

4,385

 

 

3,445

 

 

3,808

 

 

2,771

 

Home equity

 

677

 

 

797

 

 

712

 

 

570

 

 

584

 

Commercial mortgage

 

77

 

 

77

 

 

77

 

 

 

 

 

Consumer

 

597

 

 

632

 

 

815

 

 

576

 

 

588

 

Total nonaccrual loans

 

6,652

 

 

11,061

 

 

5,313

 

 

5,251

 

 

4,220

 

Other real estate owned ("OREO")

 

 

 

 

 

 

 

 

 

 

Total nonperforming assets ("NPAs")

 

6,652

 

 

11,061

 

 

5,313

 

 

5,251

 

 

4,220

 

Accruing loans 90+ days past due:

 

 

 

 

 

Commercial and industrial:

 

 

 

 

 

SBA PPP

 

 

 

 

 

 

 

13

 

 

 

Other

 

 

 

 

 

 

 

26

 

 

669

 

Real estate:

 

 

 

 

 

Residential mortgage

 

794

 

 

959

 

 

 

 

559

 

 

503

 

Home equity

 

 

 

133

 

 

 

 

 

 

 

Consumer

 

2,120

 

 

2,207

 

 

1,908

 

 

1,240

 

 

623

 

Total accruing loans 90+ days past due

 

2,914

 

 

3,299

 

 

1,908

 

 

1,838

 

 

1,795

 

Total NPAs and accruing loans 90+ days past due

$

9,566

 

$

14,360

 

$

7,221

 

$

7,089

 

$

6,015

 

 

 

 

 

 

 

Ratio of total nonaccrual loans to total loans

 

0.12

%

 

0.20

%

 

0.10

%

 

0.09

%

 

0.08

%

Ratio of total NPAs to total loans and OREO

 

0.12

%

 

0.20

%

 

0.10

%

 

0.09

%

 

0.08

%

Ratio of total NPAs and accruing loans 90+ days past due to total loans and OREO

 

0.17

%

 

0.26

%

 

0.13

%

 

0.13

%

 

0.11

%

 

 

 

 

 

 

Quarter-to-quarter changes in NPAs:

 

 

 

 

 

Balance at beginning of quarter

$

11,061

 

$

5,313

 

$

5,251

 

$

4,220

 

$

4,983

 

Additions

 

2,311

 

 

7,105

 

 

1,609

 

 

2,162

 

 

1,072

 

Reductions:

 

 

 

 

 

Payments

 

(5,718

)

 

(290

)

 

(505

)

 

(198

)

 

(329

)

Return to accrual status

 

(207

)

 

(212

)

 

(14

)

 

(44

)

 

(616

)

Net charge-offs, valuation and other adjustments

 

(795

)

 

(855

)

 

(1,028

)

 

(889

)

 

(890

)

Total reductions

 

(6,720

)

 

(1,357

)

 

(1,547

)

 

(1,131

)

 

(1,835

)

Balance at end of quarter

$

6,652

 

$

11,061

 

$

5,313

 

$

5,251

 

$

4,220

 

 

 

 

 

 

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Allowance for Credit Losses on Loans

(Unaudited)

TABLE 9

 

 

Three Months Ended

 

Nine Months Ended

 

 

Sep 30,

 

Jun 30,

 

Mar 31,

 

Dec 31,

 

Sep 30,

 

Sep 30,

(Dollars in thousands)

 

2023

 

2023

 

2023

 

2022

 

2022

 

2023

 

2022

Allowance for credit losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

63,849

 

 

$

63,099

 

 

$

63,738

 

 

$

64,382

 

 

$

65,211

 

 

$

63,738

 

 

$

68,097

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision (credit) for credit losses on loans

 

 

4,526

 

 

 

4,135

 

 

 

1,615

 

 

 

1,032

 

 

 

731

 

 

 

10,276

 

 

 

(744

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Charge-offs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

402

 

 

 

362

 

 

 

779

 

 

 

678

 

 

 

550

 

 

 

1,543

 

 

 

1,291

 

Consumer

 

 

4,710

 

 

 

3,873

 

 

 

2,686

 

 

 

1,881

 

 

 

1,912

 

 

 

11,269

 

 

 

4,518

 

Total charge-offs

 

 

5,112

 

 

 

4,235

 

 

 

3,465

 

 

 

2,559

 

 

 

2,462

 

 

 

12,812

 

 

 

5,809

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recoveries:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

261

 

 

 

125

 

 

 

250

 

 

 

210

 

 

 

220

 

 

 

636

 

 

 

785

 

Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

14

 

 

 

1

 

 

 

76

 

Residential mortgage

 

 

10

 

 

 

7

 

 

 

53

 

 

 

133

 

 

 

14

 

 

 

70

 

 

 

162

 

Home equity

 

 

 

 

 

15

 

 

 

 

 

 

 

 

 

36

 

 

 

15

 

 

 

36

 

Consumer

 

 

982

 

 

 

703

 

 

 

908

 

 

 

540

 

 

 

618

 

 

 

2,593

 

 

 

1,779

 

Total recoveries

 

 

1,254

 

 

 

850

 

 

 

1,211

 

 

 

883

 

 

 

902

 

 

 

3,315

 

 

 

2,838

 

Net charge-offs

 

 

3,858

 

 

 

3,385

 

 

 

2,254

 

 

 

1,676

 

 

 

1,560

 

 

 

9,497

 

 

 

2,971

 

Balance at end of period

 

$

64,517

 

 

$

63,849

 

 

$

63,099

 

 

$

63,738

 

 

$

64,382

 

 

$

64,517

 

 

$

64,382

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average loans, net of deferred fees and costs

 

$

5,507,248

 

 

$

5,543,398

 

 

$

5,525,988

 

 

$

5,498,800

 

 

$

5,355,088

 

 

$

5,525,476

 

 

$

5,231,098

 

Ratio of annualized net charge-offs to average loans

 

 

0.28

%

 

 

0.24

%

 

 

0.16

%

 

 

0.12

%

 

 

0.12

%

 

 

0.23

%

 

 

0.08

%

Ratio of ACL to total loans

 

 

1.17

%

 

 

1.16

%

 

 

1.14

%

 

 

1.15

%

 

 

1.19

%

 

 

1.17

%

 

 

1.19

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures

(Unaudited)

TABLE 10

The Company uses certain non-GAAP financial measures in addition to our GAAP results to provide useful information for evaluating our cash operating performance, ability to service debt, compliance with debt covenants and measurement against competitors. This information should be considered as supplemental in nature and should not be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be comparable to similarly entitled measures reported by other companies.

The Company believes that pre-provision net revenue ("PPNR"), 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 PPNR and our PPNR to average assets for each of the periods indicated:

 

Three Months Ended

 

Nine Months Ended

 

Sep 30,

 

Jun 30,

 

Mar 31,

 

Dec 31,

 

Sep 30,

 

Sep 30,

(Dollars in thousands)

2023

 

2023

 

2023

 

2022

 

2022

 

2023

 

2022

Net income

$

13,141

 

$

14,475

 

$

16,187

 

$

20,181

 

$

16,715

 

$

43,803

 

$

53,747

 

Add: Income tax expense

 

4,349

 

 

4,472

 

 

5,059

 

 

6,700

 

 

5,919

 

 

13,880

 

 

18,141

 

Pre-tax income

 

17,490

 

 

18,947

 

 

21,246

 

 

26,881

 

 

22,634

 

 

57,683

 

 

71,888

 

Add: Provision (credit) for credit losses

 

4,874

 

 

4,319

 

 

1,852

 

 

571

 

 

362

 

 

11,045

 

 

(1,844

)

PPNR

$

22,364

 

$

23,266

 

$

23,098

 

$

27,452

 

$

22,996

 

$

68,728

 

$

70,044

 

 

Three Months Ended

 

Nine Months Ended

 

Sep 30,

 

Jun 30,

 

Mar 31,

 

Dec 31,

 

Sep 30,

 

Sep 30,

(Dollars in thousands)

2023

 

2023

 

2023

 

2022

 

2022

 

2023

 

2022

Net income

$

13,141

 

$

14,475

 

$

16,187

 

$

20,181

 

$

16,715

 

$

43,803

 

$

53,747

 

Net income (annualized)

 

52,564

 

 

57,900

 

 

64,748

 

 

80,724

 

 

66,860

 

 

58,404

 

 

71,663

 

PPNR

 

22,364

 

 

23,266

 

 

23,098

 

 

27,452

 

 

22,996

 

 

68,728

 

 

70,044

 

PPNR (annualized)

 

89,456

 

 

93,064

 

 

92,392

 

 

109,808

 

 

91,984

 

 

91,637

 

 

93,392

 

Average assets

 

7,510,537

 

 

7,463,629

 

 

7,443,767

 

 

7,389,712

 

 

7,320,751

 

 

7,472,890

 

 

7,323,596

 

Return on average assets ("ROA")

 

0.70

%

 

0.78

%

 

0.87

%

 

1.09

%

 

0.91

%

 

0.78

%

 

0.98

%

PPNR to average assets

 

1.19

%

 

1.25

%

 

1.24

%

 

1.49

%

 

1.26

%

 

1.23

%

 

1.28

%

 

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