Toggle SGML Header (+)


Section 1: 8-K (8-K)

Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C.  20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
 
Date of report (Date of earliest event reported):

April 24, 2019
 
 
397632378_a8klogoa15.jpg

Central Pacific Financial Corp.
(Exact name of registrant as specified in its charter)
 
Hawaii
 
001-31567
 
99-0212597
(State or other jurisdiction
 
(Commission
 
(I.R.S. Employer
of incorporation)
 
File Number)
 
Identification No.)
 
220 South King Street, Honolulu, Hawaii
 
96813
(Address of principal executive offices)
 
(Zip Code)
 
(808) 544-0500
(Registrant’s telephone number, including area code)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
 
o
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
 
o
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
 
o
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o





ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
 
On April 24, 2019, Central Pacific Financial Corp. issued a press release regarding its results of operations and financial condition for the quarter ended March 31, 2019. A copy of the press release is furnished herewith as Exhibit 99.1.
 
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
 
(d)
 
Exhibits
 
 
99.1

 






SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
Central Pacific Financial Corp.
 
 
(Registrant)
 
 
 
 
 
 
 
 
 
Date:
April 24, 2019
/s/ David S. Morimoto
 
 
David S. Morimoto
 
 
Executive Vice President and Chief Financial Officer


(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit

Central Pacific Financial Corp. Reports $16.0 Million in First Quarter Earnings
Page 1


Exhibit 99.1
397632378_ex99logoa21.jpg
 
 
 
 
FOR IMMEDIATE RELEASE
 
 
 
 
Investor Contact:
Ian Tanaka
Media Contact:
Wayne Kirihara
 
VP, Treasury Manager
 
EVP, Chief Marketing Officer
 
(808) 544-3646
 
(808) 544-3687
 
 
 
NEWS RELEASE
 
 
 
 
 

CENTRAL PACIFIC FINANCIAL CORP. REPORTS $16.0 MILLION
FIRST QUARTER EARNINGS AND INCREASES QUARTERLY CASH DIVIDEND


Net income of $16.0 million, or fully diluted EPS of $0.55 for the first quarter, representing an increase of 12.3% and 14.6%, respectively, from the year-ago quarter.

ROA of 1.10% and ROE of 12.97% for the first quarter, compared to 1.01% and 11.60%, respectively, in the year-ago quarter.

Asset quality remains strong as nonperforming assets totaled $3.3 million, or 0.06% of total assets.

Net interest margin increased by 6 basis points in the first quarter and 13 basis points from the year-ago quarter.

Increased second quarter cash dividend by 9.5% to $0.23 per share.


HONOLULU, HI, April 24, 2019 – Central Pacific Financial Corp. (NYSE: CPF), (the "Company"), today reported net income in the first quarter of 2019 of $16.0 million, or diluted earnings per share ("EPS") of $0.55, compared to net income in the first quarter of 2018 of $14.3 million, or EPS of $0.48, and net income in the fourth quarter of 2018 of $15.8 million, or EPS of $0.54.

"We are pleased that our consistent earnings combined with solid asset quality and capital position has allowed us to increase our cash dividend." said Paul Yonamine, Chairman and Chief Executive Officer. "Our team continues to work on building customer relationships and we look forward to continuing to execute on our strategies during the rest of the year." said Catherine Ngo, President.

In April 2019, the Company's Board of Directors declared a quarterly cash dividend of $0.23 per share on its outstanding common shares. This represents a 9.5% increase from the $0.21 dividend paid in the first quarter of 2019. The dividend will be payable on June 17, 2019 to shareholders of record at the close of business on May 31, 2019.

During the three months ended March 31, 2019, the Company repurchased 277,000 shares of common stock, or approximately 1.0% of its common stock outstanding as of December 31, 2018. Total cost of the shares repurchased during the three months ended March 31, 2019 was $7.7 million, or an average cost per share of $27.83. The Company's remaining repurchase authority under its




Central Pacific Financial Corp. Reports $16.0 Million in First Quarter Earnings
Page 2


common stock repurchase program at March 31, 2019 is $13.0 million. During the three months ended March 31, 2019, the Company returned $13.8 million in capital to its shareholders through cash dividends and share repurchases.

Earnings Highlights
Net interest income for the first quarter of 2019 was $45.1 million, compared to $42.3 million in the year-ago quarter and $44.7 million in the previous quarter. Net interest margin for the first quarter of 2019 was 3.34%, compared to 3.21% in the year-ago quarter and 3.28% in the previous quarter. The increases in net interest income and net interest margin from the year-ago and sequential quarters were primarily due to growth in the loan portfolio, combined with increases in the yields earned on the loan and investment securities portfolios. These increases were partially offset by higher deposit and borrowing costs from the year-ago and sequential quarters.

Other operating income for the first quarter of 2019 totaled $11.7 million, compared to $9.0 million in the year-ago quarter and $9.4 million in the previous quarter. The increases from the year-ago and previous quarters were primarily due to the conversion of MasterCard Class B common stock received during their initial public offering to Class A common stock and immediate sale of the converted shares resulting in a gain of $2.6 million (recorded in other), combined with higher income from bank-owned life insurance. The increases in income from bank-owned life insurance from the year-ago and previous quarters of $0.6 million and $0.7 million, respectively, were primarily attributable to fluctuations in the stock market during the first quarter of 2019. These positive variances were partially offset by lower net gains on sales of residential mortgage loans (included in mortgage banking income) from the year-ago and previous quarters of $0.4 million and $0.5 million, respectively, and lower commissions and fees on investment services (included in other service charges and fees) of $0.4 million, compared to the previous quarter.

Other operating expense for the first quarter of 2019 totaled $34.3 million, which increased from $33.4 million in the year-ago quarter and increased from $33.6 million in the previous quarter. The increase from the year-ago quarter was primarily due to higher salaries and employee benefits of $1.4 million and higher computer software expense of $0.3 million. The increase in salaries and employee benefits in the current quarter was partially attributable to a $0.6 million increase in deferred compensation expense with a corresponding increase in income from bank-owned life insurance. These negative variances were partially offset by lower amortization of core deposit premium of $0.7 million, as the intangible asset was fully amortized as of September 30, 2018, and lower legal and professional fees of $0.3 million compared to the year-ago period. The increase from the previous quarter was primarily due to higher salaries and employee benefits of $0.8 million, combined with an increase to the reserve for unfunded commitments (included in other) of $0.2 million in the current quarter compared to a decrease to the provision of $0.5 million in the previous quarter. The increase in salaries and employee benefits in the current quarter was partially attributable to a $0.4 million increase in deferred compensation expense with a corresponding increase in income from bank-owned life insurance. These negative variances were partially offset by lower legal and professional services of $0.6 million, compared to the previous quarter.

The efficiency ratio for the first quarter of 2019 was 60.49%, compared to 65.15% in the year-ago quarter and 62.21% in the previous quarter. The efficiency ratio was positively impacted by the aforementioned MasterCard stock gain.

In the first quarter of 2019, the Company recorded income tax expense of $5.1 million, compared to $3.8 million in the year-ago quarter and $6.0 million in the previous quarter. The effective tax rate for the first quarter of 2019 was 24.2%, compared to 21.0% in the year-ago quarter and 27.6% in the previous quarter. Income tax expense in the year-ago quarter included an income tax benefit of $0.7 million related to the finalization of the impact of H.R.1, commonly referred to as the Tax Cuts and Jobs Act.
 
Balance Sheet Highlights
Total assets at March 31, 2019 of $5.84 billion increased by $190.1 million, or 3.4% from March 31, 2018, and increased by $34.3 million, or 0.6% from December 31, 2018.
 
Total loans and leases at March 31, 2019 of $4.10 billion increased by $285.4 million, or 7.5% and $23.2 million, or 0.6% from March 31, 2018 and December 31, 2018, respectively. The year-over-year increase in total loans was driven by broad based gains in every loan category, while the sequential quarter increase in total loans was led by growth in residential mortgage and commercial mortgage loans.
 
Total deposits at March 31, 2019 of $4.95 billion decreased by $32.3 million, or 0.6% from March 31, 2018, and remained relatively unchanged from December 31, 2018.  The year-over-year decline in total deposits was primarily attributable to a decrease in government time deposits of $102.9 million, partially offset by an increase in core deposits. Core deposits, which include demand deposits, savings and money market deposits, and time deposits less than $100,000, totaled $4.06 billion at March 31, 2019.  This represents an increase of $53.3 million, or 1.3% from March 31, 2018, and $44.3 million, or 1.1% from December 31, 2018. The




Central Pacific Financial Corp. Reports $16.0 Million in First Quarter Earnings
Page 3


Company's loan-to-deposit ratio was 82.9% at March 31, 2019, compared to 76.6% at March 31, 2018 and 82.5% at December 31, 2018.

Asset Quality
Nonperforming assets at March 31, 2019 totaled $3.3 million, or 0.06% of total assets, compared to $3.4 million, or 0.06% of total assets at March 31, 2018, and $2.7 million, or 0.05% of total assets at December 31, 2018.

Loans delinquent for 90 days or more still accruing interest totaled $0.2 million at March 31, 2019, compared to $0.4 million and $0.5 million at March 31, 2018 and December 31, 2018, respectively.

Net charge-offs in the first quarter of 2019 totaled $1.9 million, compared to net charge-offs of $0.6 million in the year-ago quarter, and net recoveries of $2.5 million in the previous quarter. Net recoveries in the fourth quarter of 2018 included a $4.5 million recovery on a U.S. mainland land loan.

In the first quarter of 2019, the Company recorded a provision for loan and lease losses of $1.3 million, compared to a credit of $0.2 million in the year-ago quarter and a credit of $1.4 million in the previous quarter. The aforementioned $4.5 million recovery contributed to the credit to the provision for loan and lease losses in the previous quarter. The allowance for loan and lease losses, as a percentage of total loans and leases at March 31, 2019 was 1.15%, compared to 1.29% at March 31, 2018 and 1.17% at December 31, 2018.
 
Capital
Total shareholders' equity was $502.6 million at March 31, 2019, compared to $484.1 million and $491.7 million at March 31, 2018 and December 31, 2018, respectively.

The Company maintained its strong capital position and its capital ratios continue to exceed the levels required to be considered a "well-capitalized" institution for regulatory purposes under Basel III. At March 31, 2019, the Company's leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ratios were 9.5%, 13.0%, 14.1%, and 11.8%, respectively, compared to 9.9%, 13.5%, 14.7%, and 11.9%, respectively, at December 31, 2018. The decline in the ratios was primarily due to the redemption of $20 million in floating rate trust preferred securities and the underlying floating rate junior subordinated debentures during the first quarter of 2019 which was treated as capital.

Non-GAAP Financial Measures
This press release contains certain references to financial measures that have been adjusted to exclude certain expenses and other specified items.  These financial measures differ from comparable measures calculated and presented in accordance with accounting principles generally accepted in the United States of America ("GAAP") in that they exclude unusual or non-recurring charges, losses, credits or gains.  This press release identifies the specific items excluded from the comparable GAAP financial measure in the calculation of each non-GAAP financial measure. Management believes that financial presentations excluding the impact of these items provide useful supplemental information that is important to a proper understanding of the Company's core business results by investors.  These presentations should not be viewed as a substitute for results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP financial measures presented by other companies.
 
Conference Call
The Company's management will host a conference call today at 1:00 p.m. Eastern Time (7:00 a.m. Hawaii Time) to discuss the quarterly results. Individuals are encouraged to listen to the live webcast of the presentation by visiting the investor relations page of the Company's website at http://ir.centralpacificbank.com. Alternatively, investors may participate in the live call by dialing 1-877-505-7644. A playback of the call will be available through May 24, 2019 by dialing 1-877-344-7529 (passcode: 10130726) and on the Company's website.

About Central Pacific Financial Corp.
Central Pacific Financial Corp. is a Hawaii-based bank holding company with approximately $5.8 billion in assets.  Central Pacific Bank, its primary subsidiary, operates 35 branches and 79 ATMs in the state of Hawaii, as of March 31, 2019.  For additional information, please visit the Company's website at http://www.centralpacificbank.com.





Central Pacific Financial Corp. Reports $16.0 Million in First Quarter Earnings
Page 4


397632378_equalhousinga21.jpg  397632378_memberfdica21.jpg

 397632378_nyselisteda21.jpg
**********
 
Forward-Looking Statements
This document may contain forward-looking statements concerning projections of revenues, income/loss, earnings/loss per share, capital expenditures, dividends, capital structure, or other financial items, plans and objectives of management for future operations, future economic performance, or any of the assumptions underlying or relating to any of the foregoing.  Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts, and may include the words "believes," "plans," "expects," "anticipates," "forecasts," "intends," "hopes," "should," "estimates," or words of similar meaning.  While the Company believes that our forward-looking statements and the assumptions underlying them are reasonably based, such statements and assumptions are by their nature subject to risks and uncertainties, and thus could later prove to be inaccurate or incorrect.  Accordingly, actual results could materially differ from projections for a variety of reasons, to include, but not limited to:  the effect of, and our failure to comply with any regulatory orders or actions we are or may become subject to; oversupply of inventory and adverse conditions in the Hawaii and California real estate markets and any weakness in the construction industry;  adverse changes in the financial performance and/or condition of our borrowers and, as a result, increased loan delinquency rates,  deterioration in asset quality, and losses in our loan portfolio; the impact of local, national, and international economies and events (including political events, acts of war or terrorism, natural disasters such as wildfires, volcanoes, tsunamis and earthquakes) on the Company's business and operations and on tourism, the military and other major industries operating within the Hawaii market and any other markets in which the Company does business; deterioration or malaise in economic conditions, including destabilizing factors in the financial industry and deterioration of the real estate market, as well as the impact from any declining levels of consumer and business confidence in the state of the economy in general and in financial institutions in particular;  the impact of regulatory action on the Company and Central Pacific Bank and legislation affecting the financial services industry; failure to maintain effective internal control over financial reporting or disclosure controls and procedures; changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, other regulatory reform, and any related rules and regulations on our business operations and competitiveness; the costs and effects of legal and regulatory developments, including legal proceedings or regulatory or other governmental inquiries and proceedings and the resolution thereof, and the results of regulatory examinations or reviews;  the effects of the Tax Cuts and Jobs Act; the effects of and changes in trade, monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System; inflation, interest rate, securities market and monetary fluctuations;  negative trends in our market capitalization and adverse changes in the price of the Company's common shares; changes in consumer spending, borrowings and savings habits; technological changes and developments; changes in the competitive environment among financial holding companies and other financial service providers, including fintech businesses; the effect of changes in accounting policies and practices, including changes as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters; changes in our capital position; our ability to attract and retain skilled directors, executives and employees; changes in our organization, compensation and benefit plans; and our success at managing the risks involved in any of the foregoing items. For further information on factors that could cause actual results to materially differ from projections, please see the Company's publicly available Securities and Exchange Commission filings, including the Company's Form 10-K for the last fiscal year and, in particular, the discussion of "Risk Factors" set forth therein. The Company does not update any of its forward-looking statements except as required by law.




CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
 
Financial Highlights
 
(Unaudited)
TABLE 1
 
 
 
Three Months Ended
(Dollars in thousands,
 
Mar 31,
 
Dec 31,
 
Sep 30,
 
Jun 30,
 
Mar 31,
except for per share amounts)
 
2019
 
2018
 
2018
 
2018
 
2018
CONDENSED INCOME STATEMENT
 
 

 
 

 
 
 
 
 
 

Net interest income
 
$
45,113

 
$
44,679

 
$
43,325

 
$
42,672

 
$
42,322

Provision (credit) for loan and lease losses
 
1,283

 
(1,386
)
 
(59
)
 
532

 
(211
)
Net interest income after provision (credit) for loan and lease losses
 
43,830

 
46,065

 
43,384

 
42,140

 
42,533

Total other operating income
 
11,673

 
9,400

 
10,820

 
9,630

 
8,954

Total other operating expense 
 
34,348

 
33,642

 
34,025

 
33,611

 
33,404

Income before taxes 
 
21,155

 
21,823

 
20,179

 
18,159

 
18,083

Income tax expense 
 
5,118

 
6,031

 
4,986

 
3,935

 
3,806

Net income
 
16,037

 
15,792

 
15,193

 
14,224

 
14,277

Basic earnings per common share
 
$
0.56

 
$
0.54

 
$
0.52

 
$
0.48

 
$
0.48

Diluted earnings per common share
 
0.55

 
0.54

 
0.52

 
0.48

 
0.48

Dividends declared per common share
 
0.21

 
0.21

 
0.21

 
0.21

 
0.19

 
 
 
 
 
 
 
 
 
 
 
PERFORMANCE RATIOS
 
 

 
 

 
 

 
 

 
 

Return on average assets (ROA) [1]
 
1.10
%
 
1.10
%
 
1.06
%
 
1.00
%
 
1.01
%
Return on average shareholders’ equity (ROE) [1]
 
12.97

 
12.90

 
12.54

 
11.83

 
11.60

Return on average tangible shareholders’ equity (ROTE) [1]
 
12.97

 
12.90

 
12.55

 
11.85

 
11.64

Average shareholders’ equity to average assets
 
8.51

 
8.53

 
8.49

 
8.49

 
8.73

Efficiency ratio [2]
 
60.49

 
62.21

 
62.84

 
64.26

 
65.15

Net interest margin (NIM) [1]
 
3.34

 
3.28

 
3.20

 
3.20

 
3.21

Dividend payout ratio [3]
 
38.18

 
38.89

 
40.38

 
43.75

 
39.58

 
 
 
 
 
 
 
 
 
 
 
SELECTED AVERAGE BALANCES
 
 

 
 

 
 

 
 

 
 

Average loans and leases, including loans held for sale
 
$
4,083,791

 
$
4,022,376

 
$
3,941,511

 
$
3,836,739

 
$
3,789,338

Average interest-earning assets
 
5,464,377

 
5,451,052

 
5,418,924

 
5,376,115

 
5,334,276

Average assets
 
5,809,931

 
5,739,228

 
5,709,825

 
5,663,697

 
5,638,205

Average deposits
 
4,978,470

 
4,938,560

 
5,063,061

 
5,041,164

 
5,000,108

Average interest-bearing liabilities
 
3,821,528

 
3,769,920

 
3,802,028

 
3,776,053

 
3,746,012

Average shareholders’ equity
 
494,635

 
489,510

 
484,737

 
480,985

 
492,184

Average tangible shareholders' equity
 
494,635

 
489,510

 
484,391

 
479,959

 
490,453


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)
 
2019
 
2018
 
2018
 
2018
 
2018
REGULATORY CAPITAL
 
 
 
 
 
 
 
 
 
 
Central Pacific Financial Corp.
 
 
 
 
 
 
 
 
 
 
Leverage capital
 
$
554,148

 
$
570,260

 
$
590,627

 
$
586,799

 
$
579,221

Tier 1 risk-based capital
 
554,148

 
570,260

 
590,627

 
586,799

 
579,221

Total risk-based capital
 
602,824

 
619,419

 
639,157

 
636,755

 
629,179

Common equity tier 1 capital
 
504,148

 
500,260

 
500,627

 
496,799

 
489,221

Central Pacific Bank
 
 
 
 
 
 
 
 
 
 
Leverage capital
 
539,390

 
533,166

 
571,949

 
569,128

 
568,409

Tier 1 risk-based capital
 
539,390

 
533,166

 
571,949

 
569,128

 
568,409

Total risk-based capital
 
588,066

 
582,325

 
620,479

 
619,084

 
618,240

Common equity tier 1 capital
 
539,390

 
533,166

 
571,949

 
569,128

 
568,409

 
 
 
 
 
 
 
 
 
 
 
REGULATORY CAPITAL RATIOS
 
 
 
 
 
 
 
 
 
 
Central Pacific Financial Corp.
 
 
 
 
 
 
 
 
 
 
Leverage capital ratio
 
9.5
%
 
9.9
%
 
10.3
%
 
10.3
%
 
10.3
%
Tier 1 risk-based capital ratio
 
13.0

 
13.5

 
14.2

 
14.4

 
14.5

Total risk-based capital ratio
 
14.1

 
14.7

 
15.4

 
15.7

 
15.8

Common equity tier 1 capital ratio
 
11.8

 
11.9

 
12.0

 
12.2

 
12.3

Central Pacific Bank
 
 
 
 
 
 
 
 
 
 
Leverage capital ratio
 
9.3

 
9.3

 
10.0

 
10.0

 
10.1

Tier 1 risk-based capital ratio
 
12.7

 
12.7

 
13.8

 
14.0

 
14.3

Total risk-based capital ratio
 
13.8

 
13.8

 
15.0

 
15.3

 
15.5

Common equity tier 1 capital ratio
 
12.7

 
12.7

 
13.8

 
14.0

 
14.3

 
 
Mar 31,
 
Dec 31,
 
Sep 30,
 
Jun 30,
 
Mar 31,
(dollars in thousands, except for per share amounts)
 
2019
 
2018
 
2018
 
2018
 
2018
BALANCE SHEET
 
 

 
 

 
 
 
 
 
 

Loans and leases
 
$
4,101,571

 
$
4,078,366

 
$
3,978,027

 
$
3,881,581

 
$
3,816,146

Total assets
 
5,841,352

 
5,807,026

 
5,728,640

 
5,681,519

 
5,651,287

Total deposits
 
4,948,128

 
4,946,490

 
5,003,680

 
4,979,099

 
4,980,431

Long-term debt
 
101,547

 
122,166

 
92,785

 
92,785

 
92,785

Total shareholders’ equity
 
502,638

 
491,725

 
478,151

 
480,668

 
484,108

Total shareholders’ equity to total assets
 
8.60
%
 
8.47
%
 
8.35
%
 
8.46
%
 
8.57
%
Tangible common equity to tangible assets [4]
 
8.60
%
 
8.47
%
 
8.35
%
 
8.45
%
 
8.54
%
 
 
 
 
 
 
 
 
 
 
 
ASSET QUALITY
 
 

 
 

 
 

 
 

 
 

Allowance for loan and lease losses
 
$
47,267

 
$
47,916

 
$
46,826

 
$
48,181

 
$
49,217

Non-performing assets
 
3,338

 
2,737

 
3,026

 
3,509

 
3,438

Allowance to loans and leases outstanding
 
1.15
%
 
1.17
%
 
1.18
%
 
1.24
%
 
1.29
%
Allowance to non-performing assets
 
1,416.03
%
 
1,750.68
%
 
1,547.46
%
 
1,373.07
%
 
1,431.56
%
 
 
 
 
 
 
 
 
 
 
 
PER SHARE OF COMMON STOCK OUTSTANDING
 
 

 
 

 
 

 
 

 
 

Book value per common share
 
$
17.50

 
$
16.97

 
$
16.34

 
$
16.30

 
$
16.30

Tangible book value per common share
 
17.50

 
16.97

 
16.34

 
16.28

 
16.25

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
[1] 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).
[2] Efficiency ratio is defined as total 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.
[4] The tangible common equity ratio is a non-GAAP measure which should be read in conjunction with the Company’s GAAP financial information. Comparison of our ratio with those of other companies may not be possible because other companies may calculate the ratio differently. See Reconciliation of Non-GAAP Financial Measures in Table 2.
 




CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
 
Reconciliation of Non-GAAP Financial Measures
 
(Unaudited)
TABLE 2
 
The following table sets forth a reconciliation of our tangible common equity ratio for each of the dates indicated:

 
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
March 31,
(Dollars in thousands)
 
2019
 
2018
 
2018
 
2018
 
2018
Tangible Common Equity Ratio:
 
 

 
 

 
 
 
 
 
 

Total shareholders’ equity
 
$
502,638

 
$
491,725

 
$
478,151

 
$
480,668

 
$
484,108

Less: Other intangible assets
 

 

 

 
(669
)
 
(1,337
)
Tangible common equity
 
$
502,638

 
$
491,725

 
$
478,151

 
$
479,999

 
$
482,771

 
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
5,841,352

 
$
5,807,026

 
$
5,728,640

 
$
5,681,519

 
$
5,651,287

Less: Other intangible assets
 

 

 

 
(669
)
 
(1,337
)
Tangible assets
 
$
5,841,352

 
$
5,807,026

 
$
5,728,640

 
$
5,680,850

 
$
5,649,950

 
 
 
 
 
 
 
 
 
 
 
Tangible common equity to tangible assets
 
8.60
%
 
8.47
%
 
8.35
%
 
8.45
%
 
8.54
%





CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
 
Consolidated Balance Sheets
 
(Unaudited)
TABLE 3
 
 
 
Mar 31,
 
Dec 31,
 
Sep 30,
 
Jun 30,
 
Mar 31,
(Dollars in thousands, except share data)
 
2019
 
2018
 
2018
 
2018
 
2018
ASSETS
 
 

 
 

 
 
 
 
 
 

Cash and due from financial institutions
 
$
90,869

 
$
80,569

 
$
82,668

 
$
75,547

 
$
59,905

Interest-bearing deposits in other financial institutions
 
7,310

 
21,617

 
7,051

 
13,948

 
5,875

Investment securities:
 
 
 
 
 
 

 
 

 
 
Available-for-sale debt securities, at fair value
 
1,319,450

 
1,205,478

 
1,233,002

 
1,279,969

 
1,326,092

Held-to-maturity debt securities, at amortized cost; fair value of: none at March 31, 2019, $144,272 at December 31, 2018, $146,466 at September 30, 2018, $152,330 at June 30, 2018, and $171,399 at March 31, 2018
 

 
148,508

 
152,852

 
158,156

 
177,078

Equity securities, at fair value
 
910

 
826

 
885

 
844

 
753

Total investment securities
 
1,320,360

 
1,354,812

 
1,386,739

 
1,438,969

 
1,503,923

Loans held for sale
 
3,539

 
6,647

 
4,460

 
9,096

 
7,492

Loans and leases
 
4,101,571

 
4,078,366

 
3,978,027

 
3,881,581

 
3,816,146

Less allowance for loan and lease losses
 
47,267

 
47,916

 
46,826

 
48,181

 
49,217

Loans and leases, net of allowance for loan and lease losses
 
4,054,304

 
4,030,450

 
3,931,201

 
3,833,400

 
3,766,929

Premises and equipment, net
 
44,527

 
45,285

 
46,184

 
47,004

 
47,436

Accrued interest receivable
 
17,082

 
17,000

 
16,755

 
16,606

 
16,070

Investment in unconsolidated subsidiaries
 
16,054

 
14,008

 
15,283

 
9,362

 
6,478

Other real estate owned
 
276

 
414

 
414

 
595

 
595

Mortgage servicing rights
 
15,347

 
15,596

 
15,634

 
15,756

 
15,821

Core deposit premium
 

 

 

 
669

 
1,337

Bank-owned life insurance
 
158,392

 
157,440

 
157,085

 
156,945

 
156,611

Federal Home Loan Bank stock
 
16,145

 
16,645

 
10,965

 
10,246

 
9,007

Right of use lease asset [1]
 
54,781

 

 

 

 

Other assets
 
42,366

 
46,543

 
54,201

 
53,376

 
53,808

Total assets
 
$
5,841,352

 
$
5,807,026

 
$
5,728,640

 
$
5,681,519

 
$
5,651,287

LIABILITIES AND SHAREHOLDERS' EQUITY
 
 

 
 

 
 

 
 

 
 

Deposits:
 
 

 
 

 
 

 
 

 
 

Noninterest-bearing demand
 
$
1,357,890

 
$
1,436,967

 
$
1,403,534

 
$
1,365,010

 
$
1,349,029

Interest-bearing demand
 
965,316

 
954,011

 
935,130

 
952,991

 
946,464

Savings and money market
 
1,562,798

 
1,448,257

 
1,503,465

 
1,502,284

 
1,533,483

Time
 
1,062,124

 
1,107,255

 
1,161,551

 
1,158,814

 
1,151,455

Total deposits
 
4,948,128

 
4,946,490

 
5,003,680

 
4,979,099

 
4,980,431

Federal Home Loan Bank advances and other short-term borrowings
 
179,000

 
197,000

 
105,000

 
87,000

 
56,000

Long-term debt
 
101,547

 
122,166

 
92,785

 
92,785

 
92,785

Lease liability [1]
 
54,861

 

 

 

 

Other liabilities
 
55,178

 
49,645

 
49,024

 
41,967

 
37,963

Total liabilities
 
5,338,714

 
5,315,301

 
5,250,489

 
5,200,851

 
5,167,179

Shareholders' equity:
 
 

 
 

 
 

 
 

 
 

Preferred stock, no par value, authorized 1,000,000 shares; issued and outstanding: none at March 31, 2019, December 31, 2018, September 30, 2018, June 30, 2018, and March 31, 2018
 

 

 

 

 

Common stock, no par value, authorized 185,000,000 shares; issued and outstanding: 28,723,041 at March 31, 2019, 28,967,715 at December 31, 2018, 29,270,398 at September 30, 2018, 29,489,954 at June 30, 2018, and 29,707,122 at March 31, 2018
 
462,952

 
470,660

 
478,721

 
485,402

 
493,794

Additional paid-in capital
 
89,374

 
88,876

 
87,939

 
86,949

 
86,497

Accumulated deficit
 
(41,733
)
 
(51,718
)
 
(61,406
)
 
(70,435
)
 
(78,454
)
Accumulated other comprehensive income (loss)
 
(7,955
)
 
(16,093
)
 
(27,103
)
 
(21,248
)
 
(17,729
)
Total shareholders' equity
 
502,638

 
491,725

 
478,151

 
480,668

 
484,108

Total liabilities and shareholders' equity
 
$
5,841,352

 
$
5,807,026

 
$
5,728,640

 
$
5,681,519

 
$
5,651,287

 
 
 
 
 
 
 
 
 
 
 
[1] The Company adopted ASU 2016-02 effective January 1, 2019 using the modified retrospective approach and recorded a right of use lease asset and lease liability on the balance sheet as of March 31, 2019 for its operating leases where it is a lessee. The Company also elected to apply the practical expedient available under ASU 2018-11, which allows entities to apply the new leases standard at the adoption date and elect to not recast comparative periods.




CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
 
Consolidated Statements of Income
 
(Unaudited)
TABLE 4
 
 
Three Months Ended
 
 
Mar 31,
 
Dec 31,
 
Sep 30,
 
Jun 30,
 
Mar 31,
(Dollars in thousands, except per share data)
 
2019
 
2018
 
2018
 
2018
 
2018
Interest income:
 
 

 
 

 
 
 
 
 
 

Interest and fees on loans and leases
 
$
43,768

 
$
42,836

 
$
40,531

 
$
38,699

 
$
37,390

Interest and dividends on investment securities:
 
 
 
 
 
 
 
 
 
 
Taxable investment securities
 
8,260

 
8,451

 
8,490

 
8,717

 
8,843

Tax-exempt investment securities
 
866

 
910

 
920

 
933

 
933

Dividend income on investment securities
 
18

 
17

 
26

 
3

 
15

Interest on deposits in other financial institutions
 
68

 
55

 
109

 
117

 
84

Dividend income on Federal Home Loan Bank stock
 
161

 
70

 
60

 
40

 
45

Total interest income
 
53,141

 
52,339

 
50,136

 
48,509

 
47,310

Interest expense:
 
 

 
 

 
 

 
 

 
 

Interest on deposits:
 
 

 
 

 
 

 
 

 
 

Demand
 
192

 
180

 
181

 
193

 
180

Savings and money market
 
791

 
579

 
593

 
459

 
369

Time
 
5,092

 
4,567

 
4,744

 
4,034

 
3,425

Interest on short-term borrowings
 
893

 
999

 
146

 
48

 
43

Interest on long-term debt
 
1,060

 
1,335

 
1,147

 
1,103

 
971

Total interest expense
 
8,028

 
7,660

 
6,811

 
5,837

 
4,988

Net interest income
 
45,113

 
44,679

 
43,325

 
42,672

 
42,322

Provision (credit) for loan and lease losses ("Provision")
 
1,283

 
(1,386
)
 
(59
)
 
532

 
(211
)
Net interest income after Provision
 
43,830

 
46,065

 
43,384

 
42,140

 
42,533

Other operating income:
 
 

 
 

 
 

 
 

 
 

Mortgage banking income (refer to Table 5)
 
1,424

 
1,770

 
1,923

 
1,775

 
1,847

Service charges on deposit accounts
 
2,081

 
2,237

 
2,189

 
1,977

 
2,003

Other service charges and fees
 
3,064

 
3,426

 
3,286

 
3,377

 
3,034

Income from fiduciary activities
 
965

 
1,113

 
1,159

 
1,017

 
956

Equity in earnings of unconsolidated subsidiaries
 
8

 
82

 
71

 
37

 
43

Fees on foreign exchange
 
151

 
197

 
220

 
277

 
211

Net gains (losses) on sales of investment securities
 

 
(279
)
 

 

 

Income from bank-owned life insurance
 
952

 
243

 
1,055

 
501

 
318

Loan placement fees
 
149

 
215

 
115

 
220

 
197

Other (refer to Table 5)
 
2,879

 
396

 
802

 
449

 
345

Total other operating income
 
11,673

 
9,400

 
10,820

 
9,630

 
8,954

Other operating expense:
 
 

 
 

 
 

 
 

 
 

Salaries and employee benefits
 
19,889

 
19,053

 
19,011

 
18,783

 
18,505

Net occupancy
 
3,458

 
3,649

 
3,488

 
3,360

 
3,266

Equipment
 
1,006

 
1,079

 
1,048

 
1,044

 
1,068

Amortization of core deposit premium
 

 

 
669

 
668

 
669

Communication expense
 
734

 
863

 
903

 
746

 
898

Legal and professional services
 
1,570

 
2,212

 
1,528

 
1,769

 
1,821

Computer software expense
 
2,597

 
2,597

 
2,672

 
2,305

 
2,267

Advertising expense
 
711

 
834

 
612

 
617

 
612

Foreclosed asset expense
 
159

 
37

 
212

 
31

 
294

Other (refer to Table 5)
 
4,224

 
3,318

 
3,882

 
4,288

 
4,004

Total other operating expense
 
34,348

 
33,642

 
34,025

 
33,611

 
33,404

Income before income taxes
 
21,155

 
21,823

 
20,179

 
18,159

 
18,083

Income tax expense
 
5,118

 
6,031

 
4,986

 
3,935

 
3,806

Net income
 
$
16,037

 
$
15,792

 
$
15,193

 
$
14,224

 
$
14,277

Per common share data:
 
 

 
 

 
 

 
 

 
 

Basic earnings per share
 
$
0.56

 
$
0.54

 
$
0.52

 
$
0.48

 
$
0.48

Diluted earnings per share
 
0.55

 
0.54

 
0.52

 
0.48

 
0.48

Cash dividends declared
 
0.21

 
0.21

 
0.21

 
0.21

 
0.19

Basic weighted average shares outstanding
 
28,758,310

 
29,033,261

 
29,297,465

 
29,510,175

 
29,807,572

Diluted weighted average shares outstanding
 
28,979,855

 
29,217,480

 
29,479,812

 
29,714,942

 
30,041,351





CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
 
Other Operating Income and Other Operating Expense - Detail
 
(Unaudited)
TABLE 5

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

 
 
Three Months Ended
 
 
Mar 31,
 
Dec 31,
 
Sep 30,
 
Jun 30,
 
Mar 31,
(Dollars in thousands)
 
2019
 
2018
 
2018
 
2018
 
2018
Mortgage banking income:
 
 
 
 
 
 
 
 
 
 
Loan servicing fees
 
$
1,245

 
$
1,290

 
$
1,269

 
$
1,289

 
$
1,311

Amortization of mortgage servicing rights
 
(471
)
 
(446
)
 
(519
)
 
(437
)
 
(457
)
Net gains on sales of residential mortgage loans
 
611

 
1,072

 
1,082

 
959

 
972

Unrealized gains (losses) on loans-held-for-sale and interest rate locks
 
39

 
(146
)
 
91

 
(36
)
 
21

Total mortgage banking income
 
$
1,424

 
$
1,770

 
$
1,923

 
$
1,775

 
$
1,847

 
 
 
 
 
 
 
 
 
 
 

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)
 
2019
 
2018
 
2018
 
2018
 
2018
Other operating income - other:
 
 
 
 
 
 
 
 
 
 
Income recovered on nonaccrual loans previously charged-off
 
$
82

 
$
99

 
$
395

 
$
130

 
$
96

Other recoveries
 
26

 
25

 
101

 
49

 
46

Commissions on sale of checks
 
80

 
79

 
79

 
84

 
86

Gain on sale of MasterCard stock
 
2,555

 

 

 

 

Other
 
136

 
193

 
227

 
186

 
117

Total other operating income - other
 
$
2,879

 
$
396

 
$
802

 
$
449

 
$
345

 
 
 
 
 
 
 
 
 
 
 

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)
 
2019
 
2018
 
2018
 
2018
 
2018
Other operating expense - other:
 
 
 
 
 
 
 
 
 
 
Charitable contributions
 
$
154

 
$
138

 
$
166

 
$
131

 
$
200

FDIC insurance assessment
 
501

 
427

 
437

 
434

 
434

Miscellaneous loan expenses
 
294

 
339

 
403

 
324

 
299

ATM and debit card expenses
 
650

 
613

 
686

 
698

 
648

Armored car expenses
 
198

 
238

 
185

 
233

 
166

Entertainment and promotions
 
230

 
445

 
185

 
273

 
159

Stationery and supplies
 
225

 
271

 
206

 
236

 
201

Directors’ fees and expenses
 
242

 
263

 
263

 
283

 
231

Provision (credit) for residential mortgage loan repurchase losses
 

 
(181
)
 
331

 

 

Increase (decrease) to the reserve for unfunded commitments
 
167

 
(461
)
 
(71
)
 
66

 
41

Other
 
1,563

 
1,226

 
1,091

 
1,610

 
1,625

Total other operating expense - other
 
$
4,224

 
$
3,318

 
$
3,882

 
$
4,288

 
$
4,004

 
 
 
 
 
 
 
 
 
 
 




CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
 
Average Balances, Interest Income & Expense, Yields and Rates (Taxable Equivalent)
 
(Unaudited)
TABLE 6

 
 
Three Months Ended
 
Three Months Ended
 
Three Months Ended
 
 
March 31, 2019
 
December 31, 2018
 
March 31, 2018
 
 
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
 
$
11,380

 
2.41
%
 
$
68

 
$
9,393

 
2.29
%
 
$
55

 
$
22,790

 
1.50
%
 
$
84

Investment securities, excluding valuation allowance:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxable
 
1,201,732

 
2.76

 
8,278

 
1,243,226

 
2.72

 
8,468

 
1,350,135

 
2.62

 
8,858

Tax-exempt [1]
 
153,196

 
2.86

 
1,096

 
161,935

 
2.84

 
1,152

 
165,176

 
2.86

 
1,181

Total investment securities
 
1,354,928

 
2.77

 
9,374

 
1,405,161

 
2.74

 
9,620

 
1,515,311

 
2.65

 
10,039

Loans and leases, including loans held for sale
 
4,083,791

 
4.33

 
43,768

 
4,022,376

 
4.24

 
42,836

 
3,789,338

 
3.98

 
37,390

Federal Home Loan Bank stock
 
14,278

 
4.52

 
161

 
14,122

 
1.98

 
70

 
6,837

 
2.61

 
45

Total interest-earning assets
 
5,464,377

 
3.94

 
53,371

 
5,451,052

 
3.84

 
52,581

 
5,334,276

 
3.59

 
47,558

Noninterest-earning assets
 
345,554

 
 

 
 

 
288,176

 
 

 
 

 
303,929

 
 

 
 

Total assets
 
$
5,809,931

 
 

 
 

 
$
5,739,228

 
 

 
 

 
$
5,638,205

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
Interest-bearing liabilities:
 
 
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Interest-bearing demand deposits
 
$
951,101

 
0.08
%
 
$
192

 
$
923,810

 
0.08
%
 
$
180

 
$
935,483

 
0.08
%
 
$
180

Savings and money market deposits
 
1,472,835

 
0.22

 
791

 
1,459,326

 
0.16

 
579

 
1,499,419

 
0.10

 
369

Time deposits under $100,000
 
175,823

 
0.66

 
287

 
176,669

 
0.60

 
265

 
179,547

 
0.44

 
195

Time deposits $100,000 and over
 
982,678

 
1.98

 
4,805

 
940,348

 
1.81

 
4,302

 
1,029,972

 
1.27

 
3,230

Total interest-bearing deposits
 
3,582,437

 
0.69

 
6,075

 
3,500,153

 
0.60

 
5,326

 
3,644,421

 
0.44

 
3,974

Federal Home Loan Bank advances and other short-term borrowings
 
137,544

 
2.63

 
893

 
157,299

 
2.52

 
999