Central Pacific Financial Corp. Reports $20.8 Million Third Quarter Earnings And Increases Cash Dividend

Rhea-AI Summary

Central Pacific Financial Corp. (NYSE: CPF) reported a net income of $20.8 million for Q3 2021, with fully diluted EPS of $0.74, significantly up from $6.9 million or $0.24 in Q3 2020. The growth was attributed to strong core loan and deposit increases and improved net interest margins at 3.31%. A quarterly cash dividend of $0.25 per share was declared, a 4.2% increase from the previous quarter. The company returned $30.2 million to shareholders in 2021 via dividends and share repurchases, maintaining a robust capital position while focusing on digital innovation.

Positive

• Net income increased to $20.8 million, or EPS of $0.74, from $6.9 million or $0.24 YoY.
• Net interest income rose to $56.1 million, up from $49.1 million YoY.
• Dividend declared increased by 4.2% to $0.25 per share, showing a return of capital to shareholders.
• Core loan growth offset total loan decline due to PPP loan forgiveness.
• Company reported a credit of $2.6 million to the provision for credit losses, indicating lower risk.

Negative

• Total loans decreased sequentially by $0.03 billion from Q2 2021.
• Other operating income decreased to $10.3 million, down from $11.6 million YoY.

HONOLULU, Oct. 27, 2021 /PRNewswire/ -- Central Pacific Financial Corp. (NYSE: CPF) (the "Company"), parent company of Central Pacific Bank (the "Bank"), today reported net income in the third quarter of 2021 of $20.8 million, or fully diluted earnings per share ("EPS") of $0.74, compared to net income in the third quarter of 2020 of $6.9 million, or EPS of $0.24, and net income in the second quarter of 2021 of $18.7 million, or EPS of $0.66.

"We are very pleased with our third quarter results which were driven by the investments in talent, technology and infrastructure we have made over the last two years," said Paul Yonamine, Chairman and Chief Executive Officer. "Our results include solid core loan and deposit growth, as well as an increase in net interest margin. We continue to be highly focused on digital innovation and we believe our upcoming new offerings will further position us as a leader in our market."

"While we grow and innovate, we remain committed to maintaining our robust capital, liquidity and asset quality position. Additionally, we remain steadfast in our dedication to support our community's needs as we rebound from the pandemic," said Catherine Ngo, President.

On October 26, 2021, the Company's Board of Directors declared a quarterly cash dividend of $0.25 per share on its outstanding common shares. This represents a 4.2% increase from the dividend paid of $0.24 per share in the third quarter of 2021 and will be payable on December 15, 2021 to shareholders of record at the close of business on November 30, 2021.

During the third quarter of 2021, the Company repurchased 234,700 shares of common stock, at a total cost of $5.9 million, or an average cost per share of $25.12. The Company's remaining repurchase authority under its common stock repurchase program at September 30, 2021 is $14.8 million. During the nine months ended September 30, 2021, the Company returned $30.2 million in capital to its shareholders through cash dividends and share repurchases.

Earnings Highlights
Net interest income for the third quarter of 2021 was $56.1 million, compared to $49.1 million in the year-ago quarter and $52.1 million in the previous quarter. Net interest margin for the third quarter of 2021 was 3.31%, compared to 3.19% in the year-ago quarter and 3.16% in the previous quarter. The sequential quarter increase in net interest margin and net interest income is primarily due to higher average balances and yields earned on investment securities, combined with higher interest income on loans which included an increase in loan fees on PPP loans. Net interest income for the third quarter of 2021 included $8.6 million in net interest income and loan fees on PPP loans, compared to $7.9 million in the previous quarter. Net deferred fees on PPP loans totaled $7.9 million at September 30, 2021, compared to $15.9 million at June 30, 2021, respectively. Additional information on average balances, interest income and expenses and yields and rates is presented in Tables 4 and 5.

In the third quarter of 2021, the Company recorded a credit to the provision for credit losses of $2.6 million, compared to a provision of $14.9 million in the year-ago quarter and a credit to the provision of $3.4 million in the previous quarter. The credit to the provision for credit losses in the third quarter of 2021 was driven by continued improvements in the economic forecast and lower net charge-offs as the State of Hawaii continues to recover from the COVID-19 pandemic.

Other operating income for the third quarter of 2021 totaled $10.3 million, compared to $11.6 million in the year-ago quarter and $10.5 million in the previous quarter. The decrease from the year-ago quarter was primarily due to lower mortgage banking income and lower bank-owned life insurance of $3.0 million and $0.6 million, respectively, partially offset by higher other service charges of $1.6 million. Additional information on other operating income is presented in Table 3.

Other operating expense for the third quarter of 2021 totaled $41.3 million, compared to $36.8 million in the year-ago quarter and $41.4 million in the previous quarter. The increase from the year-ago quarter was primarily due to higher salaries and employee benefits of $3.2 million. Additional information on other operating expense is presented in Table 3.

The efficiency ratio for the third quarter of 2021 was 62.32%, compared to 60.56% in the year-ago quarter and 66.20% in the previous quarter.

The effective tax rate for the third quarter of 2021 was 24.7%, compared to 24.3% in the year-ago quarter and 23.9% in the previous quarter.

Balance Sheet Highlights
Total assets at September 30, 2021 of $7.30 billion increased from $6.65 billion at September 30, 2020, and increased from $7.18 billion at June 30, 2021.

Total loans, net of deferred fees and costs, at September 30, 2021 of $5.05 billion increased from $5.03 billion at September 30, 2020, and decreased from $5.08 billion at June 30, 2021. The sequential quarter decrease in total loans included a net increase in core loans (or non-PPP loans) of $184.4 million, offset by a decrease in PPP loans of $215.9 million due to forgiveness and payments. Loans on forbearance or deferral totaled $1.3 million, or less than 1% of total loans at September 30, 2021. Loans by geographic distribution are summarized in Table 6.

Total deposits at September 30, 2021 of $6.52 billion increased from $5.68 billion at September 30, 2020, and increased from $6.40 billion at June 30, 2021. Core deposits, which include demand deposits, savings and money market deposits and time deposits up to $250,000, totaled $6.09 billion at September 30, 2021, and increased by $266.6 million from June 30, 2021. Non-core deposits decreased by $147.9 million, primarily driven by a decline in government time deposits. The Company's loan-to-deposit ratio was 77.4% at September 30, 2021, compared to 79.4% at June 30, 2021. Core deposit and total deposit balances are summarized in Table 7.

Asset Quality
Nonperforming assets at September 30, 2021 totaled $7.2 million, or 0.10% of total assets, compared to $13.2 million, or 0.20% of total assets at September 30, 2020, and $6.7 million, or 0.09% of total assets at June 30, 2021. Additional information on nonperforming assets, past due and restructured loans is presented in Table 8.

Net charge-offs in the third quarter of 2021 totaled $0.2 million, compared to net charge-offs of $1.3 million in the year-ago quarter, and net charge-offs of $0.8 million in the previous quarter.

The allowance for credit losses, as a percentage of total loans at September 30, 2021 was 1.48%, compared to 1.60% at September 30, 2020 and 1.53% at June 30, 2021. Excluding PPP loans, the allowance for credit losses, as a percentage of core loans at September 30, 2021 was 1.55%, compared to 1.68% at June 30, 2021. Additional information on net charge-offs and recoveries and the allowance for credit losses is presented in Tables 9 and 10.

Capital
Total shareholders' equity was $555.4 million at September 30, 2021, compared to $543.9 million and $552.8 million at September 30, 2020 and June 30, 2021, 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 September 30, 2021, the Company's leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ratios were 8.5%, 12.2%, 14.6%, and 11.2%, respectively, compared to 8.6%, 12.7%, 14.9%, and 11.6%, respectively, at June 30, 2021.

Executive Promotions
Yesterday, the Company announced the promotion of several key executives effective January 1, 2022. Catherine Ngo, President of the Company and President and Chief Executive Officer of the Bank, will be promoted to Executive Vice Chair of the Boards of Directors of the Company and the Bank; Arnold Martines, currently Executive Vice President and Chief Banking Officer, will be promoted to President and Chief Operating Officer of the Company and the Bank; David Morimoto, Executive Vice President and Chief Financial Officer will be promoted to Senior Executive Vice President and Chief Financial Officer of the Company and the Bank; and finally, Kevin Dahlstrom, presently Executive Vice President and Chief Marketing Officer will be promoted to Executive Vice President and Chief Strategy Officer of the Company and the Bank. In her new role, Ngo will continue to serve on the Bank's Executive Committee, responsible for the overall management of the Bank. Working together, the team will continue to focus on the bank's principal lines of business: residential, small business, the continued development of the Japanese market as well as the expansion of the Bank's digital product and service offerings. We will also remain active in the commercial real estate, commercial and industrial, and consumer segments with a focus on driving digital solutions to provide an exceptional customer experience.

Non-GAAP Financial Measures|
This press release contains certain references to financial measures that have been adjusted to exclude certain expenses and other specified items. These financial measures differ from comparable measures calculated and presented in accordance with accounting principles generally accepted in the United States of America ("GAAP") in that they exclude unusual or non-recurring charges, losses, credits or gains. This press release identifies the specific items excluded from the comparable GAAP financial measure in the calculation of each non-GAAP financial measure. Management believes that financial presentations excluding the impact of these items provide useful supplemental information that is important to a proper understanding of the Company's core business results by investors. These presentations should not be viewed as a substitute for results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP financial measures presented by other companies.

Conference Call
The Company's management will host a conference call today at 1:00 p.m. Eastern Time (7:00 a.m. Hawaii Time) to discuss the quarterly results. Individuals are encouraged to listen to the live webcast of the presentation by visiting the investor relations page of the Company's website at http://ir.cpb.bank. Alternatively, investors may participate in the live call by dialing 1-877-505-7644. A playback of the call will be available through November 27, 2021 by dialing 1-877-344-7529 (passcode: 10161136) 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 $7.3 billion in assets as of September 30, 2021. Central Pacific Bank, its primary subsidiary, operates 31 branches and 70 ATMs in the state of Hawaii. For additional information, please visit the Company's website at http://www.cpb.bank.

Forward-Looking Statements

This document may contain forward-looking statements concerning: projections of revenues, expenses, income or loss, earnings or loss per share, capital expenditures, the payment or nonpayment of dividends, capital position, credit losses, net interest margin or other financial items; statements of plans, objectives and expectations of Central Pacific Financial Corp. or its management or Board of Directors, including those relating to business plans, use of capital resources, products or services and regulatory developments and regulatory actions; statements of future economic performance including anticipated performance results from our business initiatives; or any statements of the assumptions underlying or relating to any of the foregoing. Words such as "believes," "plans," "anticipates," "expects," "intends," "forecasts," "hopes," "targeting," "continue," "remain," "will," "should," "estimates," "may" and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

While we believe that our forward-looking statements and the assumptions underlying them are reasonably based, such statements and assumptions are by their nature subject to risks and uncertainties, and thus could later prove to be inaccurate or incorrect. Accordingly, actual results could differ materially from those statements or projections for a variety of reasons, including, but not limited to: the adverse effects of the COVID-19 pandemic virus on local, national and international economies, including, but not limited to, the adverse impact on tourism and construction in the State of Hawaii, our borrowers, customers, third-party contractors, vendors and employees as well as the effects of government programs and initiatives in response to COVID-19; the impact of our participation in the Paycheck Protection Program ("PPP") and fulfillment of government guarantees on our PPP loans; the increase in inventory or adverse conditions in the real estate market and deterioration in the construction industry; adverse changes in the financial performance and/or condition of our borrowers and, as a result, increased loan delinquency rates, deterioration in asset quality, and losses in our loan portfolio; our ability to successfully implement our business initiatives; the impact of local, national, and international economies and events (including natural disasters such as wildfires, volcanic eruptions, hurricanes, tsunamis, storms, earthquakes and pandemic virus and disease, including COVID-19) on the Company's business and operations and on tourism, the military, and other major industries operating within the Hawaii market and any other markets in which the Company does business; deterioration or malaise in domestic economic conditions, including any destabilization in the financial industry and deterioration of the real estate market, as well as the impact of declining levels of consumer and business confidence in the state of the economy in general and in financial institutions in particular; changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), changes in capital standards, other regulatory reform and federal and state legislation, including but not limited to regulations promulgated by the Consumer Financial Protection Bureau (the "CFPB"), government-sponsored enterprise reform, and any related rules and regulations which affect our business operations and competitiveness; the costs and effects of legal and regulatory developments, including legal proceedings or regulatory or other governmental inquiries and proceedings and the resolution thereof, the results of regulatory examinations or reviews and the effect of, and our ability to comply with, any regulatory orders or actions we are or may become subject to; ability to successfully implement our initiatives to lower our efficiency ratio; the effects of and changes in trade, monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System (the "FRB" or the "Federal Reserve"); inflation, interest rate, securities market and monetary fluctuations, including the anticipated replacement of the London Interbank Offered Rate ("LIBOR") Index and the impact on our loans and debt which are tied to that index; negative trends in our market capitalization and adverse changes in the price of the Company's common stock; political instability; acts of war or terrorism;  pandemic virus and disease, including COVID-19; changes in consumer spending, borrowings and savings habits; failure to maintain effective internal control over financial reporting or disclosure controls and procedures; cybersecurity and data privacy breaches and the consequence therefrom; the ability to address deficiencies in our internal controls over financial reporting or disclosure controls and procedures; technological changes and developments; changes in the competitive environment among financial holding companies and other financial service providers; the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board ("FASB") and other accounting standard setters and the cost and resources required to implement such changes; our ability to attract and retain key personnel; changes in our 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 forward-looking statements, please see the Company's publicly available Securities and Exchange Commission filings, including the Company's Form 10-K for the last fiscal year and, in particular, the discussion of "Risk Factors" set forth therein. We urge investors to consider all of these factors carefully in evaluating the forward-looking statements contained in this Form 8-K. Forward-looking statements speak only as of the date on which such statements are made. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statements are made, or to reflect the occurrence of unanticipated events except as required by law.

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Financial Highlights
(Unaudited)																												TABLE 1
		Three Months Ended																				Nine Months Ended
(Dollars in thousands,		Sep 30,				Jun 30,				Mar 31,				Dec 31,				Sep 30,				Sep 30,
except for per share amounts)		2021				2021				2021				2020				2020				2021				2020
CONDENSED INCOME STATEMENT
Net interest income		$	56,086			$	52,061			$	49,804			$	51,474			$	49,120			$	157,951			$	146,209
(Credit) provision for credit losses [1]		(2,635)				(3,443)				(821)				4,898				14,873				(6,899)				37,213
Total other operating income		10,253				10,530				10,711				14,057				11,563				31,494				31,141
Total other operating expense [1]		41,345				41,433				37,846				44,690				36,751				120,624				107,047
Income tax expense		6,814				5,887				5,452				3,772				2,200				18,153				7,988
Net income		20,815				18,714				18,038				12,171				6,859				57,567				25,102
Basic earnings per common share		$	0.74			$	0.66			$	0.64			$	0.43			$	0.24			$	2.05			$	0.89
Diluted earnings per common share		0.74				0.66				0.64				0.43				0.24				2.03				0.89
Dividends declared per common share		0.24				0.24				0.23				0.23				0.23				0.71				0.69
PERFORMANCE RATIOS
Return on average assets (ROA) [2]		1.15		%		1.06		%		1.07		%		0.74		%		0.42		%		1.10		%		0.53		%
Return on average shareholders' equity (ROE) [2]		14.83				13.56				13.07				8.87				4.99				13.82				6.17
Average shareholders' equity to average assets		7.79				7.84				8.19				8.29				8.36				7.93				8.54
Efficiency ratio  [3]		62.32				66.20				62.54				68.20				60.56				63.67				60.36
Net interest margin (NIM) [2]		3.31				3.16				3.19				3.32				3.19				3.22				3.29
Dividend payout ratio [4]		32.43				36.36				35.94				53.49				95.83				34.98				77.53
SELECTED AVERAGE BALANCES
Average loans, including loans held for sale		$	5,022,909			$	5,110,820			$	5,079,874			$	5,034,717			$	5,016,955			$	5,070,993			$	4,794,883
Average interest-earning assets		6,761,643				6,606,779				6,305,786				6,202,228				6,160,381				6,559,740				5,952,357
Average assets		7,210,210				7,039,928				6,738,825				6,621,127				6,574,492				6,998,034				6,350,696
Average deposits		6,424,768				6,269,516				5,958,742				5,755,257				5,728,147				6,219,372				5,488,947
Average interest-bearing liabilities		4,221,073				4,253,382				4,161,453				4,163,396				4,118,726				4,247,745				4,039,874
Average shareholders' equity		561,606				552,102				551,976				548,663				549,378				555,264				542,326

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Financial Highlights
(Unaudited)                                                                                                                                                     TABLE 1 (CONTINUED)
		Sep 30,			Jun 30,			Mar 31,			Dec 31,			Sep 30,
(dollars in thousands)		2021			2021			2021			2020			2020
REGULATORY CAPITAL RATIOS
Central Pacific Financial Corp
Leverage capital ratio		8.5	%		8.6	%		8.9	%		8.8	%		8.8	%
Tier 1 risk-based capital ratio		12.2			12.7			13.1			12.9			12.8
Total risk-based capital ratio		14.6			14.9			15.4			15.2			13.9
Common equity tier 1 capital ratio		11.2			11.6			12.0			11.8			11.6
Central Pacific Bank
Leverage capital ratio		9.0			9.1			9.4			9.4			8.6
Tier 1 risk-based capital ratio		13.0			13.5			13.9			13.7			12.5
Total risk-based capital ratio		14.3			14.6			15.0			14.9			13.6
Common equity tier 1 capital ratio		13.0			13.5			13.9			13.7			12.5

		Sep 30,				Jun 30,				Mar 31,				Dec 31,				Sep 30,
(dollars in thousands, except for per share amounts)		2021				2021				2021				2020				2020
BALANCE SHEET
Total loans, net of deferred fees and costs		$	5,045,797			$	5,077,318			$	5,137,849			$	4,964,113			$	5,030,626
Total assets		7,298,231				7,178,481				6,979,265				6,594,583				6,648,142
Total deposits		6,515,863				6,397,159				6,208,950				5,796,118				5,678,929
Long-term debt		105,556				105,495				105,436				105,385				101,547
Total shareholders' equity		555,419				552,793				542,865				546,685				543,903
Total shareholders' equity to total assets		7.61		%		7.70		%		7.78		%		8.29		%		8.18		%
ASSET QUALITY
Allowance for credit losses (ACL) [1] [2]		$	74,587			$	77,781			$	81,553			$	83,269			$	80,542
Non-performing assets (NPA)		7,237				6,745				7,194				6,192				13,187
ACL to total loans [1]		1.48		%		1.53		%		1.59		%		1.68		%		1.60		%
ACL to core loans (refer to Table 10) [1]		1.55		%		1.68		%		1.80		%		1.83		%		1.79		%
ACL to non-performing assets [1]		1,030.63		%		1,153.17		%		1,133.63		%		1,344.78		%		610.77		%
NPA to total assets		0.10		%		0.09		%		0.10		%		0.09		%		0.20		%
PER SHARE OF COMMON STOCK OUTSTANDING
Book value per common share		$	19.84			$	19.59			$	19.19			$	19.40			$	19.30
Closing market price per common share		25.68				26.06				26.68				19.01				13.57

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

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

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

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

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)																				TABLE 2
		Sep 30,				Jun 30,				Mar 31,				Dec 31,				Sep 30,
(Dollars in thousands, except share data)		2021				2021				2021				2020				2020
ASSETS
Cash and due from financial institutions		$	108,669			$	116,009			$	93,358			$	97,546			$	89,665
Interest-bearing deposits in other financial institutions		240,173				224,469				166,533				6,521				5,489
Investment securities:
Available-for-sale debt securities, at fair value		1,535,450				1,407,340				1,216,341				1,182,609				1,166,319
Equity securities, at fair value		1,593				1,578				1,435				1,351				1,204
Total investment securities		1,537,043				1,408,918				1,217,776				1,183,960				1,167,523
Loans held for sale		5,290				5,361				5,234				16,687				23,962
Loans, net of deferred fees and costs		5,045,797				5,077,318				5,137,849				4,964,113				5,030,626
Less allowance for credit losses		74,587				77,781				81,553				83,269				80,542
Loans, net of allowance for credit losses		4,971,210				4,999,537				5,056,296				4,880,844				4,950,084
Premises and equipment, net		80,190				76,740				72,599				65,278				61,095
Accrued interest receivable		17,110				19,014				19,440				20,224				21,478
Investment in unconsolidated subsidiaries		30,397				31,052				31,487				29,968				30,239
Other real estate owned		—				—				—				—				128
Mortgage servicing rights		9,976				10,500				11,094				11,865				12,429
Bank-owned life insurance		167,961				167,289				167,110				163,161				161,743
Federal Home Loan Bank ("FHLB") stock		7,952				8,149				8,155				8,237				17,468
Right of use lease asset		40,757				41,890				44,727				45,857				44,896
Other assets		81,503				69,553				85,456				64,435				61,943
Total assets		$	7,298,231			$	7,178,481			$	6,979,265			$	6,594,583			$	6,648,142
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand		$	2,195,404			$	2,203,806			$	2,070,428			$	1,790,269			$	1,762,476
Interest-bearing demand		1,372,626				1,341,280				1,237,574				1,174,888				1,114,123
Savings and money market		2,296,968				2,048,945				2,004,368				1,932,043				1,881,104
Time		650,865				803,128				896,580				898,918				921,226
Total deposits		6,515,863				6,397,159				6,208,950				5,796,118				5,678,929
FHLB advances and other short-term borrowings		—				—				—				22,000				206,000
Long-term debt		105,556				105,495				105,436				105,385				101,547
Lease liability		41,933				43,112				46,033				47,191				45,355
Other liabilities		79,412				79,874				75,933				77,156				72,369
Total liabilities		6,742,764				6,625,640				6,436,352				6,047,850				6,104,200
Shareholders' equity:
Preferred stock, no par value, authorized 1,000,000 shares; issued and outstanding:  none at September 30, 2021, June 30, 2021, March 31, 2021, December 31, 2020, and September 30, 2020		—				—				—				—				—
Common stock, no par value, authorized 185,000,000 shares; issued and outstanding:  27,999,588 at September 30, 2021, 28,218,860 at June 30, 2021, 28,282,530 at March 31, 2021, 28,183,340 at December 31, 2020, and 28,179,798 at September 30, 2020		436,957				440,854				443,505				442,635				442,635
Additional paid-in capital		97,279				96,182				95,721				94,842				94,336
Retained earnings (accumulated deficit)		22,916				10,831				628				(10,920)				(16,609)
Accumulated other comprehensive (loss) income		(1,733)				4,926				3,011				20,128				23,541
Total shareholders' equity		555,419				552,793				542,865				546,685				543,903
Non-controlling interest		48				48				48				48				39
Total equity		555,467				552,841				542,913				546,733				543,942
Total liabilities and shareholders' equity		$	7,298,231			$	7,178,481			$	6,979,265			$	6,594,583			$	6,648,142

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)																												TABLE 3
		Three Months Ended																				Nine Months Ended
		September 30,				June 30,				March 31,				December 31,				September 30,				September 30,
(Dollars in thousands, except per share data)		2021				2021				2021				2020				2020				2021				2020
Interest income:
Interest and fees on loans		$	51,104			$	49,024			$	46,074			$	48,259			$	45,751			$	146,202			$	137,870
Interest and dividends on investment securities:
Taxable investment securities		6,210				4,447				5,106				5,002				5,233				15,763				18,300
Tax-exempt investment securities		470				346				514				504				621				1,330				1,888
Dividend income on investment securities		18				18				18				18				17				54				51
Interest on deposits in other financial institutions		105				61				10				4				3				176				42
Dividend income on FHLB stock		62				63				59				114				128				184				366
Total interest income		57,969				53,959				51,781				53,901				51,753				163,709				158,517
Interest expense:
Interest on deposits:
Demand		101				93				86				105				115				280				405
Savings and money market		332				282				274				314				417				888				2,102
Time		428				498				588				813				1,284				1,514				6,676
Interest on short-term borrowings		—				—				2				65				71				2				653
Interest on long-term debt		1,022				1,025				1,027				1,130				746				3,074				2,472
Total interest expense		1,883				1,898				1,977				2,427				2,633				5,758				12,308
Net interest income		56,086				52,061				49,804				51,474				49,120				157,951				146,209
(Credit) provision for credit losses		(2,635)				(3,443)				(821)				4,898				14,873				(6,899)				37,213
Net interest income after (credit) provision for credit losses		58,721				55,504				50,625				46,576				34,247				164,850				108,996
Other operating income:
Mortgage banking income		1,327				1,533				2,970				5,434				4,345				5,830				8,248
Service charges on deposit accounts		1,637				1,443				1,478				1,560				1,475				4,558				4,674
Other service charges and fees		4,942				4,619				3,790				3,709				3,345				13,351				11,158
Income from fiduciary activities		1,292				1,269				1,231				1,113				1,149				3,792				3,716
Net gain (loss) on sales of investment securities		100				50				—				151				(352)				150				(352)
Income from bank-owned life insurance		540				1,210				797				1,219				1,179				2,547				2,584
Other		415				406				445				871				422				1,266				1,113
Total other operating income		10,253				10,530				10,711				14,057				11,563				31,494				31,141
Other operating expense:
Salaries and employee benefits		23,566				23,790				19,827				23,090				20,375				67,183				60,758
Net occupancy		4,185				4,055				3,764				4,011				3,834				12,004				11,151
Equipment		1,089				1,048				1,000				1,157				1,234				3,137				3,374
Communication expense		824				756				769				758				856				2,349				2,467
Legal and professional services		2,575				2,572				2,377				2,507				2,262				7,524				6,528
Computer software expense		2,998				3,398				3,783				3,625				3,114				10,179				9,092
Advertising expense		1,329				1,329				1,658				756				1,020				4,316				3,035
Other		4,779				4,485				4,668				8,786				4,056				13,932				10,642
Total other operating expense		41,345				41,433				37,846				44,690				36,751				120,624				107,047
Income before income taxes		27,629				24,601				23,490				15,943				9,059				75,720				33,090
Income tax expense		6,814				5,887				5,452				3,772				2,200				18,153				7,988
Net income		$	20,815			$	18,714			$	18,038			$	12,171			$	6,859			$	57,567			$	25,102
Per common share data:
Basic earnings per share		$	0.74			$	0.66			$	0.64			$	0.43			$	0.24			$	2.05			$	0.89
Diluted earnings per share		0.74				0.66				0.64				0.43				0.24				2.03				0.89
Cash dividends declared		0.24				0.24				0.23				0.23				0.23				0.71				0.69
Basic weighted average shares outstanding		27,967,089				28,173,710				28,108,648				28,071,151				28,060,020				28,082,632				28,075,684
Diluted weighted average shares outstanding		28,175,953				28,456,624				28,313,014				28,177,366				28,111,664				28,316,574				28,172,153

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

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Average Balances, Interest Income & Expense, Yields and Rates (Taxable Equivalent)
(Unaudited)																																	TABLE 4
		Three Months Ended											Three Months Ended											Three Months Ended
		September 30, 2021											June 30, 2021											September 30, 2020
		Average				Average							Average				Average							Average				Average
(Dollars in thousands)		Balance				Yield/Rate			Interest				Balance				Yield/Rate			Interest				Balance				Yield/Rate			Interest
ASSETS
Interest-earning assets:
Interest-bearing deposits in other financial institutions		$	273,039			0.15	%		$	105			$	222,934			0.11	%		$	61			$	12,262			0.09	%		$	3
Investment securities, excluding valuation allowance:
Taxable		1,351,272				1.84			6,228				1,172,183				1.52			4,465				1,029,987				2.04			5,250
Tax-exempt		106,333				2.24			595				92,702				1.89			438				88,749				3.54			786
Total investment securities		1,457,605				1.87			6,823				1,264,885				1.55			4,903				1,118,736				2.16			6,036
Loans, including loans held for sale		5,022,909				4.05			51,104				5,110,820				3.84			49,024				5,016,955				3.64			45,751
Federal Home Loan Bank stock		8,090				3.09			62				8,140				3.11			63				12,428				4.12			128
Total interest-earning assets		6,761,643				3.42			58,094				6,606,779				3.28			54,051				6,160,381				3.36			51,918
Noninterest-earning assets		448,567											433,149											414,111
Total assets		$	7,210,210										$	7,039,928										$	6,574,492
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits		$	1,356,967			0.03	%		$	101			$	1,269,676			0.03	%		$	93			$	1,092,976			0.04	%		$	115
Savings and money market deposits		2,168,055				0.06			332				2,028,583				0.06			282				1,910,971				0.09			417
Time deposits up to $250,000		228,762				0.31			181				231,922				0.34			196				257,518				0.70			453
Time deposits over $250,000		467,289				0.21			247				617,745				0.20			302				672,146				0.49			831
Total interest-bearing deposits		4,221,073				0.08			861				4,147,926				0.08			873				3,933,611				0.18			1,816
Federal Home Loan Bank advances and other short-term borrowings		—				—			—				—				—			—				79,984				0.35			71
Long-term debt		105,516				3.84			1,022				105,456				3.90			1,025				105,131				2.82			746
Total interest-bearing liabilities		4,326,589				0.17			1,883				4,253,382				0.18			1,898				4,118,726				0.25			2,633
Noninterest-bearing deposits		2,203,695											2,121,590											1,794,536
Other liabilities		118,272											112,852											111,851
Total liabilities		6,648,556											6,487,824											6,025,113
Shareholders' equity		561,606											552,102											549,378
Non-controlling interest		48											2											1
Total equity		561,654											552,104											549,379
Total liabilities and equity		$	7,210,210										$	7,039,928										$	6,574,492
Net interest income									$	56,211										$	52,153										$	49,285
Interest rate spread						3.25	%										3.10	%										3.11	%
Net interest margin						3.31	%										3.16	%										3.19	%

 

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, 2021											September 30, 2020
		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		$	180,646			0.13	%		$	176			$	13,038			0.43	%		$	42
Investment securities, excluding valuation allowance:
Taxable		1,202,564				1.75			15,817				1,033,362				2.37			18,351
Tax-exempt		97,613				2.30			1,684				98,153				3.25			2,390
Total investment securities		1,300,177				1.79			17,501				1,131,515				2.44			20,741
Loans, including loans held for sale		5,070,993				3.85			146,202				4,794,883				3.84			137,870
Federal Home Loan Bank stock		7,924				3.11			184				12,921				3.78			366
Total interest-earning assets		6,559,740				3.34			164,063				5,952,357				3.57			159,019
Noninterest-earning assets		438,294											398,339
Total assets		$	6,998,034										$	6,350,696
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits		$	1,271,825			0.03	%		$	280			$	1,054,692			0.05	%		$	405
Savings and money market deposits		2,057,194				0.06			888				1,806,829				0.16			2,102
Time deposits up to  $250,000		232,474				0.36			619				162,255				0.64			777
Time deposits over $250,000		579,984				0.21			895				807,346				0.98			5,899
Total interest-bearing deposits		4,141,477				0.09			2,682				3,831,122				0.32			9,183
Federal Home Loan Bank advances and other short-term borrowings		810				0.30			2				94,248				0.93			653
Long-term debt		105,458				3.90			3,074				114,504				2.88			2,472
Total interest-bearing liabilities		4,247,745				0.18			5,758				4,039,874				0.41			12,308
Noninterest-bearing deposits		2,077,895											1,657,825
Other liabilities		117,113											110,669
Total liabilities		6,442,753											5,808,368
Shareholders' equity		555,264											542,326
Non-controlling interest		17											2
Total equity		555,281											542,328
Total liabilities and equity		$	6,998,034										$	6,350,696
Net interest income									$	158,305										$	146,711
Interest rate spread						3.16	%										3.16	%
Net interest margin						3.22	%										3.29	%

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Loans by Geographic Distribution
(Unaudited)																				TABLE 6
		September 30,				June 30,				March 31,				December 31,				September 30,
(Dollars in thousands)		2021				2021				2021				2020				2020
HAWAII:
Commercial, financial and agricultural:
SBA Paycheck Protection Program		$	198,315			$	395,352			$	548,880			$	375,879			$	485,286
Other		404,751				389,341				399,154				426,670				414,754
Real estate:
Construction		128,908				133,457				137,976				125,407				118,247
Residential mortgage		1,748,729				1,711,801				1,687,513				1,690,212				1,680,060
Home equity		618,951				583,430				559,514				551,266				534,056
Commercial mortgage		915,746				926,006				911,216				898,055				914,144
Consumer		331,987				328,332				319,032				332,430				342,203
Total loans, net of deferred fees and costs		4,347,387				4,467,719				4,563,285				4,399,919				4,488,750
Allowance for credit losses		(62,126)				(67,773)				(70,961)				(73,152)				(71,575)
Loans, net of allowance for credit losses		$	4,285,261			$	4,399,946			$	4,492,324			$	4,326,767			$	4,417,175
U.S. MAINLAND: [1]
Commercial, financial and agricultural:
SBA Paycheck Protection Program		$	20,356			$	39,258			$	48,939			$	40,496			$	43,295
Other		114,122				96,884				115,035				118,421				113,316
Real estate:
Commercial mortgage		292,671				260,424				253,122				258,273				227,121
Consumer		271,261				213,033				157,468				147,004				158,144
Total loans, net of deferred fees and costs		698,410				609,599				574,564				564,194				541,876
Allowance for credit losses		(12,461)				(10,008)				(10,592)				(10,117)				(8,967)
Loans, net of allowance for credit losses		$	685,949			$	599,591			$	563,972			$	554,077			$	532,909
TOTAL:
Commercial, financial and agricultural:
SBA Paycheck Protection Program		$	218,671			$	434,610			$	597,819			$	416,375			$	528,581
Other		518,873				486,225				514,189				545,091				528,070
Real estate:
Construction		128,908				133,457				137,976				125,407				118,247
Residential mortgage		1,748,729				1,711,801				1,687,513				1,690,212				1,680,060
Home equity		618,951				583,430				559,514				551,266				534,056
Commercial mortgage		1,208,417				1,186,430				1,164,338				1,156,328				1,141,265
Consumer		603,248				541,365				476,500				479,434				500,347
Total loans, net of deferred fees and costs		5,045,797				5,077,318				5,137,849				4,964,113				5,030,626
Allowance for credit losses		(74,587)				(77,781)				(81,553)				(83,269)				(80,542)
Loans, net of allowance for credit losses		$	4,971,210			$	4,999,537			$	5,056,296			$	4,880,844			$	4,950,084

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

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Deposits
(Unaudited)																				TABLE 7
		September 30,				June 30,				March 31,				December 31,				September 30,
(Dollars in thousands)		2021				2021				2021				2020				2020
Noninterest-bearing demand		$	2,195,404			$	2,203,806			$	2,070,428			$	1,790,269			$	1,762,476
Interest-bearing demand		1,372,626				1,341,280				1,237,574				1,174,888				1,114,123
Savings and money market		2,296,968				2,048,945				2,004,368				1,932,043				1,881,104
Time deposits less than $100,000		139,358				141,498				145,497				149,063				157,051
Other time deposits $100,000 to $250,000 [1]		87,491				89,710				88,814				90,149				95,918
Core deposits		6,091,847				5,825,239				5,546,681				5,136,412				5,010,672
Government time deposits		238,950				403,755				500,194				500,344				500,762
Other time deposits greater than $250,000		185,066				168,165				162,075				159,362				167,495
Total time deposits greater than $250,000		424,016				571,920				662,269				659,706				668,257
Total deposits		$	6,515,863			$	6,397,159			$	6,208,950			$	5,796,118			$	5,678,929

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

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Nonperforming Assets, Past Due and Restructured Loans
(Unaudited)																				TABLE 8
		September 30,				June 30,				March 31,				December 31,				September 30,
(Dollars in thousands)		2021				2021				2021				2020				2020
Nonaccrual loans: [1]
Commercial, financial and agricultural - Other		$	689			$	699			$	1,412			$	1,461			$	1,536
Real estate:
Residential mortgage		5,351				5,280				4,553				4,115				4,032
Home equity		880				434				439				524				533
Commercial mortgage		—				—				—				—				6,889
Consumer		317				332				790				92				69
Total nonaccrual loans		7,237				6,745				7,194				6,192				13,059
Other real estate owned ("OREO"):
Real estate:
Residential mortgage		—				—				—				—				128
Total OREO		—				—				—				—				128
Total nonperforming assets ("NPAs")		7,237				6,745				7,194				6,192				13,187
Loans delinquent for 90 days or more still accruing interest: [1]
Commercial, financial and agricultural - Other		—				29				—				—				—
Real estate:
Residential mortgage		444				1,438				4,522				567				588
Consumer		166				100				262				240				321
Total loans delinquent for 90 days or more still accruing interest		610				1,567				4,784				807				909
Restructured loans still accruing interest: [1]
Commercial, financial and agricultural - Other		12				26				63				100				137
Real estate:
Residential mortgage		4,458				4,258				5,473				5,718				5,178
Commercial mortgage		1,577				1,636				1,698				1,761				1,825
Consumer		99				132				198				207				214
Total restructured loans still accruing interest		6,146				6,052				7,432				7,786				7,354
Total NPAs and loans delinquent for 90 days or more and restructured loans still accruing interest		$	13,993			$	14,364			$	19,410			$	14,785			$	21,450
Total nonaccrual loans as a percentage of total loans		0.14		%		0.13		%		0.14		%		0.12		%		0.26		%
Total NPAs as a percentage of total loans and OREO		0.14		%		0.13		%		0.14		%		0.12		%		0.26		%
Total NPAs and loans delinquent for 90 days or more still accruing interest as a percentage of total loans and OREO		0.16		%		0.16		%		0.23		%		0.14		%		0.28		%
Total NPAs, loans delinquent for 90 days or more and restructured loans still accruing interest as a percentage of total loans and OREO		0.28		%		0.28		%		0.38		%		0.30		%		0.43		%
Quarter-to-quarter changes in NPAs:
Balance at beginning of quarter		$	6,745			$	7,194			$	6,192			$	13,187			$	4,741
Additions		1,951				1,879				2,257				1,370				9,060
Reductions:
Payments		(767)				(1,120)				(292)				(3,186)				(393)
Return to accrual status		(141)				(84)				(99)				(548)				—
Sales of NPAs		—				—				—				(4,353)				—
Charge-offs, valuation and other adjustments		(551)				(1,124)				(864)				(278)				(221)
Total reductions		(1,459)				(2,328)				(1,255)				(8,365)				(614)
Balance at end of quarter		$	7,237			$	6,745			$	7,194			$	6,192			$	13,187

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

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Allowance for Credit Losses on Loans
(Unaudited)																												TABLE 9
		Three Months Ended																				Nine Months Ended
		Sep 30,				Jun 30,				Mar 31,				Dec 31,				Sep 30,				September 30,
(Dollars in thousands)		2021				2021				2021				2020				2020				2021				2020
Allowance for credit  losses ("ACL"):
ACL at beginning of period		$	77,781			$	81,553			$	83,269			$	80,542			$	67,339			$	83,269			$	47,971
Adoption of ASU 2016-13		—				—				—				—				—				—				3,566
Adjusted ACL at beginning of period		77,781				81,553				83,269				80,542				67,339				83,269				51,537
(Credit) provision for credit losses on loans [1] [2]		(2,969)				(2,963)				(974)				4,496				14,465				(6,906)				34,434
Charge-offs:
Commercial, financial and agricultural - Other		334				401				609				676				810				1,344				2,350
Real estate:
Residential mortgage		—				—				—				—				11				—				63
Commercial mortgage		—				—				—				—				75				—				75
Consumer		829				1,523				1,098				1,856				1,492				3,450				6,335
Total charge-offs		1,163				1,924				1,707				2,532				2,388				4,794				8,823
Recoveries:
Commercial, financial and agricultural - Other		281				276				89				189				321				646				968
Real estate:
Construction		—				—				—				—				—				—				131
Residential mortgage		53				186				106				15				13				345				214
Home equity		—				—				9				2				—				9				31
Commercial mortgage		—				65				8				1				12				73				15
Consumer		604				588				753				556				780				1,945				2,035
Total recoveries		938				1,115				965				763				1,126				3,018				3,394
Net charge-offs		225				809				742				1,769				1,262				1,776				5,429
ACL at end of period		$	74,587			$	77,781			$	81,553			$	83,269			$	80,542			$	74,587			$	80,542
Average loans, net of deferred fees and costs		$	5,022,909			$	5,110,820			$	5,079,874			$	5,034,717			$	5,016,955			$	5,070,993			$	4,794,883
Annualized ratio of net charge-offs to average loans		0.02		%		0.06		%		0.06		%		0.14		%		0.10		%		0.05		%		0.15		%

[1] In 2020, the Company recorded a reserve on accrued interest receivable ("AIR") of $0.2 million for loans on payment forbearance or deferral, which were granted to borrowers impacted by the COVID-19 pandemic. This reserve was recorded as a contra-asset against AIR with the offset to the provision for credit losses. During the second quarter of 2021, the Company reversed the entire reserve on AIR. The provision for credit losses presented in this table excludes the provision for credit losses on AIR

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

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)																				TABLE 10
The following table sets forth a reconciliation of our core loans and the ratios of our allowance for credit losses ("ACL") to total loans and ACL to core loans (or total loans, excluding SBA Paycheck Protection Program ("PPP") loans), for each of the periods indicated:
		Sep 30,				Jun 30,				Mar 31,				Dec 31,				Sep 30,
(Dollars in thousands)		2021				2021				2021				2020				2020
ACL		$	74,587			$	77,781			$	81,553			$	83,269			$	80,542
Total loans		$	5,045,797			$	5,077,318			$	5,137,849			$	4,964,113			$	5,030,626
Less: PPP loans		218,671				434,610				597,819				416,375				528,581
Core loans (or total loans, excluding PPP loans)		$	4,827,126			$	4,642,708			4,540,030				4,547,738				$	4,502,045
Ratio of ACL to total loans		1.48		%		1.53		%		1.59		%		1.68		%		1.60		%
Ratio of ACL to core loans		1.55		%		1.68		%		1.80		%		1.83		%		1.79		%

 

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SOURCE Central Pacific Financial Corp.

FAQ

What was Central Pacific Financial Corp's net income for Q3 2021?

Central Pacific Financial Corp reported a net income of $20.8 million for Q3 2021.

How much is the dividend announced by CPF for Q3 2021?

The dividend announced by CPF for Q3 2021 is $0.25 per share.

What is the EPS for Central Pacific Financial Corp in Q3 2021?

The fully diluted EPS for Central Pacific Financial Corp in Q3 2021 is $0.74.

How did CPF's net interest margin change in Q3 2021?

CPF's net interest margin increased to 3.31% in Q3 2021.

What initiatives are driving CPF's growth?

CPF's growth is driven by strong core loan and deposit growth, digital innovation, and investments in technology.