Central Pacific Financial Corp. Reports Fourth Quarter 2020 Quarterly And Annual Results

Rhea-AI Summary

Central Pacific Financial Corp. (NYSE: CPF) reported a fourth-quarter net income of $12.2 million ($0.43 EPS), down from $14.2 million ($0.50 EPS) a year earlier. Total annual net income decreased to $37.3 million from $58.3 million. The COVID-19 pandemic led to a higher provision for credit loss of $39.1 million in 2020, increasing to $4.5 million in Q4 2020. Total assets grew by 9.7% to $6.59 billion, with loans increasing by 11.6% to $4.96 billion. Meanwhile, the company's efficiency ratio rose to 68.81%. A cash dividend of $0.23 per share was declared.

Positive

• Total assets increased by 9.7% to $6.59 billion from the previous year.
• Loan growth of 11.6% to $4.96 billion driven by PPP loans.
• Net interest income improved to $51.5 million from $47.9 million year-over-year.
• Quarterly cash dividend of $0.23 declared for March 2021 payout.

Negative

• Fourth-quarter net income decreased to $12.2 million from $14.2 million year-over-year.
• Annual net income dropped to $37.3 million from $58.3 million.
• Higher provision for credit loss expense of $39.1 million in 2020, reflecting pandemic impact.
• Efficiency ratio increased to 68.81% from 62.81% year-over-year.

HONOLULU, Jan. 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 fourth quarter of 2020 of $12.2 million, or fully diluted earnings per share ("EPS") of $0.43, compared to net income in the fourth quarter of 2019 of $14.2 million, or EPS of $0.50, and net income in the third quarter of 2020 of $6.9 million, or EPS of $0.24. Net income for the year was $37.3 million, or EPS of $1.32, compared to net income of $58.3 million, or EPS of $2.03 in the previous year. The Company's operating results continue to be impacted by a higher provision for credit loss expense that was driven by the economic forecast under the current COVID-19 pandemic. During the fourth quarter of 2020, the Company recorded a provision for credit loss expense of $4.5 million, compared to $2.1 million in the fourth quarter of 2019 and $14.7 million in the third quarter of 2020. During 2020, the Company recorded a provision for credit loss expense of $39.1 million, compared to $6.3 million in the previous year.

"The Company ended the 2020 year strong and with great positive momentum, despite the challenges of the operating environment. We are optimistic for improvements to the local economy in 2021 and are actively pushing forward with our strategies to position the Company for the future," said Paul Yonamine, Chairman and Chief Executive Officer.

"We are proud of the accomplishments of all of our employees this year in supporting our clients and the community, as well as moving us significantly forward with the completion of our RISE2020 initiative," said Catherine Ngo, President.

On October 20, 2020, the Company completed a $55 million private placement of ten-year fixed-to-floating rate subordinated notes, which will be used to support regulatory capital ratios and for general corporate purposes. The Company exchanged the privately placed notes for registered notes with the same terms and in the same aggregate principal amount at the end of the fourth quarter of 2020. The notes bear a fixed interest rate of 4.75% for the first five years and will reset quarterly thereafter for the remaining five years to the then current three-month Secured Overnight Financing Rate, as published by the Federal Reserve Bank of New York, plus 456 basis points.

On January 26, 2021, the Company's Board of Directors declared a quarterly cash dividend of $0.23 per share on its outstanding common shares. The dividend will be payable on March 15, 2021 to shareholders of record at the close of business on February 26, 2021. The Company's Board of Directors also approved a new share repurchase authorization of up to $25 million of its common stock.

Earnings Highlights
Net interest income for the fourth quarter of 2020 was $51.5 million, compared to $47.9 million in the year-ago quarter and $49.1 million in the previous quarter. Net interest margin for the fourth quarter of 2020 was 3.32%, compared to 3.43% in the year-ago quarter and 3.19% in the previous quarter. The increase in net interest income from the year-ago quarter was primarily due to growth in the loan portfolio, including loans originated under the PPP program, combined with lower rates paid on interest-bearing liabilities. These increases were partially offset by lower yields earned on the loan and investment securities portfolios which were primarily due to the historically low interest rate environment we are currently operating in and led to the year-over-year decline in net interest margin. The sequential quarter increase in net interest income and net interest margin is primarily due to an increase in PPP net loan fees. Net interest income for the fourth quarter of 2020 included $6.3 million in PPP net interest income and net loan fees, which are accreted into income over the term of the loans and accelerated when the loans are forgiven or paid-off, compared to $3.4 million in the previous quarter. During the fourth quarter, approximately $118.9 million in PPP loans were forgiven which resulted in the immediate recognition of $3.0 million in net loan fees.

Other operating income for the fourth quarter of 2020 totaled $14.1 million, which increased from $9.8 million in the year-ago quarter and $11.6 million in the previous quarter, primarily due to strong mortgage banking activity. Mortgage banking income increased by $4.0 million and $1.1 million from the year-ago and previous quarters, respectively. The increase in other operating income from the year-ago quarter was also attributable to higher income from bank-owned life insurance of $0.6 million, due to equity market gains. These increases were partially offset by lower service charges on deposit accounts of $0.6 million and lower other service charges and fees of $0.4 million, which were primarily attributable to lower transactional activity due to the pandemic. The increase in other operating income from the previous quarter was primarily due to the aforementioned higher mortgage banking income, combined with higher other service charges and fees of $0.4 million and a gain on the sale of certain investment securities of $0.2 million, compared to a loss on sale of certain investments in the previous quarter of $0.4 million.

Other operating expense for the fourth quarter of 2020 totaled $45.1 million, which increased from $36.2 million in the year-ago quarter and $37.0 million in the previous quarter. The current quarter expense was elevated due to $5.9 million in nonrecurring expenses, which included:  employee incentives and other benefit programs of $2.0 million, branch consolidation costs of $1.3 million,  litigation settlements of $0.8 million, Federal Home Loan Bank ("FHLB") advance prepayment fee $0.7 million, loss on disposal of fixed assets of $0.6 million and other nonrecurring expenses totaling $0.5 million. In addition, the increase from the year-ago quarter was due to higher FDIC insurance assessment of $0.7 million, higher computer software expense of $0.7 million, higher directors' deferred compensation expense of $0.6 million, and a higher provision for off-balance sheet exposures of $0.6 million. The increase in other operating expense from the previous quarter also included higher directors' deferred compensation expense of $0.9 million and higher computer software expense of $0.5 million.

The efficiency ratio for the fourth quarter of 2020 was 68.81%, compared to 62.81% in the year-ago quarter and 60.93% in the previous quarter. The increase in the efficiency ratio was primarily due to the aforementioned nonrecurring items in other operating expense.

In the fourth quarter of 2020, the Company recorded income tax expense of $3.8 million, compared to $5.2 million in the year-ago quarter and $2.2 million in the previous quarter. The effective tax rate for the fourth quarter of 2020 was 23.7%, compared to 26.7% in the year-ago quarter and 24.3% in the previous quarter.

Balance Sheet Highlights
Total assets at December 31, 2020 of $6.59 billion increased by $581.9 million, or 9.7% from December 31, 2019, and decreased by $53.6 million, or 0.8% from September 30, 2020.

Total loans at December 31, 2020 of $4.96 billion increased by $514.6 million, or 11.6% from December 31, 2019, and decreased by $66.5 million, or 1.3% from September 30, 2020. The year-over-year increase in total loans was driven by the origination of PPP loans, totaling $416.4 million, net of deferred fees and costs and loans forgiven and repaid, combined with increases in residential mortgage loans of $90.4 million, home equity loans of $60.5 million, commercial mortgage loans of $32.9 million, and construction loans of $29.6 million, partially offset by decreases in the consumer and other commercial loan portfolios of $90.0 million and $25.2 million, respectively. The sequential quarter decrease in total loans was primarily due to decreases in the PPP and consumer loan portfolios of $112.2 million and $20.9 million, respectively, partially offset by increases in home equity loans of $17.2 million, other commercial loans of $17.0 million, commercial mortgage loans of $15.1 million, residential mortgage loans of $10.2 million, and construction loans of $7.2 million.

Total deposits at December 31, 2020 of $5.80 billion increased by $676.1 million, or 13.2% from December 31, 2019, and increased by $117.2 million, or 2.1% from September 30, 2020. The sequential quarter increase in total deposits was primarily attributable to the increases in noninterest-bearing demand deposits of $27.8 million, interest-bearing demand deposits of $60.8 million, and savings and money market deposits of $50.9 million. These increases were offset by a decrease in total time deposits of $22.3 million. Core deposits, which include demand deposits, savings and money market deposits, and time deposits less than $100,000, totaled $5.05 billion at December 31, 2020. This represents an increase of $786.9 million, or 18.5% from December 31, 2019, and an increase of $131.5 million, or 2.7% from September 30, 2020. The Company's loan-to-deposit ratio was 85.7% at December 31, 2020, compared to 86.9% at December 31, 2019 and 88.6% at September 30, 2020.

During the fourth quarter of 2020, $25 million in long-term FHLB advances matured and the Company elected to prepay the remaining $25 million in long-term FHLB advances, requiring a one-time prepayment penalty of $0.7 million recorded in other operating expense. The FHLB advances that were prepaid had an interest rate of 3.25% and a maturity date of November 2021.

Asset Quality
Nonperforming assets at December 31, 2020 totaled $6.2 million, or 0.09% of total assets, compared to $1.7 million, or 0.03% of total assets at December 31, 2019, and $13.2 million, or 0.20% of total assets at September 30, 2020. The decline in nonperforming assets of $7.0 million during the fourth quarter of 2020 was primarily attributable to the sale of a commercial real estate loan of $4.2 million and the payoff of a commercial loan and a commercial real estate loan to the same borrower totaling $2.9 million.

Loans delinquent for 90 days or more still accruing interest totaled $0.8 million at December 31, 2020, compared to $1.0 million and $0.9 million at December 31, 2019 and September 30, 2020, respectively.

Loans on payment forbearance or deferrals granted to borrowers impacted by the COVID-19 pandemic declined significantly to $120.2 million or 2.4% of the total loan portfolio (or 2.6% excluding PPP loans), as of December 31, 2020, compared to $290.8 million or 5.8% of the total loan portfolio (or 6.5% excluding PPP loans), as of September 30, 2020.

Net charge-offs in the fourth quarter of 2020 totaled $1.8 million, compared to net charge-offs of $2.3 million in the year-ago quarter, and net charge-offs of $1.3 million in the previous quarter.

In the fourth quarter of 2020, the Company recorded a provision for credit losses on loans of $4.5 million, compared to a provision of $2.1 million in the year-ago quarter and a provision of $14.7 million in the previous quarter. The higher provision for credit losses from the year-ago quarter was driven by the economic forecast which captures the effect of the COVID-19 pandemic. The allowance for credit losses, as a percentage of total loans at December 31, 2020 was 1.68%, compared to 1.08% at December 31, 2019 and 1.60% at September 30, 2020. Excluding the PPP loans, the allowance for credit losses, as a percentage of total loans at December 31, 2020 was 1.83%, compared to 1.79% at September 30, 2020.

Capital
Total shareholders' equity was $546.7 million at December 31, 2020, compared to $528.5 million and $543.9 million at December 31, 2019 and September 30, 2020, respectively.

The Company maintained its strong capital position and its capital ratios continue to exceed the levels required to be considered a "well-capitalized" institution for regulatory purposes under Basel III. At December 31, 2020, the Company's leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ratios were 8.8%, 12.9%, 15.2%, and 11.8%, respectively, compared to 8.8%, 12.8%, 13.9%, and 11.6%, respectively, at September 30, 2020.

On October 20, 2020, the Company completed a $55 million private placement of ten-year fixed-to-floating rate subordinated notes. At the end of the fourth quarter of 2020, the Company exchanged the privately placed notes for registered notes with identical terms. The proceeds from the private placement were structured to qualify initially as tier 2 capital for the Company for regulatory capital purposes and the Company downstreamed $46.8 million to the Bank.

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

Conference Call
The Company's management will host a conference call today at 1:00 p.m. Eastern Time (8:00 a.m. Hawaii Time) to discuss the quarterly results. Individuals are encouraged to listen to the live webcast of the presentation by visiting the investor relations page of the Company's website at http://ir.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 February 27, 2021 by dialing 1-877-344-7529 (passcode: 10151516) 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 $6.6 billion in assets.  Central Pacific Bank, its primary subsidiary, operates 31 branches (two of which remain temporarily closed to protect the health and well-being of the Company's employees and customers from COVID-19) and 69 ATMs in the state of Hawaii, as of December 31, 2020.  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, xpenses, income or loss, earnings or loss per share, capital expenditures, the payment or nonpayment of dividends, capital position, credit losses, net interest margin or other financial items; statements of plans, objectives and expectations of Central Pacific Financial Corp. or its management or Board of Directors, including those relating to business plans, use of capital resources, products or services and regulatory developments and regulatory actions; statements of future economic performance including anticipated performance results from our RISE2020 initiative; or any statements of the assumptions underlying or relating to any of the foregoing. Words such as "believes," "plans," "anticipates," "expects," "intends," "forecasts," "hopes," "targeting," "continue," "remain," "will," "should," "estimates," "may" and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

While we believe that our forward-looking statements and the assumptions underlying them are reasonably based, such statements and assumptions are by their nature subject to risks and uncertainties, and thus could later prove to be inaccurate or incorrect. Accordingly, actual results could differ materially from those statements or projections for a variety of reasons, including, but not limited to: the adverse effects of the COVID-19 pandemic virus on local, national and international economies, including, but not limited to, the adverse impact on tourism and construction in the State of Hawaii, our borrowers, customers, third-party contractors, vendors and employees as well as the effects of government programs and initiatives in response to COVID-19; the impact of our participation in the Paycheck Protection Program ("PPP") and fulfillment of government guarantees on our PPP loans; the increase in inventory or adverse conditions in the real estate market and deterioration in the construction industry; adverse changes in the financial performance and/or condition of our borrowers and, as a result, increased loan delinquency rates, deterioration in asset quality, and losses in our loan portfolio; our ability to successfully implement our RISE2020 initiative; the impact of local, national, and international economies and events (including natural disasters such as wildfires, volcanic eruptions, hurricanes, tsunamis, storms, earthquakes and pandemic virus and disease, including COVID-19) on the Company's business and operations and on tourism, the military, and other major industries operating within the Hawaii market and any other markets in which the Company does business; deterioration or malaise in domestic economic conditions, including any destabilization in the financial industry and deterioration of the real estate market, as well as the impact of declining levels of consumer and business confidence in the state of the economy in general and in financial institutions in particular; changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), changes in capital standards, other regulatory reform and federal and state legislation, including but not limited to regulations promulgated by the Consumer Financial Protection Bureau (the "CFPB"), government-sponsored enterprise reform, and any related rules and regulations which affect our business operations and competitiveness; the costs and effects of legal and regulatory developments, including legal proceedings or regulatory or other governmental inquiries and proceedings and the resolution thereof, the results of regulatory examinations or reviews and the effect of, and our ability to comply with, any regulatory orders or actions we are or may become subject to; ability to successfully implement our initiatives to lower our efficiency ratio; the effects of and changes in trade, monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System (the "FRB" or the "Federal Reserve"); inflation, interest rate, securities market and monetary fluctuations, including the anticipated replacement of the London Interbank Offered Rate ("LIBOR") Index and the impact on our loans and debt which are tied to that index; negative trends in our market capitalization and adverse changes in the price of the Company's common stock; political instability; acts of war or terrorism;  pandemic virus and disease, including COVID-19; changes in consumer spending, borrowings and savings habits; failure to maintain effective internal control over financial reporting or disclosure controls and procedures; cybersecurity and data privacy breaches and the consequence therefrom; the ability to address deficiencies in our internal controls over financial reporting or disclosure controls and procedures; technological changes and developments; changes in the competitive environment among financial holding companies and other financial service providers; the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board ("FASB") and other accounting standard setters and the cost and resources required to implement such changes; our ability to attract and retain key personnel; changes in our organization, compensation and benefit plans; and our success at managing the risks involved in the foregoing items.

For further information with respect to factors that could cause actual results to materially differ from the expectations or projections stated in the forward-looking statements, please see the Company's publicly available Securities and Exchange Commission filings, including the Company's Form 10-K for the last fiscal year and, in particular, the discussion of "Risk Factors" set forth therein. We urge investors to consider all of these factors carefully in evaluating the forward-looking statements contained in this Form 8-K. Forward-looking statements speak only as of the date on which such statements are made. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statements are made, or to reflect the occurrence of unanticipated events except as required by law.

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES Financial Highlights (Unaudited)																						TABLE 1
		Three Months Ended																				Year Ended
(Dollars in thousands,		Dec 31, 2020				Sep 30, 2020				Jun 30, 2020				Mar 31, 2020				Dec 31, 2019				Dec 31,
except for per share amounts)																						2020				2019
CONDENSED INCOME STATEMENT
Net interest income		$	51,474			$	49,120			$	49,259			$	47,830			$	47,934			$	197,683			$	184,074
Provision for credit losses [1]		4,496				14,652				10,640				9,329				2,098				39,117				6,317
Net interest income after provision for credit losses [1]		46,978				34,468				38,619				38,501				45,836				158,566				177,757
Total other operating income		14,057				11,563				10,692				8,886				9,768				45,198				41,801
Total other operating expense		45,092				36,972				36,427				36,240				36,242				154,731				141,631
Income before taxes		15,943				9,059				12,884				11,147				19,362				49,033				77,927
Income tax expense		3,772				2,200				2,967				2,821				5,165				11,760				19,605
Net income		12,171				6,859				9,917				8,326				14,197				37,273				58,322
Basic earnings per common share		$	0.43			$	0.24			$	0.35			$	0.30			$	0.50			$	1.33			$	2.05
Diluted earnings per common share		0.43				0.24				0.35				0.29				0.50				1.32				2.03
Dividends declared per common share		0.23				0.23				0.23				0.23				0.23				0.92				0.90
PERFORMANCE RATIOS
Return on average assets (ROA) [2]		0.74		%		0.42		%		0.61		%		0.55		%		0.95		%		0.58		%		0.99		%
Return on average shareholders' equity (ROE) [2]		8.87				4.99				7.34				6.21				10.70				6.85				11.36
Average shareholders' equity to average assets		8.29				8.36				8.36				8.93				8.87				8.47				8.72
Efficiency ratio [1] [3]		68.81				60.93				60.76				63.90				62.81				63.71				62.70
Net interest margin (NIM) [2]		3.32				3.19				3.26				3.43				3.43				3.30				3.35
Dividend payout ratio [4]		53.49				95.83				65.71				79.31				46.00				69.70				44.33
SELECTED AVERAGE BALANCES
Average loans, including loans held for sale		$	5,034,717			$	5,016,955			$	4,902,905			$	4,462,347			$	4,412,247			$	4,855,169			$	4,241,308
Average interest-earning assets		6,202,228				6,160,381				6,073,361				5,621,043				5,595,142				6,015,166				5,518,641
Average assets		6,621,127				6,574,492				6,468,129				6,007,237				5,978,797				6,418,661				5,888,615
Average deposits		5,755,257				5,728,147				5,614,595				5,121,696				4,998,897				5,555,877				4,985,701
Average interest-bearing liabilities		4,163,396				4,118,726				4,082,699				3,917,332				3,947,924				4,070,923				3,897,254
Average shareholders' equity		548,663				549,378				540,802				536,721				530,464				543,919				513,610

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES Financial Highlights (Unaudited)																		TABLE 1 (CONTINUED)
		Dec 31,				Sep 30,				Jun 30,				Mar 31,				Dec 31,
(dollars in thousands)		2020				2020				2020				2020				2019
REGULATORY CAPITAL
Central Pacific Financial Corp
Leverage capital		$	581,358			$	573,636			$	571,976			$	567,947			$	568,529
Tier 1 risk-based capital		581,358				573,636				571,976				567,947				568,529
Total risk-based capital		686,130				623,157				622,393				618,504				617,772
Common equity tier 1 capital		531,358				523,636				521,976				517,947				518,529
Central Pacific Bank
Leverage capital		620,372				559,750				559,461				556,895				556,077
Tier 1 risk-based capital		620,372				559,750				559,461				556,895				556,077
Total risk-based capital		670,087				609,203				609,811				607,402				605,320
Common equity tier 1 capital		620,372				559,750				559,461				556,895				556,077
REGULATORY CAPITAL RATIOS
Central Pacific Financial Corp
Leverage capital ratio		8.8		%		8.8		%		8.9		%		9.5		%		9.5		%
Tier 1 risk-based capital ratio		12.9				12.8				12.5				12.3				12.6
Total risk-based capital ratio		15.2				13.9				13.6				13.4				13.6
Common equity tier 1 capital ratio		11.8				11.6				11.4				11.3				11.5
Central Pacific Bank
Leverage capital ratio		9.4				8.6				8.7				9.3				9.3
Tier 1 risk-based capital ratio		13.7				12.5				12.2				12.1				12.3
Total risk-based capital ratio		14.9				13.6				13.3				13.2				13.4
Common equity tier 1 capital ratio		13.7				12.5				12.2				12.1				12.3
		Dec 31,				Sep 30,				Jun 30,				Mar 31,				Dec 31,
(dollars in thousands, except for per share amounts)		2020				2020				2020				2020				2019
BALANCE SHEET
Total loans, net of deferred fees and costs		$	4,964,113			$	5,030,626			$	5,003,438			$	4,511,998			$	4,449,540
Total assets		6,594,583				6,648,142				6,632,972				6,108,548				6,012,672
Total deposits		5,796,118				5,678,929				5,794,685				5,136,069				5,120,023
Long-term debt		105,385				101,547				167,491				101,547				101,547
Total shareholders' equity		546,685				543,903				544,271				533,781				528,520
Total shareholders' equity to total assets		8.29		%		8.18		%		8.21		%		8.74		%		8.79		%
Tangible common equity to tangible assets [5]		8.29		%		8.18		%		8.21		%		8.74		%		8.79		%
ASSET QUALITY
Allowance for credit losses ("ACL") [1]		$	83,269			$	80,542			$	67,339			$	59,645			$	47,971
Non-performing assets ("NPA")		6,192				13,187				4,741				3,647				1,719
ACL to total loans [1]		1.68		%		1.60		%		1.35		%		1.32		%		1.08		%
ACL to total loans, excluding PPP loans [1]		1.83		%		1.79		%		1.50		%		1.32		%		1.08		%
ACL to non-performing assets [1]		1,344.78		%		610.77		%		1,420.35		%		1,635.45		%		2,790.63		%
NPA to total assets		0.09		%		0.20		%		0.07		%		0.06		%		0.03		%
PER SHARE OF COMMON STOCK OUTSTANDING
Book value per common share		$	19.40			$	19.30			$	19.33			$	18.99			$	18.68
Tangible book value per common share		19.40				19.30				19.33				18.99				18.68
Closing market price per common share		19.01				13.57				16.03				15.90				29.58
[1] The Company adopted ASU 2016-13, "Financial Instruments-Credit Losses" ("CECL"), effective January 1, 2020 using the modified retrospective approach. Results for the reporting periods beginning after January 1, 2020 are presented under CECL, while prior period amounts continue to be reported under previous GAAP
[2] ROA, ROE and ROTE are annualized based on a 30/360 day convention. Annualized net interest income and expense in the NIM calculation are based on the day count interest payment conventions at the interest-earning asset or interest-bearing liability level (i.e. 30/360, actual/actual)
[3] Efficiency ratio is defined as total operating expense divided by total revenue (net interest income and total other operating income)
[4] Dividend payout ratio is defined as dividends declared per share divided by diluted earnings per share
[5] The tangible common equity ratio is a non-GAAP measure which should be read in conjunction with the Company's GAAP financial information. Comparison of our ratio with those of other companies may not be possible because other companies may calculate the ratio differently. See Reconciliation of Non-GAAP Financial Measures in Table 2

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited)																		TABLE 2
		Dec 31,				Sep 30,				Jun 30,				Mar 31,				Dec 31,
(Dollars in thousands, except share data)		2020				2020				2020				2020				2019
ASSETS
Cash and due from financial institutions		$	97,546			$	89,665			$	102,132			$	81,972			$	78,418
Interest-bearing deposits in other financial institutions		6,521				5,489				41,201				11,021				24,554
Investment securities:
Available-for-sale debt securities, at fair value		1,182,609				1,166,319				1,168,594				1,184,023				1,126,983
Equity securities, at fair value		1,351				1,204				1,209				1,002				1,127
Total investment securities		1,183,960				1,167,523				1,169,803				1,185,025				1,128,110
Loans held for sale		16,687				23,962				10,443				3,910				9,083
Loans, net of deferred fees and costs		4,964,113				5,030,626				5,003,438				4,511,998				4,449,540
Less allowance for credit losses [1]		83,269				80,542				67,339				59,645				47,971
Loans, net of allowance for credit losses		4,880,844				4,950,084				4,936,099				4,452,353				4,401,569
Premises and equipment, net		65,278				61,095				55,032				50,447				46,343
Accrued interest receivable		20,224				21,478				19,590				16,851				16,500
Investment in unconsolidated subsidiaries		29,968				30,239				16,428				16,721				17,115
Other real estate owned		—				128				—				100				164
Mortgage servicing rights		11,865				12,429				12,771				13,345				14,718
Bank-owned life insurance		163,161				161,743				161,758				159,637				159,656
Federal Home Loan Bank ("FHLB") stock		8,237				17,468				9,229				18,109				14,983
Right of use lease asset		45,857				44,896				50,039				51,198				52,348
Other assets		64,435				61,943				48,447				47,859				49,111
Total assets		$	6,594,583			$	6,648,142			$	6,632,972			$	6,108,548			$	6,012,672
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand		$	1,790,269			$	1,762,476			$	1,851,012			$	1,430,540			$	1,450,532
Interest-bearing demand		1,174,888				1,114,123				1,067,483				1,018,508				1,043,010
Savings and money market		1,932,043				1,881,104				1,945,744				1,693,280				1,600,028
Time		898,918				921,226				930,446				993,741				1,026,453
Total deposits		5,796,118				5,678,929				5,794,685				5,136,069				5,120,023
FHLB advances and other short-term borrowings		22,000				206,000				—				222,000				150,000
Long-term debt		105,385				101,547				167,491				101,547				101,547
Lease liability		47,191				45,355				50,440				51,541				52,632
Other liabilities		77,156				72,369				76,050				63,561				59,950
Total liabilities		6,047,850				6,104,200				6,088,666				5,574,718				5,484,152
Shareholders' equity:
Preferred stock, no par value, authorized 1,000,000 shares; issued and outstanding:  none at December 31, 2020, September 30, 2020, June 30, 2020, March 31, 2020, and December 31, 2019		—				—				—				—				—
Common stock, no par value, authorized 185,000,000 shares; issued and outstanding:  28,183,340 at December 31, 2020, 28,179,798 at September 30, 2020, 28,154,159 at June 30, 2020, 28,115,353 at March 31, 2020, and 28,289,257 at December 31, 2019		442,635				442,635				442,699				442,853				447,602
Additional paid-in capital		94,842				94,336				93,007				92,284				91,611
Accumulated deficit [1]		(10,920)				(16,609)				(16,986)				(20,428)				(19,102)
Accumulated other comprehensive income		20,128				23,541				25,551				19,072				8,409
Total shareholders' equity		546,685				543,903				544,271				533,781				528,520
Non-controlling interest		48				39				35				49				—
Total equity		546,733				543,942				544,306				533,830				528,520
Total liabilities and shareholders' equity		$	6,594,583			$	6,648,142			$	6,632,972			$	6,108,548			$	6,012,672
[1] The Company adopted ASU 2016-13, "Financial Instruments-Credit Losses" ("CECL"), effective January 1, 2020 using the modified retrospective approach. Results for the reporting periods beginning after January 1, 2020 are presented under CECL, while prior period amounts continue to be reported under previous GAAP

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES Consolidated Statements of Income (Unaudited)																						TABLE 3
		Three Months Ended																				Year Ended
		Dec 31,				Sep 30,				Jun 30,				Mar 31,				Dec 31,				Dec 31,
(Dollars in thousands, except per share data)		2020				2020				2020				2020				2019				2020				2019
Interest income:
Interest and fees on loans		$	48,259			$	45,751			$	45,915			$	46,204			$	47,488			$	186,129			$	182,657
Interest and dividends on investment securities:
Taxable investment securities		5,002				5,233				6,310				6,757				6,486				23,302				29,454
Tax-exempt investment securities		504				621				599				668				656				2,392				3,044
Dividend income on investment securities		18				17				17				17				17				69				63
Interest on deposits in other financial institutions		4				3				3				36				54				46				201
Dividend income on FHLB stock		114				128				106				132				456				480				964
Total interest income		53,901				51,753				52,950				53,814				55,157				212,418				216,383
Interest expense:
Interest on deposits:
Demand		105				115				114				176				202				510				800
Savings and money market		314				417				567				1,118				1,253				2,416				5,100
Time		813				1,284				2,124				3,268				3,653				7,489				18,044
Interest on short-term borrowings		65				71				74				508				1,139				718				4,285
Interest on long-term debt		1,130				746				812				914				976				3,602				4,080
Total interest expense		2,427				2,633				3,691				5,984				7,223				14,735				32,309
Net interest income		51,474				49,120				49,259				47,830				47,934				197,683				184,074
Provision for credit losses		4,496				14,652				10,640				9,329				2,098				39,117				6,317
Net interest income after provision for credit losses		46,978				34,468				38,619				38,501				45,836				158,566				177,757
Other operating income:
Mortgage banking income		5,434				4,345				3,566				337				1,410				13,682				6,685
Service charges on deposit accounts		1,560				1,475				1,149				2,050				2,159				6,234				8,406
Other service charges and fees		3,709				3,345				2,916				4,897				4,095				14,867				15,113
Income from fiduciary activities		1,113				1,149				1,270				1,297				1,175				4,829				4,395
Equity in earnings of unconsolidated subsidiaries		181				104				104				26				92				415				257
Net gain (loss) on sales of investment securities		151				(352)				—				—				—				(201)				36
Income from bank-owned life insurance		1,219				1,179				1,424				(19)				594				3,803				3,105
Net gain (loss) on sales of foreclosed assets		(9)				—				(6)				—				(162)				(15)				(145)
Other (refer to Table 4)		699				318				269				298				405				1,584				3,949
Total other operating income		14,057				11,563				10,692				8,886				9,768				45,198				41,801
Other operating expense:
Salaries and employee benefits		23,403				20,729				20,622				20,347				21,207				85,101				82,290
Net occupancy		4,011				3,834				3,645				3,672				3,619				15,162				14,299
Equipment		1,157				1,234				1,043				1,097				1,142				4,531				4,353
Communication expense		758				856				774				837				906				3,225				3,551
Legal and professional services		2,507				2,262				2,238				2,028				2,123				9,035				7,354
Computer software expense		3,625				3,114				3,035				2,943				2,942				12,717				10,812
Advertising expense		756				1,020				923				1,092				527				3,791				2,661
Foreclosed asset expense		(2)				6				—				67				28				71				251
Other (refer to Table 4)		8,877				3,917				4,147				4,157				3,748				21,098				16,060
Total other operating expense		45,092				36,972				36,427				36,240				36,242				154,731				141,631
Income before income taxes		15,943				9,059				12,884				11,147				19,362				49,033				77,927
Income tax expense		3,772				2,200				2,967				2,821				5,165				11,760				19,605
Net income		$	12,171			$	6,859			$	9,917			$	8,326			$	14,197			$	37,273			$	58,322
Per common share data:
Basic earnings per share		$	0.43			$	0.24			$	0.35			$	0.30			$	0.50			$	1.33			$	2.05
Diluted earnings per share		0.43				0.24				0.35				0.29				0.50				1.32				2.03
Cash dividends declared		0.23				0.23				0.23				0.23				0.23				0.92				0.90
Basic weighted average shares outstanding		28,071,151				28,060,020				28,040,802				28,126,400				28,259,294				28,074,543				28,495,699
Diluted weighted average shares outstanding		28,177,366				28,111,664				28,095,230				28,277,753				28,448,243				28,180,576				28,677,100
Note: Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Other Operating Income and Other Operating Expense - Detail
(Unaudited)	TABLE 4

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

		Three Months Ended																				Year Ended
		Dec 31,				Sep 30,				Jun 30,				Mar 31,				Dec 31,				Dec 31,
(Dollars in thousands)		2020				2020				2020				2020				2019				2020				2019
Other operating income - other:
Income recovered on nonaccrual loans previously charged-off		$	73			$	47			$	37			$	23			$	80			$	180			$	320
Other recoveries		38				22				26				40				36				126				130
Commissions on sale of checks		69				73				56				81				75				279				309
Gain on sale of MasterCard stock		—				—				—				—				—				—				2,555
Other		519				176				150				154				214				999				635
Total other operating income - other		$	699			$	318			$	269			$	298			$	405			$	1,584			$	3,949

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

		Three Months Ended																				Year Ended
		Dec 31,				Sep 30,				Jun 30,				Mar 31,				Dec 31,				Dec 31,
(Dollars in thousands)		2020				2020				2020				2020				2019				2020				2019
Other operating expense - other:
Charitable contributions		$	63			$	12			$	10			$	187			$	122			$	272			$	681
FDIC insurance assessment		733				649				475				—				—				1,857				868
Miscellaneous loan expenses		512				497				399				300				361				1,708				1,246
ATM and debit card expenses		498				573				584				634				672				2,289				2,602
Armored car expenses		251				192				229				294				186				966				815
Entertainment and promotions		220				132				165				280				495				797				2,071
Stationery and supplies		196				226				220				248				305				890				1,049
Directors' fees and expenses		213				213				196				241				246				863				968
Directors' deferred compensation plan expense		706				(237)				103				(1,483)				148				(911)				561
Provision (credit) for residential mortgage loan repurchase losses		—				—				—				—				—				—				(403)
Provision for off-balance sheet credit exposures		402				221				573				1,798				(160)				2,994				29
Branch consolidation costs		1,310				321				—				—				—				1,631				—
Litigation settlement		750				—				—				—				—				750				—
FHLB advance prepayment fee		747				—				—				—				—				747				—
Loss on disposal of fixed assets		552				—				—				—				—				552				(3)
Other		1,724				1,118				1,193				1,658				1,373				5,693				5,576
Total other operating expense - other		$	8,877			$	3,917			$	4,147			$	4,157			$	3,748			$	21,098			$	16,060
Note: Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES Average Balances, Interest Income & Expense, Yields and Rates (Taxable Equivalent) (Unaudited)																								TABLE 5
		Three Months Ended											Three Months Ended											Three Months Ended
		December 31, 2020											September 30, 2020											December 31, 2019
		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		$	16,786			0.10	%		$	4			$	12,262			0.09	%		$	3			$	13,704			1.57	%		$	54
Investment securities, excluding valuation allowance:
Taxable		1,048,665				1.91			5,020				1,029,987				2.04			5,250				1,042,057				2.50			6,503
Tax-exempt		90,452				2.83			638				88,749				3.54			786				108,630				3.06			830
Total investment securities		1,139,117				1.99			5,658				1,118,736				2.16			6,036				1,150,687				2.55			7,333
Loans, including loans held for sale		5,034,717				3.82			48,259				5,016,955				3.64			45,751				4,412,247				4.28			47,488
Federal Home Loan Bank stock		11,608				3.91			114				12,428				4.12			128				18,504				9.85			456
Total interest-earning assets		6,202,228				3.48			54,035				6,160,381				3.36			51,918				5,595,142				3.94			55,331
Noninterest-earning assets		418,899											414,111											383,655
Total assets		$	6,621,127										$	6,574,492										$	5,978,797
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits		$	1,149,759			0.04	%		$	105			$	1,092,976			0.04	%		$	115			$	1,019,854			0.08	%		$	202
Savings and money market deposits		1,902,876				0.07			314				1,910,971				0.09			417				1,592,398				0.31			1,253
Time deposits under $100,000		153,611				0.47			181				160,634				0.57			232				167,675				0.71			299
Time deposits $100,000 and over		755,352				0.33			632				769,030				0.54			1,052				828,434				1.61			3,354
Total interest-bearing deposits		3,961,598				0.12			1,232				3,933,611				0.18			1,816				3,608,361				0.56			5,108
Federal Home Loan Bank advances and other short-term borrowings		76,968				0.33			65				79,984				0.35			71				238,016				1.90			1,139
Long-term debt		124,830				3.60			1,130				105,131				2.82			746				101,547				3.81			976
Total interest-bearing liabilities		4,163,396				0.23			2,427				4,118,726				0.25			2,633				3,947,924				0.73			7,223
Noninterest-bearing deposits		1,793,659											1,794,536											1,390,536
Other liabilities		115,407											111,851											109,873
Total liabilities		6,072,462											6,025,113											5,448,333
Shareholders' equity		548,663											549,378											530,464
Non-controlling interest		2											1											—
Total equity		548,665											549,379											530,464
Total liabilities and equity		$	6,621,127										$	6,574,492										$	5,978,797
Net interest income									$	51,608										$	49,285										$	48,108
Interest rate spread						3.25	%										3.11	%										3.21	%
Net interest margin						3.32	%										3.19	%										3.43	%

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES Average Balances, Interest Income & Expense, Yields and Rates (Taxable Equivalent) (Unaudited)													TABLE 6
		Year Ended											Year Ended
		December 31, 2020											December 31, 2019
		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		$	13,980			0.33	%		$	46			$	9,842			2.04	%		$	201
Investment securities, excluding valuation allowance:
Taxable		1,037,209				2.25			23,371				1,120,711				2.63			29,517
Tax-exempt		96,217				3.15			3,028				130,411				2.95			3,853
Total investment securities		1,133,426				2.33			26,399				1,251,122				2.67			33,370
Loans, including loans held for sale		4,855,169				3.83			186,129				4,241,308				4.31			182,657
Federal Home Loan Bank stock		12,591				3.81			480				16,369				5.89			964
Total interest-earning assets		6,015,166				3.54			213,054				5,518,641				3.94			217,192
Noninterest-earning assets		403,495											369,974
Total assets		$	6,418,661										$	5,888,615
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits		$	1,078,589			0.05	%		$	510			$	984,298			0.08	%		$	800
Savings and money market deposits		1,830,972				0.13			2,416				1,556,766				0.33			5,100
Time deposits under $100,000		160,082				0.60			958				171,064				0.69			1,183
Time deposits $100,000 and over		794,276				0.82			6,531				897,670				1.88			16,861
Total interest-bearing deposits		3,863,919				0.27			10,415				3,609,798				0.66			23,944
Federal Home Loan Bank advances and other short-term borrowings		89,904				0.80			718				185,909				2.31			4,285
Long-term debt		117,100				3.08			3,602				101,547				4.02			4,080
Total interest-bearing liabilities		4,070,923				0.36			14,735				3,897,254				0.83			32,309
Noninterest-bearing deposits		1,691,958											1,375,903
Other liabilities		111,859											101,848
Total liabilities		5,874,740											5,375,005
Shareholders' equity		543,919											513,610
Non-controlling interest		2											—
Total equity		543,921											513,610
Total liabilities and equity		$	6,418,661										$	5,888,615
Net interest income									$	198,319										$	184,883
Interest rate spread						3.18	%										3.11	%
Net interest margin						3.30	%										3.35	%

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES Loans by Geographic Distribution (Unaudited)																		TABLE 7
		Dec 31,				Sep 30,				Jun 30,				Mar 31,				Dec 31,
(Dollars in thousands)		2020				2020				2020				2020				2019
HAWAII:
Commercial, financial and agricultural:
SBA Paycheck Protection Program		$	375,879			$	485,286			$	483,827			$	—			$	—
Other		426,670				414,754				431,887				454,817				454,582
Real estate:
Construction		125,407				118,247				103,518				100,617				95,854
Residential mortgage		1,690,212				1,680,060				1,657,558				1,632,536				1,599,801
Home equity		551,266				534,056				510,962				504,686				490,734
Commercial mortgage		898,055				914,144				912,422				917,886				909,798
Consumer		332,430				342,203				350,414				367,960				373,451
Total loans, net of deferred fees and costs		4,399,919				4,488,750				4,450,588				3,978,502				3,924,220
Allowance for credit losses		(73,152)				(71,575)				(59,765)				(51,646)				(42,592)
Loans, net of allowance for credit losses		$	4,326,767			$	4,417,175			$	4,390,823			$	3,926,856			$	3,881,628
U.S. MAINLAND: [1]
Commercial, financial and agricultural:
SBA Paycheck Protection Program		$	40,496			$	43,295			$	42,581			$	—			$	—
Other		118,421				113,316				115,971				120,507				115,722
Real estate:
Commercial mortgage		258,273				227,121				217,747				221,251				213,617
Consumer		147,004				158,144				176,551				191,738				195,981
Total loans, net of deferred fees and costs		564,194				541,876				552,850				533,496				525,320
Allowance for credit losses		(10,117)				(8,967)				(7,574)				(7,999)				(5,379)
Loans, net of allowance for credit losses		$	554,077			$	532,909			$	545,276			$	525,497			$	519,941
TOTAL:
Commercial, financial and agricultural:
SBA Paycheck Protection Program		$	416,375			$	528,581			$	526,408			$	—			$	—
Other		545,091				528,070				547,858				575,324				570,304
Real estate:
Construction		125,407				118,247				103,518				100,617				95,854
Residential mortgage		1,690,212				1,680,060				1,657,558				1,632,536				1,599,801
Home equity		551,266				534,056				510,962				504,686				490,734
Commercial mortgage		1,156,328				1,141,265				1,130,169				1,139,137				1,123,415
Consumer		479,434				500,347				526,965				559,698				569,432
Total loans, net of deferred fees and costs		4,964,113				5,030,626				5,003,438				4,511,998				4,449,540
Allowance for credit losses		(83,269)				(80,542)				(67,339)				(59,645)				(47,971)
Loans, net of allowance for credit losses		$	4,880,844			$	4,950,084			$	4,936,099			$	4,452,353			$	4,401,569
[1] U.S. Mainland includes territories of the United States

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES Deposits (Unaudited)																		TABLE 8
		Dec 31,				Sep 30,				Jun 30,				Mar 31,				Dec 31,
(Dollars in thousands)		2020				2020				2020				2020				2019
Noninterest-bearing demand		$	1,790,269			$	1,762,476			$	1,851,012			$	1,430,540			$	1,450,532
Interest-bearing demand		1,174,888				1,114,123				1,067,483				1,018,508				1,043,010
Savings and money market		1,932,043				1,881,104				1,945,744				1,693,280				1,600,028
Time deposits less than $100,000		149,063				157,051				159,739				162,399				165,755
Core deposits		5,046,263				4,914,754				5,023,978				4,304,727				4,259,325
Government time deposits		500,344				500,762				509,927				523,343				533,088
Other time deposits $100,000 to $250,000		90,149				95,918				96,633				100,047				107,550
Other time deposits greater than $250,000		159,362				167,495				164,147				207,952				220,060
Total time deposits $100,000 and over		749,855				764,175				770,707				831,342				860,698
Total deposits		$	5,796,118			$	5,678,929			$	5,794,685			$	5,136,069			$	5,120,023

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES Nonperforming Assets, Past Due and Restructured Loans (Unaudited)																		TABLE 9
		Dec 31,				Sep 30,				Jun 30,				Mar 31,				Dec 31,
(Dollars in thousands)		2020				2020				2020				2020				2019
Nonaccrual loans: [1]
Commercial, financial and agricultural		$	1,461			$	1,536			$	934			$	667			$	467
Real estate:
Residential mortgage		4,115				4,032				3,215				2,287				979
Home equity		524				533				538				545				92
Commercial mortgage		—				6,889				—				—				—
Consumer		92				69				54				48				17
Total nonaccrual loans		6,192				13,059				4,741				3,547				1,555
Other real estate owned ("OREO"):
Real estate:
Residential mortgage		—				128				—				—				—
Home equity		—				—				—				100				164
Total OREO		—				128				—				100				164
Total nonperforming assets ("NPAs")		6,192				13,187				4,741				3,647				1,719
Loans delinquent for 90 days or more still accruing interest: [1]
Real estate:
Residential mortgage		567				588				726				1,221				724
Consumer		240				321				444				352				286
Total loans delinquent for 90 days or more still accruing interest		807				909				1,170				1,573				1,010
Restructured loans still accruing interest: [1]
Commercial, financial and agricultural		100				137				172				113				135
Real estate:
Residential mortgage		5,718				5,178				5,290				5,431				5,502
Commercial mortgage		1,761				1,825				1,888				1,709				1,839
Consumer		207				214				145				—				—
Total restructured loans still accruing interest		7,786				7,354				7,495				7,253				7,476
Total NPAs and loans delinquent for 90 days or more and restructured loans still accruing interest		$	14,785			$	21,450			$	13,406			$	12,473			$	10,205
Total nonaccrual loans as a percentage of total loans		0.12		%		0.26		%		0.09		%		0.08		%		0.03		%
Total NPAs as a percentage of total loans and OREO		0.12		%		0.26		%		0.09		%		0.08		%		0.04		%
Total NPAs and loans delinquent for 90 days or more still accruing interest as a percentage of total loans and OREO		0.14		%		0.28		%		0.12		%		0.12		%		0.06		%
Total NPAs, loans delinquent for 90 days or more and restructured loans still accruing interest as a percentage of total loans and OREO		0.30		%		0.43		%		0.27		%		0.28		%		0.23		%
Quarter-to-quarter changes in NPAs:
Balance at beginning of quarter		$	13,187			$	4,741			$	3,647			$	1,719			$	1,360
Additions		1,370				9,060				1,771				2,056				695
Reductions:
Payments		(3,186)				(393)				(367)				(60)				(34)
Return to accrual status		(548)				—				(123)				—				—
Sales of NPAs		(4,353)				—				(94)				—				(302)
Charge-offs, valuation and other adjustments		(278)				(221)				(93)				(68)				—
Total reductions		(8,365)				(614)				(677)				(128)				(336)
Balance at end of quarter		$	6,192			$	13,187			$	4,741			$	3,647			$	1,719
[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 10
		Three Months Ended																				Year Ended
		Dec 31, 2020				Sep 30, 2020				Jun 30, 2020				Mar 31, 2020				Dec 31, 2019				Dec 31,
(Dollars in thousands)																						2020				2019
Allowance for credit  losses ("ACL"):
ACL at beginning of period		$	80,542			$	67,339			$	59,645			$	47,971			$	48,167			$	47,971			$	47,916
Adoption of ASU 2016-13		—				—				—				3,566				—				3,566				—
Adjusted ACL at beginning of period		80,542				67,339				59,645				51,537				48,167				51,537				47,916
Provision for credit losses on loans [1]		4,496				14,465				10,640				9,329				2,098				38,930				6,317
Charge-offs:
Commercial, financial and agricultural		676				810				1,103				437				379				3,026				2,478
Real estate:
Residential mortgage		—				11				52				—				—				63				—
Home equity		—				—				—				—				—				—				5
Commercial mortgage		—				75				—				—				—				75				—
Consumer		1,856				1,492				2,626				2,217				2,723				8,191				8,265
Leases		—				—				—				—				—				—				—
Total charge-offs		2,532				2,388				3,781				2,654				3,102				11,355				10,748
Recoveries:
Commercial, financial and agricultural		189				321				305				342				264				1,157				1,174
Real estate:
Construction		—				—				—				131				6				131				610
Residential mortgage		15				13				20				181				26				229				524
Home equity		2				—				—				31				—				33				42
Commercial mortgage		1				12				1				2				—				16				25
Consumer		556				780				509				746				512				2,591				2,111
Total recoveries		763				1,126				835				1,433				808				4,157				4,486
Net charge-offs		1,769				1,262				2,946				1,221				2,294				7,198				6,262
ACL at end of period		$	83,269			$	80,542			$	67,339			$	59,645			$	47,971			$	83,269			$	47,971
Average loans, net of deferred fees and costs		$	5,034,717			$	5,016,955			$	4,902,905			$	4,462,347			$	4,412,247			$	4,855,169			$	4,241,308
Annualized ratio of net charge-offs to average loans		0.14		%		0.10		%		0.24		%		0.11		%		0.21		%		0.15		%		0.15		%
[1] The Company recorded a reserve on accrued interest receivable for loans on payment forbearance or deferral, which were granted to borrowers impacted by the COVID-19 pandemic. This reserve was recorded as a contra-asset against accrued interest receivable with the offset to provision for credit losses. The provision for credit losses presented in this table excludes the provision for credit losses on accrued interest receivable of $0.187 million

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)	TABLE 11

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

		Three Months Ended																				Year Ended
		Dec 31,				Sep 30,				Jun 30,				Mar 31,				Dec 31,				Dec 31,
(Dollars in thousands)		2020				2020				2020				2020				2019				2020				2019
Net income		$	12,171			$	6,859			$	9,917			$	8,326			$	14,197			$	37,273			$	58,322
Add: Income tax expense		3,772				2,200				2,967				2,821				5,165				11,760				19,605
Income before taxes		15,943				9,059				12,884				11,147				19,362				49,033				77,927
Add: Provision for credit losses		4,496				14,652				10,640				9,329				2,098				39,117				6,317
PTPP earnings		$	20,439			$	23,711			$	23,524			$	20,476			$	21,460			$	88,150			$	84,244

 

		Three Months Ended																				Year Ended
		Dec 31,				Sep 30,				Jun 30,				Mar 31,				Dec 31,				Dec 31,
(Dollars in thousands)		2020				2020				2020				2020				2019				2020				2019
Net income		$	12,171			$	6,859			$	9,917			$	8,326			$	14,197			$	37,273			$	58,322
Net income (annualized)		48,684				27,436				39,668				33,304				56,788				37,273				58,322
PTPP earnings		20,439				23,711				23,524				20,476				21,460				88,150				84,244
PTPP earnings (annualized)		81,756				94,844				94,096				81,904				85,840				88,150				84,244
Average assets		6,621,127				6,574,492				6,468,129				6,007,237				5,978,797				6,418,661				5,888,615
Return on average assets		0.74		%		0.42		%		0.61		%		0.55		%		0.95		%		0.58		%		0.99		%
PTPP earnings to average assets		1.23		%		1.44		%		1.45		%		1.36		%		1.44		%		1.37		%		1.43		%

 

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

		Dec 31,				Sep 30,				Jun 30,				Mar 31,				Dec 31,
(Dollars in thousands)		2020				2020				2020				2020				2019
ACL		$	83,269			$	80,542			$	67,339			$	59,645			$	47,971
Total loans		$	4,964,113			$	5,030,626			$	5,003,438			$	4,511,998			$	4,449,540
PPP loans		416,375				528,581				526,408				—				—
Total loans, excluding PPP loans		$	4,547,738			$	4,502,045			4,477,030				4,511,998				$	4,449,540
Ratio of ACL to total loans		1.68		%		1.60		%		1.35		%		1.32		%		1.08		%
Ratio of ACL to total loans, excluding PPP loans		1.83		%		1.79		%		1.50		%		1.32		%		1.08		%

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)	TABLE 11 (CONTINUED)

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

		Dec 31,				Sep 30,				Jun 30,
		2020				2020				2020
Loans on payment forbearance or deferrals		$	120,206			$	290,841			$	567,860
Total loans		4,964,113				5,030,626				5,003,438
Total loans, excluding PPP loans		4,547,738				4,502,045				4,477,030
Ratio of loans on payment forbearance or deferrals to total loans		2.42		%		5.78		%		11.35		%
Ratio of loans on payment forbearance or deferrals to total loans, excluding PPP loans		2.64		%		6.46		%		12.68		%

 

 

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SOURCE Central Pacific Financial Corp.

FAQ

What were Central Pacific Financial Corp's fourth quarter earnings for 2020?

Central Pacific Financial Corp reported a net income of $12.2 million for Q4 2020, or $0.43 per share.

How did CPF's annual net income change in 2020?

In 2020, CPF's net income decreased to $37.3 million from $58.3 million in 2019.

What impact did COVID-19 have on CPF's financial results?

The COVID-19 pandemic led to a higher provision for credit loss expense of $39.1 million in 2020.

When is the dividend payment for CPF's latest declaration?

The quarterly cash dividend of $0.23 per share will be payable on March 15, 2021.