Central Pacific Financial Reports First Quarter Earnings of $16.2 Million

Rhea-AI Summary

Central Pacific Financial Corp. (NYSE: CPF) reported a net income of $16.2 million, or $0.60 per diluted share for Q1 2023. This reflects a decrease from $20.2 million or $0.74 in Q4 2022. Total loans rose to $5.56 billion, with deposits at $6.75 billion, showing minor increases. Nonperforming assets stayed stable at $5.3 million, representing 0.07% of total assets. The company declared a quarterly cash dividend of $0.26 per share. Despite challenges in the banking industry, management highlighted strong asset quality, liquidity with $198.8 million in cash, and a robust capital position. However, net interest income declined by 3.7% from the previous quarter to $54.2 million. The efficiency ratio increased to 64.58%.

Positive

• Strong liquidity position with $198.8 million in cash and $2.83 billion in other liquidity sources.
• Nonperforming assets stable at 0.07% of total assets.
• Quarterly cash dividend of $0.26 per share approved.

Negative

• Net income decreased by 19.7% from the prior quarter.
• Net interest income dropped by 3.7% compared to Q4 2022.
• Efficiency ratio increased to 64.58%, indicating higher operating expenses.

• Net income of $16.2 million, or $0.60 per diluted share for the quarter.

• ROA of 0.87% and ROE of 13.97% for the quarter.

• Total loans of $5.56 billion increased by $1.9 million in the first quarter.

• Total deposits of $6.75 billion increased by $10.7 million in the first quarter. 66% of total deposits are FDIC-insured or fully collateralized as of March 31, 2023.

• Asset quality remains strong as nonperforming assets totaled $5.3 million, or 0.07% of total assets.

• Solid liquidity position with $198.8 million in cash on balance sheet and $2.83 billion in total other liquidity sources, including available borrowing capacity plus unpledged investment securities as of March 31, 2023.

• Board of Directors approved quarterly cash dividend of $0.26 per share.

HONOLULU--(BUSINESS WIRE)-- Central Pacific Financial Corp. (NYSE: CPF) (the "Company"), parent company of Central Pacific Bank (the "Bank" or "CPB"), today reported net income for the first quarter of 2023 of $16.2 million, or fully diluted earnings per share ("EPS") of $0.60, compared to net income of $20.2 million, or EPS of $0.74 in the previous quarter and net income of $19.4 million, or EPS of $0.70 in the year-ago quarter.

"We are pleased with our first quarter financial results, highlighted by stable deposit balances, continued solid asset quality and strong liquidity and capital positions," said Arnold Martines, President and Chief Executive Officer. "Despite the recent events affecting the national banking industry, Central Pacific Bank remains financially strong and committed to supporting our customers and community."

Earnings Highlights

Net interest income for the first quarter of 2023 was $54.2 million, which decreased by $2.1 million, or 3.7% from the previous quarter, and increased by $3.3 million, or 6.4% from the year-ago quarter. The sequential quarter decrease in net interest income is primarily due to increases in average balances and rates paid on interest-bearing deposits and borrowings, which outpaced the increases in average loan balances and asset yields.

Net interest margin ("NIM") for the first quarter of 2023 was 3.08%, which decreased by 9 basis points ("bps") from the previous quarter and increased by 11 bps from the year-ago quarter. The sequential quarter decrease in NIM is primarily due to higher rates paid on deposits and borrowings, which outpaced the increase in asset yields. Additional information on average balances, interest income and expenses and yields and rates is presented in Table 4.

In the first quarter of 2023, the Company recorded a provision for credit losses of $1.9 million, compared to a provision of $0.6 million in the previous quarter and a release of credit loss reserves of $3.2 million in the year-ago quarter.

Other operating income for the first quarter of 2023 totaled $11.0 million, compared to $11.6 million in the previous quarter and $9.6 million in the year-ago quarter. The decrease from the previous quarter was primarily due to lower income from bank-owned life insurance of $0.9 million, partially offset by higher income from fiduciary activities of $0.3 million. Additional information on other operating income is presented in Table 3.

Other operating expense for the first quarter of 2023 totaled $42.1 million, compared to $40.4 million in the previous quarter and $38.2 million in the year-ago quarter. The increase in other operating expense was primarily due to higher computer software expense of $0.6 million, higher net occupancy expense of $0.5 million and a higher FDIC insurance assessment of $0.5 million (included in other), partially offset by lower salaries and employee benefits expense of $0.7 million. Additional information on other operating expense is presented in Table 3.

The efficiency ratio for the first quarter of 2023 was 64.58%, compared to 59.56% in the previous quarter and 63.16% in the year-ago quarter.

The effective tax rate for the first quarter of 2023 was 23.8%, compared to 24.9% in the previous quarter and 23.7% in the year-ago quarter.

Balance Sheet Highlights

Total assets at March 31, 2023 of $7.52 billion increased by $88.5 million, or 1.2% from $7.43 billion at December 31, 2022, and increased by $222.4 million, or 3.0% from $7.30 billion at March 31, 2022.

Total loans, net of deferred fees and costs, at March 31, 2023 of $5.56 billion increased by $1.9 million from $5.56 billion at December 31, 2022, and increased by $382.6 million, or 7.4% from $5.17 billion at March 31, 2022. Loans by type and geographic distribution are summarized in Table 5.

Total deposits at March 31, 2023 of $6.75 billion increased by $10.7 million or 0.2% from $6.74 billion at December 31, 2022, and increased by $147.9 million, or 2.2% from $6.60 billion at March 31, 2022. Core deposits, which include demand deposits, savings and money market deposits and time deposits up to $250,000, totaled $5.97 billion at March 31, 2023, and decreased by $103.3 million, or 1.7% from December 31, 2022. Average rates paid on total deposits during the first quarter of 2023 was 0.61%, compared to 0.41% in the previous quarter and 0.06% in the year-ago quarter. At March 31, 2023, approximately 66% of the Company's total deposits were FDIC-insured or fully collateralized. Core deposit and total deposit balances are summarized in Table 6.

At March 31, 2023, the Company had $198.8 million in cash on balance sheet and $2.83 billion in total other liquidity sources, including available borrowing capacity plus unpledged investment securities.

Asset Quality

Nonperforming assets at March 31, 2023 totaled $5.3 million, or 0.07% of total assets, and remained relatively unchanged from December 31, 2022 and March 31, 2022. Additional information on nonperforming assets, past due and restructured loans is presented in Table 7.

Net charge-offs in the first quarter of 2023 totaled $2.3 million, compared to net charge-offs of $1.7 million in the previous quarter, and net charge-offs of $0.4 million in the year-ago quarter. Annualized net charge-offs as a percentage of average loans was 0.16%, 0.12% and 0.03% during the three months ended March 31, 2023, December 31, 2022 and March 31, 2022, respectively.

The allowance for credit losses, as a percentage of total loans at March 31, 2023 was 1.14%, compared to 1.15% at December 31, 2022, and 1.25% at March 31, 2022. Additional information on net charge-offs and recoveries and the allowance for credit losses is presented in Table 8.

Capital

Total shareholders' equity was $470.9 million at March 31, 2023, compared to $452.9 million and $486.3 million at December 31, 2022 and March 31, 2022, respectively. The increase in shareholders' equity from the previous quarter was primarily due to net income of $16.2 million and a decline in unrealized losses on our available-for-sale investment securities portfolio which flow through accumulated other comprehensive loss.

During the first quarter of 2023, the Company repurchased 101,760 shares of common stock, at a total cost of $2.2 million, or an average cost per share of $21.67. As of March 31, 2023, $23.8 million remained available for repurchase under the Company's share repurchase program. In March 2023, the Company temporarily suspended share repurchases while market conditions continue to be evaluated.

At March 31, 2023, the Company's leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ratios were 8.6%, 11.5%, 13.6%, and 10.6%, respectively, compared to 8.5%, 11.3%, 13.5%, and 10.5%, respectively, at December 31, 2022.

On April 25, 2023, the Company's Board of Directors declared a quarterly cash dividend of $0.26 per share on its outstanding common shares. The dividend will be payable on June 15, 2023 to shareholders of record at the close of business on May 31, 2023.

During the quarter, CPB was named Lender of the Year (Category 2), by the Small Business Administration. In January 2023, the Bank also launched its unique Friendship Floor, a newly-remodeled co-working hub on the third floor of Central Pacific Plaza, with eight conference rooms and 80 hybrid workspaces and other conveniences to promote employee engagement.

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 1-833-470-1428 (access code: 500446). A playback of the call will be available through May 26, 2023 by dialing 1-866-813-9403 (access code: 402781) 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 $7.52 billion in assets as of March 31, 2023. Central Pacific Bank, its primary subsidiary, operates 27 branches and 61 ATMs in the state of Hawaii. For additional information, please visit the Company's website at http://www.cpb.bank.

Equal Housing Lender
Member FDIC
NYSE Listed: CPF

Forward-Looking Statements ("FLS")

This document may contain FLS concerning: projections of revenues, expenses, income or loss, earnings or loss per share, capital expenditures, the payment or nonpayment of dividends, capital position, credit losses, net interest margin or other financial items; statements of plans, objectives and expectations of Central Pacific Financial Corp. 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 FLS but are not the exclusive means of identifying such statements.

While we believe that our FLS and the assumptions underlying them are reasonably based, such statements and assumptions are by their nature subject to risks and uncertainties, and thus could later prove to be inaccurate or incorrect. Accordingly, actual results could differ materially from those statements or projections for a variety of reasons, including, but not limited to: the effects of inflation and rising interest rates; the adverse effects of recent bank failures and the potential impact of such developments on customer confidence, deposit behavior, liquidity and regulatory responses thereto; the adverse effects of the COVID-19 pandemic virus (and ongoing pandemic variants) on local, national and international economies, including, but not limited to, the adverse impact on tourism and construction in the State of Hawaii, our borrowers, customers, third-party contractors, vendors and employees; supply chain disruptions; the increase in inventory or adverse conditions in the real estate market and deterioration in the construction industry; adverse changes in the financial performance and/or condition of our borrowers and, as a result, increased loan delinquency rates, deterioration in asset quality, and losses in our loan portfolio; our ability to achieve the objectives of our RISE2020 initiative; our ability to successfully implement and achieve the objectives of our Banking-as-a-Service ("BaaS") initiatives, including adoption of the initiatives by customers and risks faced by any of our bank collaborations including reputational and regulatory risk; the impact of local, national, and international economies and events (including natural disasters such as wildfires, volcanic eruptions, hurricanes, tsunamis, storms, earthquakes and pandemic viruses and diseases) on the Company's business and operations and on tourism, the military, and other major industries operating within the Hawaii market and any other markets in which the Company does business; deterioration or malaise in domestic economic conditions, including any destabilization in the financial industry and deterioration of the real estate market, as well as the impact of declining levels of consumer and business confidence in the state of the economy in general and in financial institutions in particular; changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), changes in capital standards, other regulatory reform and federal and state legislation, including but not limited to regulations promulgated by the Consumer Financial Protection Bureau (the "CFPB"), government-sponsored enterprise reform, and any related rules and regulations which affect our business operations and competitiveness; the costs and effects of legal and regulatory developments, including legal proceedings or regulatory or other governmental inquiries and proceedings and the resolution thereof, the results of regulatory examinations or reviews and the effect of, and our ability to comply with, any regulations or regulatory orders or actions we are or may become subject to; ability to successfully implement our initiatives to lower our efficiency ratio; the effects of and changes in trade, monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System (the "FRB" or the "Federal Reserve"); securities market and monetary fluctuations, including the replacement of the London Interbank Offered Rate ("LIBOR") Index and the impact on our loans and debt which are tied to that index and uncertainties regarding potential alternative reference rates, including the Secured Overnight Financing Rate ("SOFR"); negative trends in our market capitalization and adverse changes in the price of the Company's common stock; political instability; acts of war or terrorism; changes in consumer spending, borrowings and savings habits; 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 ("PCAOB"), the Financial Accounting Standards Board ("FASB") and other accounting standard setters and the cost and resources required to implement such changes; our ability to attract and retain key personnel; changes in our personnel, organization, compensation and benefit plans; and our success at managing the risks involved in the foregoing items.

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

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Financial Highlights
(Unaudited)						TABLE 1
		Three Months Ended
(Dollars in thousands,		Mar 31,				Dec 31,				Sep 30,				Jun 30,				Mar 31,
except for per share amounts)		2023				2022				2022				2022				2022
CONDENSED INCOME STATEMENT
Net interest income		$	54,196			$	56,285			$	55,365			$	52,978			$	50,935
Provision (credit) for credit losses			1,852				571				362				989				(3,195	)
Total other operating income			11,009				11,601				9,629				17,138				9,551
Total other operating expense			42,107				40,434				41,998				45,349				38,205
Income tax expense			5,059				6,700				5,919				6,184				6,038
Net income			16,187				20,181				16,715				17,594				19,438
Basic earnings per common share		$	0.60			$	0.74			$	0.61			$	0.64			$	0.70
Diluted earnings per common share			0.60				0.74				0.61				0.64				0.70
Dividends declared per common share			0.26				0.26				0.26				0.26				0.26
PERFORMANCE RATIOS
Return on average assets (ROA) [1]			0.87	%			1.09	%			0.91	%			0.96	%			1.06	%
Return on average shareholders’ equity (ROE) [1]			13.97				18.30				14.49				14.93				14.44
Average shareholders’ equity to average assets			6.23				5.97				6.30				6.45				7.34
Efficiency ratio [2]			64.58				59.56				64.62				64.68				63.16
Net interest margin (NIM) [1]			3.08				3.17				3.17				3.05				2.97
Dividend payout ratio [3]			43.33				35.14				42.62				40.63				37.14
SELECTED AVERAGE BALANCES
Average loans, including loans held for sale		$	5,525,988			$	5,498,800			$	5,355,088			$	5,221,300			$	5,114,260
Average interest-earning assets			7,112,377				7,103,841				6,991,773				6,982,556				6,933,007
Average assets			7,443,767				7,389,712				7,320,751				7,309,939				7,341,850
Average deposits			6,655,660				6,673,922				6,535,321				6,626,462				6,581,593
Average interest-bearing liabilities			4,820,660				4,708,045				4,538,893				4,442,172				4,429,114
Average shareholders’ equity			463,556				441,084				461,328				471,420				538,601

[1]		ROA and ROE are annualized based on a 30/360 day convention. Annualized net interest income and expense in the NIM calculation are based on the day count interest payment conventions at the interest-earning asset or interest-bearing liability level (i.e. 30/360, actual/actual).
[2]		Efficiency ratio is defined as total operating expense divided by total revenue (net interest income and total other operating income).
[3]		Dividend payout ratio is defined as dividends declared per share divided by diluted earnings per share.

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Financial Highlights
(Unaudited)						TABLE 1 (CONTINUED)
		Mar 31,				Dec 31,				Sep 30,				Jun 30,				Mar 31,
		2023				2022				2022				2022				2022
REGULATORY CAPITAL RATIOS
Central Pacific Financial Corp.
Leverage capital ratio			8.6	%			8.5	%			8.7	%			8.6	%			8.5	%
Tier 1 risk-based capital ratio			11.5				11.3				11.5				11.6				11.9
Total risk-based capital ratio			13.6				13.5				13.7				13.9				14.2
Common equity tier 1 capital ratio			10.6				10.5				10.6				10.7				10.9
Central Pacific Bank
Leverage capital ratio			9.0				9.0				9.1				9.0				9.0
Tier 1 risk-based capital ratio			12.0				11.9				12.2				12.2				12.6
Total risk-based capital ratio			13.2				13.1				13.4				13.5				13.8
Common equity tier 1 capital ratio			12.0				11.9				12.2				12.2				12.6
		Mar 31,				Dec 31,				Sep 30,				Jun 30,				Mar 31,
(dollars in thousands, except for per share amounts)		2023				2022				2022				2022				2022
BALANCE SHEET
Total loans, net of deferred fees and costs		$	5,557,397			$	5,555,466			$	5,422,212			$	5,301,633			$	5,174,837
Total assets			7,521,247				7,432,763				7,337,631				7,299,178				7,298,819
Total deposits			6,746,968				6,736,223				6,556,434				6,622,061				6,599,031
Long-term debt			155,920				105,859				105,799				105,738				105,677
Total shareholders’ equity			470,926				452,871				438,468				455,100				486,328
Total shareholders’ equity to total assets			6.26	%			6.09	%			5.98	%			6.23	%			6.66	%
ASSET QUALITY
Allowance for credit losses (ACL)		$	63,099			$	63,738			$	64,382			$	65,211			$	64,754
Nonaccrual loans			5,313				5,251				4,220				4,983				5,336
Non-performing assets (NPA)			5,313				5,251				4,220				4,983				5,336
ACL to total loans			1.14	%			1.15	%			1.19	%			1.23	%			1.25	%
ACL to nonaccrual loans			1,187.63	%			1,213.83	%			1,525.64	%			1,308.67	%			1,213.53	%
NPA to total assets			0.07	%			0.07	%			0.06	%			0.07	%			0.07	%
PER SHARE OF COMMON STOCK OUTSTANDING
Book value per common share		$	17.44			$	16.76			$	16.08			$	16.57			$	17.63
Closing market price per common share			17.90				20.28				20.69				21.45				27.90

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)						TABLE 2
		Mar 31,				Dec 31,				Sep 30,				Jun 30,				Mar 31,
(Dollars in thousands, except share data)		2023				2022				2022				2022				2022
ASSETS
Cash and due from financial institutions		$	108,535			$	97,150			$	116,365			$	108,389			$	83,947
Interest-bearing deposits in other financial institutions			90,247				14,894				22,332				22,741				118,183
Investment securities:
Available-for-sale debt securities, at fair value			687,188				671,794				686,681				787,373				1,199,482
Held-to-maturity debt securities, at amortized cost; fair value of: $599,300 at March 31, 2023, $596,780 at December 31, 2022, $590,880 at September 30, 2022, $635,565 at June 30, 2022, and $329,503 at March 31, 2022			658,596				664,883				662,827				663,365				329,507
Total investment securities			1,345,784				1,336,677				1,349,508				1,450,738				1,528,989
Loans held for sale			—				1,105				1,701				535				4,677
Loans, net of deferred fees and costs			5,557,397				5,555,466				5,422,212				5,301,633				5,174,837
Less: allowance for credit losses			63,099				63,738				64,382				65,211				64,754
Loans, net of allowance for credit losses			5,494,298				5,491,728				5,357,830				5,236,422				5,110,083
Premises and equipment, net			93,761				91,634				89,979				88,664				79,455
Accrued interest receivable			20,473				20,345				18,134				17,146				16,423
Investment in unconsolidated entities			45,953				46,641				36,769				37,341				31,092
Mortgage servicing rights			8,943				9,074				9,216				9,369				9,480
Bank-owned life insurance			168,244				167,967				167,761				167,202				167,407
Federal Home Loan Bank ("FHLB") stock			11,960				9,146				13,546				8,943				8,943
Right of use lease asset			34,237				34,985				35,978				36,978				38,435
Other assets			98,812				111,417				118,512				114,710				101,705
Total assets		$	7,521,247			$	7,432,763			$	7,337,631			$	7,299,178			$	7,298,819
LIABILITIES
Deposits:
Noninterest-bearing demand		$	2,028,087			$	2,092,823			$	2,138,083			$	2,282,967			$	2,269,562
Interest-bearing demand			1,386,913				1,453,167				1,441,302				1,444,566				1,433,284
Savings and money market			2,184,675				2,199,028				2,194,991				2,214,146				2,197,647
Time			1,147,293				991,205				782,058				680,382				698,538
Total deposits			6,746,968				6,736,223				6,556,434				6,622,061				6,599,031
FHLB advances and other short-term borrowings			25,000				5,000				115,000				—				—
Long-term debt, net of unamortized debt issuance costs of: $627 at March 31, 2023, $688 at December 31, 2022, $748 at September 30, 2022, $809 at June 30, 2022 and $870 at March 31, 2022			155,920				105,859				105,799				105,738				105,677
Lease liability			35,076				35,889				36,941				38,037				39,610
Other liabilities			87,357				96,921				84,989				78,242				68,123
Total liabilities			7,050,321				6,979,892				6,899,163				6,844,078				6,812,441
EQUITY
Shareholders' equity:
Preferred stock, no par value, authorized 1,000,000 shares; issued and outstanding: none at March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022, and March 31, 2022			—				—				—				—				—
Common stock, no par value, authorized 185,000,000 shares; issued and outstanding: 27,005,545 at March 31, 2023, 27,025,070 at December 31, 2022, 27,262,879 at September 30, 2022, 27,463,562 at June 30, 2022, and 27,584,929 at March 31, 2022			405,866				408,071				412,994				417,862				421,153
Additional paid-in capital			101,188				101,346				100,426				98,977				98,270
Retained earnings			96,600				87,438				74,301				64,693				54,252
Accumulated other comprehensive loss			(132,728	)			(143,984	)			(149,253	)			(126,432	)			(87,347	)
Total shareholders' equity			470,926				452,871				438,468				455,100				486,328
Non-controlling interest			—				—				—				—				50
Total equity			470,926				452,871				438,468				455,100				486,378
Total liabilities and equity		$	7,521,247			$	7,432,763			$	7,337,631			$	7,299,178			$	7,298,819

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)														TABLE 3
		Three Months Ended
		Mar 31,				Dec 31,				Sep 30,				Jun 30,				Mar 31,
(Dollars in thousands, except per share data)		2023				2022				2022				2022				2022
Interest income:
Interest and fees on loans		$	58,269			$	56,682			$	51,686			$	46,963			$	44,949
Interest and dividends on investment securities:
Taxable investment securities			7,336				7,104				6,933				7,035				6,969
Tax-exempt investment securities			790				776				805				807				816
Dividend income on investment securities			—				—				—				—				21
Interest on deposits in other financial institutions			277				370				107				191				72
Dividend income on FHLB stock			136				105				138				68				59
Total interest income			66,808				65,037				59,669				55,064				52,886
Interest expense:
Interest on deposits:
Demand			363				333				217				144				112
Savings and money market			3,386				2,488				1,054				317				329
Time			6,264				4,063				1,092				490				469
Interest on short-term borrowings			761				393				660				2				—
Interest on long-term debt			1,838				1,475				1,281				1,133				1,041
Total interest expense			12,612				8,752				4,304				2,086				1,951
Net interest income			54,196				56,285				55,365				52,978				50,935
Provision (credit) for credit losses			1,852				571				362				989				(3,195	)
Net interest income after provision (credit) for credit losses			52,344				55,714				55,003				51,989				54,130
Other operating income:
Mortgage banking income			526				667				831				1,140				1,172
Service charges on deposit accounts			2,111				2,172				2,138				2,026				1,861
Other service charges and fees			4,985				4,972				4,955				4,610				4,488
Income from fiduciary activities			1,321				1,058				1,165				1,188				1,154
Net gain on sales of investment securities			—				—				—				8,506				—
Income from bank-owned life insurance			1,291				2,187				167				(1,028	)			539
Other			775				545				373				696				337
Total other operating income			11,009				11,601				9,629				17,138				9,551
Other operating expense:
Salaries and employee benefits			22,023				22,692				22,778				22,369				20,942
Net occupancy			4,474				3,998				4,743				4,448				3,774
Equipment			946				996				1,085				1,075				1,082
Communication			778				696				712				744				806
Legal and professional services			2,886				2,677				2,573				2,916				2,626
Computer software			4,606				3,996				4,138				3,624				3,082
Advertising			933				701				1,150				1,150				1,150
Other			5,461				4,678				4,819				9,023				4,743
Total other operating expense			42,107				40,434				41,998				45,349				38,205
Income before income taxes			21,246				26,881				22,634				23,778				25,476
Income tax expense			5,059				6,700				5,919				6,184				6,038
Net income		$	16,187			$	20,181			$	16,715			$	17,594			$	19,438
Per common share data:
Basic earnings per share		$	0.60			$	0.74			$	0.61			$	0.64			$	0.70
Diluted earnings per share			0.60				0.74				0.61				0.64				0.70
Cash dividends declared			0.26				0.26				0.26				0.26				0.26
Basic weighted average shares outstanding			26,999,138				27,134,970				27,356,614				27,516,284				27,591,390
Diluted weighted average shares outstanding			27,122,012				27,303,249				27,501,212				27,676,619				27,874,924
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
		March 31, 2023											December 31, 2022											March 31, 2022
		Average				Average							Average				Average							Average				Average
(Dollars in thousands)		Balance				Yield/Rate			Interest				Balance				Yield/Rate			Interest				Balance				Yield/Rate			Interest
ASSETS
Interest-earning assets:
Interest-bearing deposits in other financial institutions		$	24,957			4.51	%		$	277			$	38,610			3.80	%		$	370			$	157,861			0.18	%		$	72
Investment securities, excluding valuation allowance:
Taxable			1,395,985			2.10				7,336				1,399,627			2.03				7,104				1,489,538			1.88				6,990
Tax-exempt [1]			153,067			2.61				1,000				156,079			2.52				982				163,352			2.53				1,033
Total investment securities			1,549,052			2.15				8,336				1,555,706			2.08				8,086				1,652,890			1.94				8,023
Loans, including loans held for sale			5,525,988			4.26				58,269				5,498,800			4.10				56,682				5,114,260			3.54				44,949
Federal Home Loan Bank stock			12,380			4.40				136				10,725			3.90				105				7,996			2.98				59
Total interest-earning assets			7,112,377			3.80				67,018				7,103,841			3.66				65,243				6,933,007			3.09				53,103
Noninterest-earning assets			331,390											285,871											408,843
Total assets		$	7,443,767										$	7,389,712										$	7,341,850
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits		$	1,415,155			0.10	%		$	363			$	1,441,787			0.09	%		$	333			$	1,425,303			0.03	%		$	112
Savings and money market deposits			2,182,942			0.63				3,386				2,209,166			0.45				2,488				2,212,426			0.06				329
Time deposits up to $250,000			341,396			2.22				1,870				311,639			1.50				1,174				223,661			0.28				156
Time deposits over $250,000			689,432			2.58				4,394				595,133			1.93				2,889				462,087			0.28				313
Total interest-bearing deposits			4,628,925			0.88				10,013				4,557,725			0.60				6,884				4,323,477			0.09				910
Federal Home Loan Bank advances and other short-term borrowings			64,462			4.79				761				44,491			3.51				393				—			—				—
Long-term debt			127,273			5.86				1,838				105,829			5.53				1,475				105,637			4.00				1,041
Total interest-bearing liabilities			4,820,660			1.06				12,612				4,708,045			0.74				8,752				4,429,114			0.18				1,951
Noninterest-bearing deposits			2,026,735											2,116,197											2,258,116
Other liabilities			132,816											124,386											115,971
Total liabilities			6,980,211											6,948,628											6,803,201
Shareholders’ equity			463,556											441,084											538,601
Non-controlling interest			—											—											48
Total equity			463,556											441,084											538,649
Total liabilities and equity		$	7,443,767										$	7,389,712										$	7,341,850
Net interest income									$	54,406										$	56,491										$	51,152
Interest rate spread						2.74	%										2.92	%										2.91	%
Net interest margin						3.08	%										3.17	%										2.97	%

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

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Loans by Geographic Distribution
(Unaudited)														TABLE 5
		Mar 31,				Dec 31,				Sep 30,				Jun 30,				Mar 31,
(Dollars in thousands)		2023				2022				2022				2022				2022
HAWAII:
Commercial, financial and agricultural:
SBA Paycheck Protection Program		$	1,821			$	2,555			$	5,208			$	19,469			$	43,380
Other			375,158				383,665				358,805				367,676				407,559
Real estate:
Construction			154,303				150,208				138,724				134,103				122,329
Residential mortgage			1,941,230				1,940,999				1,923,068				1,890,783				1,874,048
Home equity			743,908				739,380				719,399				698,209				676,326
Commercial mortgage			1,030,086				1,029,708				1,002,874				994,405				927,241
Consumer			342,922				346,789				347,388				341,213				337,188
Total loans, net of deferred fees and costs			4,589,428				4,593,304				4,495,466				4,445,858				4,388,071
Allowance for credit losses			(44,062	)			(45,169	)			(47,814	)			(51,374	)			(51,521	)
Loans, net of allowance for credit losses		$	4,545,366			$	4,548,135			$	4,447,652			$	4,394,484			$	4,336,550
U.S. MAINLAND: [1]
Commercial, financial and agricultural:
SBA Paycheck Protection Program		$	—			$	—			$	—			$	712			$	851
Other			179,906				160,282				158,474				156,567				136,857
Real estate:
Construction			27,171				16,515				12,872				10,935				988
Commercial mortgage			331,546				333,367				332,872				309,230				316,258
Consumer			429,346				451,998				422,528				378,331				331,812
Total loans, net of deferred fees and costs			967,969				962,162				926,746				855,775				786,766
Allowance for credit losses			(19,037	)			(18,569	)			(16,568	)			(13,837	)			(13,233	)
Loans, net of allowance for credit losses		$	948,932			$	943,593			$	910,178			$	841,938			$	773,533
TOTAL:
Commercial, financial and agricultural:
SBA Paycheck Protection Program		$	1,821			$	2,555			$	5,208			$	20,181			$	44,231
Other			555,064				543,947				517,279				524,243				544,416
Real estate:
Construction			181,474				166,723				151,596				145,038				123,317
Residential mortgage			1,941,230				1,940,999				1,923,068				1,890,783				1,874,048
Home equity			743,908				739,380				719,399				698,209				676,326
Commercial mortgage			1,361,632				1,363,075				1,335,746				1,303,635				1,243,499
Consumer			772,268				798,787				769,916				719,544				669,000
Total loans, net of deferred fees and costs			5,557,397				5,555,466				5,422,212				5,301,633				5,174,837
Allowance for credit losses			(63,099	)			(63,738	)			(64,382	)			(65,211	)			(64,754	)
Loans, net of allowance for credit losses		$	5,494,298			$	5,491,728			$	5,357,830			$	5,236,422			$	5,110,083

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

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Deposits
(Unaudited)														TABLE 6
		Mar 31,				Dec 31,				Sep 30,				Jun 30,				Mar 31,
(Dollars in thousands)		2023				2022				2022				2022				2022
Noninterest-bearing demand		$	2,028,087			$	2,092,823			$	2,138,083			$	2,282,967			$	2,269,562
Interest-bearing demand			1,386,913				1,453,167				1,441,302				1,444,566				1,433,284
Savings and money market			2,184,675				2,199,028				2,194,991				2,214,146				2,197,647
Time deposits less than $100,000			188,289				181,547				153,238				129,103				132,712
Other time deposits $100,000 to $250,000			183,861				148,601				108,723				84,840				87,838
Core deposits			5,971,825				6,075,166				6,036,337				6,155,622				6,121,043
Government time deposits			360,501				290,057				195,057				165,000				188,000
Other time deposits greater than $250,000			414,642				371,000				325,040				301,439				289,988
Total time deposits greater than $250,000			775,143				661,057				520,097				466,439				477,988
Total deposits		$	6,746,968			$	6,736,223			$	6,556,434			$	6,622,061			$	6,599,031

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Nonperforming Assets, Past Due and Restructured Loans
(Unaudited)										TABLE 7
		Mar 31,				Dec 31,				Sep 30,				Jun 30,				Mar 31,
(Dollars in thousands)		2023				2022				2022				2022				2022
Nonaccrual loans:
Commercial, financial and agricultural - Other		$	264			$	297			$	277			$	333			$	293
Real estate:
Residential mortgage			3,445				3,808				2,771				3,490				3,804
Home equity			712				570				584				592				820
Commercial mortgage			77				—				—				—				—
Consumer			815				576				588				568				419
Total nonaccrual loans			5,313				5,251				4,220				4,983				5,336
Other real estate owned ("OREO"):
Real estate:
Residential mortgage			—				—				—				—				—
Total OREO			—				—				—				—				—
Total nonperforming assets ("NPAs")			5,313				5,251				4,220				4,983				5,336
Loans delinquent for 90 days or more still accruing interest:
Commercial, financial and agricultural:
SBA PPP			—				13				—				—				—
Other			—				26				669				309				592
Real estate:
Residential mortgage			—				559				503				—				111
Consumer			1,908				1,240				623				842				621
Total loans delinquent for 90 days or more still accruing interest			1,908				1,838				1,795				1,151				1,324
Restructured loans still accruing interest:
Real estate:
Residential mortgage			1,376				1,845				2,030				2,006				2,751
Commercial mortgage			846				886				925				965				1,004
Consumer			54				62				69				76				83
Total restructured loans still accruing interest			2,276				2,793				3,024				3,047				3,838
Total NPAs and loans delinquent for 90 days or more and restructured loans still accruing interest		$	9,497			$	9,882			$	9,039			$	9,181			$	10,498
Total nonaccrual loans as a percentage of total loans			0.10	%			0.09	%			0.08	%			0.09	%			0.10	%
Total NPAs as a percentage of total loans and OREO			0.10	%			0.09	%			0.08	%			0.09	%			0.10	%
Total NPAs and loans delinquent for 90 days or more still accruing interest as a percentage of total loans and OREO			0.13	%			0.13	%			0.11	%			0.12	%			0.13	%
Total NPAs, loans delinquent for 90 days or more and restructured loans still accruing interest as a percentage of total loans and OREO			0.17	%			0.18	%			0.17	%			0.17	%			0.20	%
Quarter-to-quarter changes in NPAs:
Balance at beginning of quarter		$	5,251			$	4,220			$	4,983			$	5,336			$	5,881
Additions			1,626				2,162				1,072				1,881				1,659
Reductions:
Payments			(857	)			(198	)			(329	)			(285	)			(1,598	)
Return to accrual status			(15	)			(44	)			(616	)			(979	)			(38	)
Charge-offs, valuation and other adjustments			(692	)			(889	)			(890	)			(970	)			(568	)
Total reductions			(1,564	)			(1,131	)			(1,835	)			(2,234	)			(2,204	)
Balance at end of quarter		$	5,313			$	5,251			$	4,220			$	4,983			$	5,336

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Allowance for Credit Losses on Loans
(Unaudited)														TABLE 8
		Three Months Ended
		Mar 31,				Dec 31,				Sep 30,				Jun 30,				Mar 31,
(Dollars in thousands)		2023				2022				2022				2022				2022
Allowance for credit losses ("ACL"):
ACL at beginning of period		$	63,738			$	64,382			$	65,211			$	64,754			$	68,097
Provision (credit) for credit losses on loans			1,615				1,032				731				1,456				(2,931	)
Charge-offs:
Commercial, financial and agricultural - Other			779				678				550				487				254
Consumer			2,686				1,881				1,912				1,390				1,216
Total charge-offs			3,465				2,559				2,462				1,877				1,470
Recoveries:
Commercial, financial and agricultural - Other			250				210				220				215				350
Real estate:
Construction			—				—				14				62				—
Residential mortgage			53				133				14				36				112
Home equity			—				—				36				—				—
Consumer			908				540				618				565				596
Total recoveries			1,211				883				902				878				1,058
Net charge-offs			2,254				1,676				1,560				999				412
ACL at end of period		$	63,099			$	63,738			$	64,382			$	65,211			$	64,754
Average loans, net of deferred fees and costs		$	5,525,988			$	5,498,800			$	5,355,088			$	5,221,300			$	5,114,260
Annualized ratio of net charge-offs to average loans			0.16	%			0.12	%			0.12	%			0.08	%			0.03	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230426005237/en/

Investor Contact:

Ian Tanaka

SVP, Treasurer

(808) 544-3646

ian.tanaka@cpb.bank



Media Contact:

Tim Sakahara

AVP, Corporate Communications Manager

(808) 544-5125

tim.sakahara@cpb.bank

Source: Central Pacific Financial Corp.

FAQ

What were the net income and earnings per share for Central Pacific Financial Corp. (CPF) in Q1 2023?

The net income for Q1 2023 was $16.2 million, with an earnings per share (EPS) of $0.60.

How much did total loans and deposits increase for CPF in Q1 2023?

Total loans increased by $1.9 million to $5.56 billion, while total deposits increased by $10.7 million to $6.75 billion.

What is the current efficiency ratio for CPF?

The efficiency ratio for Q1 2023 is 64.58%.

What dividend was declared by CPF for Q1 2023?

Central Pacific Financial Corp. declared a quarterly cash dividend of $0.26 per share.

How did CPF's net interest income change in Q1 2023?

Net interest income decreased by $2.1 million, or 3.7%, from the previous quarter.