Central Pacific Financial Reports Second Quarter Earnings of $14.5 Million

• Net income of $14.5 million, or $0.53 per diluted share for the quarter.
• ROA of 0.78% and ROE of 12.12% for the quarter.
• Total loans of $5.52 billion decreased by $36.7 million in the second quarter.
• Total deposits of $6.81 billion increased by $58.8 million in the second quarter. Core deposits of $5.98 billion increased by $10.1 million, or 0.2% in the second quarter. 65% of total deposits are FDIC-insured or fully collateralized as of June 30, 2023.
• Solid liquidity position with $311.0 million in cash on balance sheet and $2.71 billion in total other liquidity sources, including available borrowing capacity and unpledged investment securities as of June 30, 2023.
• Ratio of total available sources of liquidity to uninsured and uncollateralized deposits was 128% as of June 30, 2023.
• Leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ratios improved to 8.7%, 11.8%, 13.9%, and 10.9%, respectively, in the second quarter, compared to 8.6%, 11.5%, 13.6%, and 10.6% in the first quarter.
• 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 second quarter of 2023 of $14.5 million, or fully diluted earnings per share ("EPS") of $0.53, compared to net income of $16.2 million, or EPS of $0.60 in the previous quarter and net income of $17.6 million, or EPS of $0.64 in the year-ago quarter.

Pre-provision net revenue ("PPNR"), or net income excluding provision for credit losses and income taxes, totaled $23.3 million in the second quarter of 2023, compared to PPNR of $23.1 million in the previous quarter and $24.8 million in the year-ago quarter. Net income and PPNR in the year-ago quarter included an $8.5 million non-recurring gain on sale of Class B shares of Visa, partially offset by a $4.9 million non-recurring, non-cash settlement charge related to the termination and settlement of our defined benefit pension plan. Additional information on pre-provision net revenue is presented in Table 10.

"Central Pacific delivered solid results during the second quarter and further strengthened our balance sheet, liquidity and capital positions," said Arnold Martines, President and Chief Executive Officer. "We were successful in growing deposits by focusing on the needs of our long-time personal and business customers as well as attracting new relationships. We will continue our focus on building liquidity and ensuring strong credit quality while we navigate the current economic environment."

Earnings Highlights

Net interest income for the second quarter of 2023 was $52.7 million, which decreased by $1.5 million, or 2.7% from the previous quarter, and decreased by $0.2 million, or 0.5% 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, which outpaced the increases in average loan balances and loan yields.

Net interest margin ("NIM") for the second quarter of 2023 was 2.96%, which decreased by 12 basis points ("bps") from the previous quarter and decreased by 9 bps from the year-ago quarter. The sequential quarter decrease in NIM is primarily due to higher rates paid on deposits, which outpaced the increase in loan yields. Additional information on average balances, interest income and expenses and yields and rates is presented in Tables 4 and 5.

In the second quarter of 2023, the Company recorded a provision for credit losses of $4.3 million, compared to a provision of $1.9 million in the previous quarter and a provision of $1.0 million in the year-ago quarter. The provision in the second quarter consisted of a provision for credit losses on loans of $4.1 million and a provision for credit losses on off-balance sheet credit exposures of $0.2 million.

Other operating income for the second quarter of 2023 totaled $10.4 million, compared to $11.0 million in the previous quarter and $17.1 million in the year-ago quarter. The decrease from the previous quarter was primarily due to lower income from fiduciary activities of $0.3 million and lower income recovered on nonaccrual loans previously charged-off of $0.2 million (included in other). Other operating income in the year-ago quarter included the aforementioned $8.5 million gain on the sale of Class B common stock of Visa. Additional information on other operating income is presented in Table 3.

Other operating expense for the second quarter of 2023 totaled $39.9 million, compared to $42.1 million in the previous quarter and $45.3 million in the year-ago quarter. The decrease in other operating expense was primarily due to lower salaries and employee benefits of $1.2 million and lower legal and professional services of $0.4 million. Other operating expense in the year-ago quarter included the aforementioned non-cash settlement charge of $4.9 million related to the termination and settlement of our defined benefit pension plan. Additional information on other operating expense is presented in Table 3.

The efficiency ratio for the second quarter of 2023 was 63.17%, compared to 64.58% in the previous quarter and 64.68% in the year-ago quarter.

The effective tax rate for the second quarter of 2023 was 23.6%, compared to 23.8% in the previous quarter and 26.0% in the year-ago quarter.

Balance Sheet Highlights

Total assets at June 30, 2023 of $7.57 billion increased by $46.3 million, or 0.6% from $7.52 billion at March 31, 2023, and increased by $268.4 million, or 3.7% from $7.30 billion at June 30, 2022. At June 30, 2023, the Company had $311.0 million in cash on its balance sheet and $2.71 billion in total other liquidity sources, including available borrowing capacity and unpledged investment securities. Total available sources of liquidity as a percentage of uninsured and uncollateralized deposits was 128%.

Total loans, net of deferred fees and costs, at June 30, 2023 of $5.52 billion decreased by $36.7 million from $5.56 billion at March 31, 2023, and increased by $219.1 million, or 4.1% from $5.30 billion at June 30, 2022. Average yields earned on loans during the second quarter of 2023 was 4.37%, compared to 4.26% in the previous quarter and 3.60% in the year-ago quarter. Loans by type and geographic distribution are summarized in Table 6.

Total deposits at June 30, 2023 of $6.81 billion increased by $58.8 million or 0.9% from $6.75 billion at March 31, 2023, and increased by $183.7 million, or 2.8% from $6.62 billion at June 30, 2022. Core deposits, which include demand deposits, savings and money market deposits and time deposits up to $250,000, totaled $5.98 billion at June 30, 2023, and increased by $10.1 million, or 0.2% from $5.97 billion at March 31, 2023. Average rates paid on total deposits during the second quarter of 2023 was 0.84%, compared to 0.60% in the previous quarter and 0.06% in the year-ago quarter. At June 30, 2023, approximately 65% of the Company's total deposits were FDIC-insured or fully collateralized. Core deposit and total deposit balances are summarized in Table 7.

Asset Quality

Nonperforming assets at June 30, 2023 totaled $11.1 million, or 0.15% of total assets, compared to $5.3 million, or 0.07% of total assets at March 31, 2023 and $5.0 million, or 0.07% of total assets at June 30, 2022. The increase in nonperforming assets from the previous quarter is primarily attributable to the addition of two Hawaii construction loans to a single borrower totaling $4.9 million. In mid-July 2023, the loans were paid-off in full.

Additional information on nonperforming assets, past due and restructured loans is presented in Table 8.

Net charge-offs in the second quarter of 2023 totaled $3.4 million, compared to net charge-offs of $2.3 million in the previous quarter, and net charge-offs of $1.0 million in the year-ago quarter. Annualized net charge-offs as a percentage of average loans was 0.24%, 0.16% and 0.08% during the three months ended June 30, 2023, March 31, 2023 and June 30, 2022, respectively.

The allowance for credit losses, as a percentage of total loans at June 30, 2023 was 1.16%, compared to 1.14% at March 31, 2023, and 1.23% at June 30, 2022. Additional information on net charge-offs and recoveries and the allowance for credit losses is presented in Table 9.

Capital

Total shareholders' equity was $476.3 million at June 30, 2023, compared to $470.9 million and $455.1 million at March 31, 2023 and June 30, 2022, respectively.

During the second quarter of 2023, the Company repurchased 23,750 shares of common stock, at a total cost of $0.4 million, or an average cost per share of $14.92. During the six months ended June 30, 2023, the Company repurchased 125,510 shares of common stock, at a total cost of $2.6 million, or an average cost per share of $20.39. As of June 30, 2023, $23.5 million remained available for repurchase under the Company's share repurchase program.

At June 30, 2023, the Company's leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ratios were 8.7%, 11.8%, 13.9%, and 10.9%, respectively, compared to 8.6%, 11.5%, 13.6%, and 10.6%, respectively, at March 31, 2023.

On July 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 September 15, 2023 to shareholders of record at the close of business on August 31, 2023.

Conference Call

The Company's management will host a conference call today at 1:00 p.m. Eastern Time (7:00 a.m. Hawaii Time) to discuss the quarterly results. Individuals are encouraged to listen to the live webcast of the presentation by visiting the investor relations page of the Company's website at http://ir.cpb.bank. Alternatively, investors may participate in the live call by dialing 1-888-510-2553 (access code: 9816541). A playback of the call will be available through August 26, 2023 by dialing 1-800-770-2030 (access code: 9816541) and on the Company's website. Information which may be discussed in the conference call is provided in an earnings supplement presentation on the Company's website at http://ir.cpb.bank.

About Central Pacific Financial Corp.

Central Pacific Financial Corp. is a Hawaii-based bank holding company with approximately $7.57 billion in assets as of June 30, 2023. Central Pacific Bank, its primary subsidiary, operates 27 branches and 57 ATMs in the state of Hawaii. For additional information, please visit the Company's website at http://www.cpb.bank.

Equal Housing Lender
Member FDIC
NYSE Listed: CPF

Forward-Looking Statements ("FLS")

This document may contain FLS concerning: projections of revenues, expenses, income or loss, earnings or loss per share, capital expenditures, the payment or nonpayment of dividends, capital position, credit losses, net interest margin or other financial items; statements of plans, objectives and expectations of Central Pacific Financial Corp. (the "Company") or its management or Board of Directors, including those relating to business plans, use of capital resources, products or services and regulatory developments and regulatory actions; statements of future economic performance including anticipated performance results from our business initiatives; or any statements of the assumptions underlying or relating to any of the foregoing. Words such as "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 and lawsuits we are or may become subject to, or regulatory or other governmental inquiries and proceedings and the resolution thereof, the results of regulatory examinations or reviews and the effect of, and our ability to comply with, any regulations or regulatory orders or actions we are or may become subject to; ability to successfully implement our initiatives to lower our efficiency ratio; the effects of and changes in trade, monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System (the "FRB" or the "Federal Reserve"); securities market and monetary fluctuations, including the replacement of the London Interbank Offered Rate ("LIBOR") Index and the impact on our loans and debt which are tied to that index and uncertainties regarding potential alternative reference rates, including the Secured Overnight Financing Rate ("SOFR"); negative trends in our market capitalization and adverse changes in the price of the Company's common stock; political instability; acts of war or terrorism; changes in consumer spending, borrowings and savings habits; cybersecurity and data privacy breaches and the consequence therefrom; failure to maintain effective internal control over financial reporting or disclosure controls and procedures; the ability to address deficiencies in our internal controls over financial reporting or disclosure controls and procedures; technological changes and developments; changes in the competitive environment among financial holding companies and other financial service providers; the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board ("PCAOB"), the Financial Accounting Standards Board ("FASB") and other accounting standard setters and the cost and resources required to implement such changes; our ability to attract and retain key personnel; changes in our personnel, organization, compensation and benefit plans; and our success at managing the risks involved in the foregoing items.

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

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Financial Highlights
(Unaudited)																						TABLE 1
		Three Months Ended																				Six Months Ended
(Dollars in thousands,		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,				Jun 30,
except for per share amounts)		2023				2023				2022				2022				2022				2023				2022
CONDENSED INCOME STATEMENT
Net interest income		$	52,734			$	54,196			$	56,285			$	55,365			$	52,978			$	106,930			$	103,913
Provision (credit) for credit losses			4,319				1,852				571				362				989				6,171				(2,206	)
Total other operating income			10,435				11,009				11,601				9,629				17,138				21,444				26,689
Total other operating expense			39,903				42,107				40,434				41,998				45,349				82,010				83,554
Income tax expense			4,472				5,059				6,700				5,919				6,184				9,531				12,222
Net income			14,475				16,187				20,181				16,715				17,594				30,662				37,032
Basic earnings per share		$	0.54			$	0.60			$	0.74			$	0.61			$	0.64			$	1.14			$	1.34
Diluted earnings per share			0.53				0.60				0.74				0.61				0.64				1.13				1.33
Dividends declared per share			0.26				0.26				0.26				0.26				0.26				0.52				0.52
PERFORMANCE RATIOS
Return on average assets (ROA) [1]			0.78	%			0.87	%			1.09	%			0.91	%			0.96	%			0.82	%			1.01	%
Return on average shareholders’ equity (ROE) [1]			12.12				13.97				18.30				14.49				14.93				13.03				14.67
Average shareholders’ equity to average assets			6.40				6.23				5.97				6.30				6.45				6.31				6.89
Efficiency ratio [2]			63.17				64.58				59.56				64.62				64.68				63.88				63.98
Net interest margin (NIM) [1]			2.96				3.08				3.17				3.17				3.05				3.02				3.01
Dividend payout ratio [3]			49.06				43.33				35.14				42.62				40.63				46.02				39.10
SELECTED AVERAGE BALANCES
Average loans, including loans held for sale		$	5,543,398			$	5,525,988			$	5,498,800			$	5,355,088			$	5,221,300			$	5,534,741			$	5,168,076
Average interest-earning assets			7,155,606				7,112,377				7,103,841				6,991,773				6,982,556				7,134,111				6,957,918
Average assets			7,463,629				7,443,767				7,389,712				7,320,751				7,309,939				7,453,753				7,325,042
Average deposits			6,674,650				6,655,660				6,673,922				6,535,321				6,626,462				6,665,208				6,603,467
Average interest-bearing liabilities			4,908,120				4,820,660				4,708,045				4,538,893				4,442,172				4,864,633				4,435,678
Average shareholders’ equity			477,711				463,556				441,084				461,328				471,420				470,673				504,825

[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)
		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,
		2023				2023				2022				2022				2022
REGULATORY CAPITAL RATIOS
Central Pacific Financial Corp.
Leverage capital ratio			8.7	%			8.6	%			8.5	%			8.7	%			8.6	%
Tier 1 risk-based capital ratio			11.8				11.5				11.3				11.5				11.6
Total risk-based capital ratio			13.9				13.6				13.5				13.7				13.9
Common equity tier 1 capital ratio			10.9				10.6				10.5				10.6				10.7
Central Pacific Bank
Leverage capital ratio			9.1				9.0				9.0				9.1				9.0
Tier 1 risk-based capital ratio			12.3				12.0				11.9				12.2				12.2
Total risk-based capital ratio			13.5				13.2				13.1				13.4				13.5
Common equity tier 1 capital ratio			12.3				12.0				11.9				12.2				12.2
		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,
(dollars in thousands, except for per share amounts)		2023				2023				2022				2022				2022
BALANCE SHEET
Total loans, net of deferred fees and costs		$	5,520,683			$	5,557,397			$	5,555,466			$	5,422,212			$	5,301,633
Total assets			7,567,592				7,521,247				7,432,763				7,337,631				7,299,178
Total deposits			6,805,737				6,746,968				6,736,223				6,556,434				6,622,061
Long-term debt			155,981				155,920				105,859				105,799				105,738
Total shareholders’ equity			476,279				470,926				452,871				438,468				455,100
Total shareholders’ equity to total assets			6.29	%			6.26	%			6.09	%			5.98	%			6.23	%
ASSET QUALITY
Allowance for credit losses (ACL)		$	63,849			$	63,099			$	63,738			$	64,382			$	65,211
Nonaccrual loans			11,061				5,313				5,251				4,220				4,983
Non-performing assets (NPA)			11,061				5,313				5,251				4,220				4,983
ACL to total loans			1.16	%			1.14	%			1.15	%			1.19	%			1.23	%
ACL to nonaccrual loans			577.24	%			1,187.63	%			1,213.83	%			1,525.64	%			1,308.67	%
NPA to total assets			0.15	%			0.07	%			0.07	%			0.06	%			0.07	%
PER SHARE OF COMMON STOCK OUTSTANDING
Book value per common share		$	17.61			$	17.44			$	16.76			$	16.08			$	16.57
Closing market price per common share			15.71				17.90				20.28				20.69				21.45

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)		TABLE 2
		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,
(Dollars in thousands, except share data)		2023				2023				2022				2022				2022
ASSETS
Cash and due from financial institutions		$	129,071			$	108,535			$	97,150			$	116,365			$	108,389
Interest-bearing deposits in other financial institutions			181,913				90,247				14,894				22,332				22,741
Investment securities:
Available-for-sale debt securities, at fair value			664,071				687,188				671,794				686,681				787,373
Held-to-maturity debt securities, at amortized cost; fair value of: $581,222 at June 30, 2023, $599,300 at March 31, 2023, $596,780 at December 31, 2022, $590,880 at September 30, 2022, and $635,565 at June 30, 2022			649,946				658,596				664,883				662,827				663,365
Total investment securities			1,314,017				1,345,784				1,336,677				1,349,508				1,450,738
Loans held for sale, at fair value			2,593				—				1,105				1,701				535
Loans, net of deferred fees and costs			5,520,683				5,557,397				5,555,466				5,422,212				5,301,633
Less: allowance for credit losses			63,849				63,099				63,738				64,382				65,211
Loans, net of allowance for credit losses			5,456,834				5,494,298				5,491,728				5,357,830				5,236,422
Premises and equipment, net			96,479				93,761				91,634				89,979				88,664
Accrued interest receivable			20,463				20,473				20,345				18,134				17,146
Investment in unconsolidated entities			45,218				45,953				46,641				36,769				37,341
Mortgage servicing rights			8,843				8,943				9,074				9,216				9,369
Bank-owned life insurance			168,136				168,244				167,967				167,761				167,202
Federal Home Loan Bank ("FHLB") stock			10,960				11,960				9,146				13,546				8,943
Right-of-use lease asset			33,247				34,237				34,985				35,978				36,978
Other assets			99,818				98,812				111,417				118,512				114,710
Total assets		$	7,567,592			$	7,521,247			$	7,432,763			$	7,337,631			$	7,299,178
LIABILITIES
Deposits:
Noninterest-bearing demand		$	2,009,387			$	2,028,087			$	2,092,823			$	2,138,083			$	2,282,967
Interest-bearing demand			1,359,978				1,386,913				1,453,167				1,441,302				1,444,566
Savings and money market			2,184,652				2,184,675				2,199,028				2,194,991				2,214,146
Time			1,251,720				1,147,293				991,205				782,058				680,382
Total deposits			6,805,737				6,746,968				6,736,223				6,556,434				6,622,061
FHLB advances and other short-term borrowings			—				25,000				5,000				115,000				—
Long-term debt, net of unamortized debt issuance costs of: $566 at June 30, 2023, $627 at March 31, 2023, $688 at December 31, 2022, $748 at September 30, 2022 and $809 at June 30, 2022			155,981				155,920				105,859				105,799				105,738
Lease liability			34,111				35,076				35,889				36,941				38,037
Other liabilities			95,484				87,357				96,921				84,989				78,242
Total liabilities			7,091,313				7,050,321				6,979,892				6,899,163				6,844,078
EQUITY
Shareholders' equity:
Preferred stock, no par value, authorized 1,000,000 shares; issued and outstanding: none at June 30, 2023, March 31, 2023, December 31, 2022, September 30, 2022, and June 30, 2022			—				—				—				—				—
Common stock, no par value, authorized 185,000,000 shares; issued and outstanding: 27,045,792 at June 30, 2023, 27,005,545 at March 31, 2023, 27,025,070 at December 31, 2022, 27,262,879 at September 30, 2022, and 27,463,562 at June 30, 2022			405,511				405,866				408,071				412,994				417,862
Additional paid-in capital			101,997				101,188				101,346				100,426				98,977
Retained earnings			104,046				96,600				87,438				74,301				64,693
Accumulated other comprehensive loss			(135,275	)			(132,728	)			(143,984	)			(149,253	)			(126,432	)
Total shareholders' equity			476,279				470,926				452,871				438,468				455,100
Non-controlling interest			—				—				—				—				—
Total equity			476,279				470,926				452,871				438,468				455,100
Total liabilities and equity		$	7,567,592			$	7,521,247			$	7,432,763			$	7,337,631			$	7,299,178

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)		TABLE 3
		Three Months Ended																				Six Months Ended
		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,				Jun 30,
(Dollars in thousands, except per share data)		2023				2023				2022				2022				2022				2023				2022
Interest income:
Interest and fees on loans		$	60,455			$	58,269			$	56,682			$	51,686			$	46,963			$	118,724			$	91,912
Interest and dividends on investment securities:
Taxable investment securities			7,145				7,336				7,104				6,933				7,035				14,481				14,004
Tax-exempt investment securities			727				790				776				805				807				1,517				1,623
Dividends on investment securities			—				—				—				—				—				—				21
Interest on deposits in other financial institutions			877				277				370				107				191				1,154				263
Dividend income on FHLB stock			120				136				105				138				68				256				127
Total interest income			69,324				66,808				65,037				59,669				55,064				136,132				107,950
Interest expense:
Interest on deposits:
Demand			411				363				333				217				144				774				256
Savings and money market			4,670				3,386				2,488				1,054				317				8,056				646
Time			8,932				6,264				4,063				1,092				490				15,196				959
Interest on short-term borrowings			378				761				393				660				2				1,139				2
Interest on long-term debt			2,199				1,838				1,475				1,281				1,133				4,037				2,174
Total interest expense			16,590				12,612				8,752				4,304				2,086				29,202				4,037
Net interest income			52,734				54,196				56,285				55,365				52,978				106,930				103,913
Provision (credit) for credit losses			4,319				1,852				571				362				989				6,171				(2,206	)
Net interest income after provision (credit) for credit losses			48,415				52,344				55,714				55,003				51,989				100,759				106,119
Other operating income:
Mortgage banking income			690				526				667				831				1,140				1,216				2,312
Service charges on deposit accounts			2,137				2,111				2,172				2,138				2,026				4,248				3,887
Other service charges and fees			4,994				4,985				4,972				4,955				4,610				9,979				9,098
Income from fiduciary activities			1,068				1,321				1,058				1,165				1,188				2,389				2,342
Net gain on sales of investment securities			—				—				—				—				8,506				—				8,506
Income from bank-owned life insurance			1,185				1,291				2,187				167				(1,028	)			2,476				(489	)
Other			361				775				545				373				696				1,136				1,033
Total other operating income			10,435				11,009				11,601				9,629				17,138				21,444				26,689
Other operating expense:
Salaries and employee benefits			20,848				22,023				22,692				22,778				22,369				42,871				43,311
Net occupancy			4,310				4,474				3,998				4,743				4,448				8,784				8,222
Equipment			932				946				996				1,085				1,075				1,878				2,157
Communication			791				778				696				712				744				1,569				1,550
Legal and professional services			2,469				2,886				2,677				2,573				2,916				5,355				5,542
Computer software			4,621				4,606				3,996				4,138				3,624				9,227				6,706
Advertising			942				933				701				1,150				1,150				1,875				2,300
Other			4,990				5,461				4,678				4,819				9,023				10,451				13,766
Total other operating expense			39,903				42,107				40,434				41,998				45,349				82,010				83,554
Income before income taxes			18,947				21,246				26,881				22,634				23,778				40,193				49,254
Income tax expense			4,472				5,059				6,700				5,919				6,184				9,531				12,222
Net income		$	14,475			$	16,187			$	20,181			$	16,715			$	17,594			$	30,662			$	37,032
Per common share data:
Basic earnings per share		$	0.54			$	0.60			$	0.74			$	0.61			$	0.64			$	1.14			$	1.34
Diluted earnings per share			0.53				0.60				0.74				0.61				0.64				1.13				1.33
Cash dividends declared			0.26				0.26				0.26				0.26				0.26				0.52				0.52
Basic weighted average shares outstanding			27,024,043				26,999,138				27,134,970				27,356,614				27,516,284				27,011,659				27,553,629
Diluted weighted average shares outstanding			27,071,478				27,122,012				27,303,249				27,501,212				27,676,619				27,090,258				27,759,187
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
		June 30, 2023									March 31, 2023									June 30, 2022
		Average			Average						Average			Average						Average			Average
(Dollars in thousands)		Balance			Yield/Rate			Interest			Balance			Yield/Rate			Interest			Balance			Yield/Rate			Interest
ASSETS
Interest-earning assets:
Interest-bearing deposits in other financial institutions		$	69,189		5.08	%		$	877		$	24,957		4.51	%		$	277		$	106,083		0.72	%		$	191
Investment securities, excluding valuation allowance:
Taxable			1,379,319		2.07				7,145			1,395,985		2.10				7,336			1,487,129		1.89				7,034
Tax-exempt [1]			151,979		2.42				920			153,067		2.61				1,000			159,087		2.57				1,023
Total investment securities			1,531,298		2.11				8,065			1,549,052		2.15				8,336			1,646,216		1.96				8,057
Loans, including loans held for sale			5,543,398		4.37				60,455			5,525,988		4.26				58,269			5,221,300		3.60				46,963
Federal Home Loan Bank stock			11,721		4.10				120			12,380		4.40				136			8,957		3.02				68
Total interest-earning assets			7,155,606		3.89				69,517			7,112,377		3.80				67,018			6,982,556		3.17				55,279
Noninterest-earning assets			308,023									331,390									327,383
Total assets		$	7,463,629								$	7,443,767								$	7,309,939
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits		$	1,367,878		0.12	%		$	411		$	1,415,155		0.10	%		$	363		$	1,435,088		0.04	%		$	144
Savings and money market deposits			2,172,680		0.86				4,670			2,182,942		0.63				3,386			2,204,934		0.06				317
Time deposits up to $250,000			390,961		2.98				2,907			341,396		2.22				1,870			217,605		0.27				148
Time deposits over $250,000			790,864		3.06				6,025			689,432		2.58				4,394			478,483		0.29				342
Total interest-bearing deposits			4,722,383		1.19				14,013			4,628,925		0.88				10,013			4,336,110		0.09				951
Federal Home Loan Bank advances and other short-term borrowings			29,791		5.09				378			64,462		4.79				761			363		1.84				2
Long-term debt			155,946		5.65				2,199			127,273		5.86				1,838			105,699		4.30				1,133
Total interest-bearing liabilities			4,908,120		1.36				16,590			4,820,660		1.06				12,612			4,442,172		0.19				2,086
Noninterest-bearing deposits			1,952,267									2,026,735									2,290,352
Other liabilities			125,531									132,816									105,979
Total liabilities			6,985,918									6,980,211									6,838,503
Shareholders’ equity			477,711									463,556									471,420
Non-controlling interest			—									—									16
Total equity			477,711									463,556									471,436
Total liabilities and equity		$	7,463,629								$	7,443,767								$	7,309,939
Net interest income								$	52,927								$	54,406								$	53,193
Interest rate spread					2.53	%								2.74	%								2.98	%
Net interest margin					2.96	%								3.08	%								3.05	%

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

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Average Balances, Interest Income & Expense, Yields and Rates (Taxable Equivalent)
(Unaudited)		TABLE 5
		Six Months Ended									Six Months Ended
		June 30, 2023									June 30, 2022
		Average			Average						Average			Average
(Dollars in thousands)		Balance			Yield/Rate			Interest			Balance			Yield/Rate			Interest
ASSETS
Interest-earning assets:
Interest-bearing deposits in other financial institutions		$	47,195		4.93	%		$	1,154		$	131,829		0.40	%		$	263
Investment securities, excluding valuation allowance:
Taxable			1,387,606		2.09				14,481			1,488,327		1.88				14,024
Tax-exempt [1]			152,520		2.52				1,920			161,208		2.55				2,056
Total investment securities			1,540,126		2.13				16,401			1,649,535		1.95				16,080
Loans, including loans held for sale			5,534,741		4.32				118,724			5,168,076		3.58				91,912
Federal Home Loan Bank stock			12,049		4.26				256			8,479		3.00				127
Total interest-earning assets			7,134,111		3.85				136,535			6,957,919		3.13				108,382
Noninterest-earning assets			319,642									367,124
Total assets		$	7,453,753								$	7,325,043
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits		$	1,391,386		0.11	%		$	774		$	1,430,222		0.04	%		$	256
Savings and money market deposits			2,177,783		0.75				8,056			2,208,659		0.06				646
Time deposits up to $250,000			366,316		2.63				4,776			220,617		0.28				303
Time deposits over $250,000			740,428		2.84				10,420			470,330		0.28				656
Total interest-bearing deposits			4,675,913		1.04				24,026			4,329,828		0.09				1,861
Federal Home Loan Bank advances and other short-term borrowings			47,031		4.88				1,139			182		1.84				2
Long-term debt			141,689		5.75				4,037			105,668		4.15				2,174
Total interest-bearing liabilities			4,864,633		1.21				29,202			4,435,678		0.18				4,037
Noninterest-bearing deposits			1,989,295									2,273,639
Other liabilities			129,152									110,868
Total liabilities			6,983,080									6,820,185
Shareholders’ equity			470,673									504,825
Non-controlling interest			—									32
Total equity			470,673									504,857
Total liabilities and equity		$	7,453,753								$	7,325,042
Net interest income								$	107,333								$	104,345
Interest rate spread					2.64	%								2.95	%
Net interest margin					3.02	%								3.01	%

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

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Loans by Geographic Distribution
(Unaudited)										TABLE 6
		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,
(Dollars in thousands)		2023				2023				2022				2022				2022
HAWAII:
Commercial, financial and agricultural:
SBA Paycheck Protection Program		$	1,565			$	1,821			$	2,555			$	5,208			$	19,469
Other			373,036				375,158				383,665				358,805				367,676
Real estate:
Construction			168,012				154,303				150,208				138,724				134,103
Residential mortgage			1,942,906				1,941,230				1,940,999				1,923,068				1,890,783
Home equity			750,760				743,908				739,380				719,399				698,209
Commercial mortgage			1,037,826				1,030,086				1,029,708				1,002,874				994,405
Consumer			327,790				342,922				346,789				347,388				341,213
Total loans, net of deferred fees and costs			4,601,895				4,589,428				4,593,304				4,495,466				4,445,858
Allowance for credit losses			(44,828	)			(44,062	)			(45,169	)			(47,814	)			(51,374	)
Loans, net of allowance for credit losses		$	4,557,067			$	4,545,366			$	4,548,135			$	4,447,652			$	4,394,484
U.S. MAINLAND: [1]
Commercial, financial and agricultural:
SBA Paycheck Protection Program		$	—			$	—			$	—			$	—			$	712
Other			170,557				179,906				160,282				158,474				156,567
Real estate:
Construction			32,807				27,171				16,515				12,872				10,935
Commercial mortgage			329,736				331,546				333,367				332,872				309,230
Consumer			385,688				429,346				451,998				422,528				378,331
Total loans, net of deferred fees and costs			918,788				967,969				962,162				926,746				855,775
Allowance for credit losses			(19,021	)			(19,037	)			(18,569	)			(16,568	)			(13,837	)
Loans, net of allowance for credit losses		$	899,767			$	948,932			$	943,593			$	910,178			$	841,938
TOTAL:
Commercial, financial and agricultural:
SBA Paycheck Protection Program		$	1,565			$	1,821			$	2,555			$	5,208			$	20,181
Other			543,593				555,064				543,947				517,279				524,243
Real estate:
Construction			200,819				181,474				166,723				151,596				145,038
Residential mortgage			1,942,906				1,941,230				1,940,999				1,923,068				1,890,783
Home equity			750,760				743,908				739,380				719,399				698,209
Commercial mortgage			1,367,562				1,361,632				1,363,075				1,335,746				1,303,635
Consumer			713,478				772,268				798,787				769,916				719,544
Total loans, net of deferred fees and costs			5,520,683				5,557,397				5,555,466				5,422,212				5,301,633
Allowance for credit losses			(63,849	)			(63,099	)			(63,738	)			(64,382	)			(65,211	)
Loans, net of allowance for credit losses		$	5,456,834			$	5,494,298			$	5,491,728			$	5,357,830			$	5,236,422

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

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Deposits
(Unaudited)								TABLE 7
		Jun 30,			Mar 31,			Dec 31,			Sep 30,			Jun 30,
(Dollars in thousands)		2023			2023			2022			2022			2022
Noninterest-bearing demand deposits		$	2,009,387		$	2,028,087		$	2,092,823		$	2,138,083		$	2,282,967
Interest-bearing demand deposits			1,359,978			1,386,913			1,453,167			1,441,302			1,444,566
Savings and money market deposits			2,184,652			2,184,675			2,199,028			2,194,991			2,214,146
Time deposits less than $100,000			221,366			188,289			181,547			153,238			129,103
Other time deposits $100,000 to $250,000			206,498			183,861			148,601			108,723			84,840
Core deposits			5,981,881			5,971,825			6,075,166			6,036,337			6,155,622
Government time deposits			383,426			360,501			290,057			195,057			165,000
Other time deposits greater than $250,000			440,430			414,642			371,000			325,040			301,439
Total time deposits greater than $250,000			823,856			775,143			661,057			520,097			466,439
Total deposits		$	6,805,737		$	6,746,968		$	6,736,223		$	6,556,434		$	6,622,061

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Nonperforming Assets, Past Due and Restructured Loans
(Unaudited)						TABLE 8
		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,
(Dollars in thousands)		2023				2023				2022				2022				2022
Nonaccrual loans:
Commercial, financial and agricultural - Other		$	319			$	264			$	297			$	277			$	333
Real estate:
Construction			4,851				—				—				—				—
Residential mortgage			4,385				3,445				3,808				2,771				3,490
Home equity			797				712				570				584				592
Commercial mortgage			77				77				—				—				—
Consumer			632				815				576				588				568
Total nonaccrual loans			11,061				5,313				5,251				4,220				4,983
Other real estate owned ("OREO"):
Real estate:
Residential mortgage			—				—				—				—				—
Total OREO			—				—				—				—				—
Total nonperforming assets ("NPAs")			11,061				5,313				5,251				4,220				4,983
Loans delinquent for 90 days or more still accruing interest:
Commercial, financial and agricultural:
SBA PPP			—				—				13				—				—
Other			—				—				26				669				309
Real estate:
Residential mortgage			959				—				559				503				—
Home equity			133				—				—				—				—
Consumer			2,207				1,908				1,240				623				842
Total loans delinquent for 90 days or more still accruing interest			3,299				1,908				1,838				1,795				1,151
Restructured loans still accruing interest:
Real estate:
Residential mortgage			1,339				1,376				1,845				2,030				2,006
Commercial mortgage			805				846				886				925				965
Consumer			47				54				62				69				76
Total restructured loans still accruing interest			2,191				2,276				2,793				3,024				3,047
Total NPAs and loans delinquent for 90 days or more and restructured loans still accruing interest		$	16,551			$	9,497			$	9,882			$	9,039			$	9,181
Total nonaccrual loans as a percentage of total loans			0.20	%			0.10	%			0.09	%			0.08	%			0.09	%
Total NPAs as a percentage of total loans and OREO			0.20	%			0.10	%			0.09	%			0.08	%			0.09	%
Total NPAs and loans delinquent for 90 days or more still accruing interest as a percentage of total loans and OREO			0.26	%			0.13	%			0.13	%			0.11	%			0.12	%
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	%			0.17	%			0.18	%			0.17	%			0.17	%
Quarter-to-quarter changes in NPAs:
Balance at beginning of quarter		$	5,313			$	5,251			$	4,220			$	4,983			$	5,336
Additions			7,105				1,609				2,162				1,072				1,881
Reductions:
Payments			(290	)			(505	)			(198	)			(329	)			(285	)
Return to accrual status			(212	)			(14	)			(44	)			(616	)			(979	)
Net charge-offs, valuation and other adjustments			(855	)			(1,028	)			(889	)			(890	)			(970	)
Total reductions			(1,357	)			(1,547	)			(1,131	)			(1,835	)			(2,234	)
Balance at end of quarter		$	11,061			$	5,313			$	5,251			$	4,220			$	4,983

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Allowance for Credit Losses on Loans
(Unaudited)																						TABLE 9
		Three Months Ended																				Six Months Ended
		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,				Jun 30,
(Dollars in thousands)		2023				2023				2022				2022				2022				2023				2022
Allowance for credit losses:
Balance at beginning of period		$	63,099			$	63,738			$	64,382			$	65,211			$	64,754			$	63,738			$	68,097
Provision (credit) for credit losses on loans			4,135				1,615				1,032				731				1,456				5,750				(1,475	)
Charge-offs:
Commercial, financial and agricultural - Other			362				779				678				550				487				1,141				741
Consumer			3,873				2,686				1,881				1,912				1,390				6,559				2,606
Total charge-offs			4,235				3,465				2,559				2,462				1,877				7,700				3,347
Recoveries:
Commercial, financial and agricultural - Other			125				250				210				220				215				375				565
Real estate:
Construction			—				—				—				14				62				—				62
Residential mortgage			7				53				133				14				36				60				148
Home equity			15				—				—				36				—				15				—
Consumer			703				908				540				618				565				1,611				1,161
Total recoveries			850				1,211				883				902				878				2,061				1,936
Net charge-offs			3,385				2,254				1,676				1,560				999				5,639				1,411
Balance at end of period		$	63,849			$	63,099			$	63,738			$	64,382			$	65,211			$	63,849			$	65,211
Average loans, net of deferred fees and costs		$	5,543,398			$	5,525,988			$	5,498,800			$	5,355,088			$	5,221,300			$	5,534,741			$	5,168,076
Annualized ratio of net charge-offs to average loans			0.24	%			0.16	%			0.12	%			0.12	%			0.08	%			0.20	%			0.05	%

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)	TABLE 10

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

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

		Three Months Ended																				Six Months Ended
		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,				Jun 30,
(Dollars in thousands)		2023				2023				2022				2022				2022				2023				2022
Net income		$	14,475			$	16,187			$	20,181			$	16,715			$	17,594			$	30,662			$	37,032
Add: Income tax expense			4,472				5,059				6,700				5,919				6,184				9,531				12,222
Pre-tax income			18,947				21,246				26,881				22,634				23,778				40,193				49,254
Add: Provision (credit) for credit losses			4,319				1,852				571				362				989				6,171				(2,206	)
PPNR		$	23,266			$	23,098			$	27,452			$	22,996			$	24,767			$	46,364			$	47,048
		Three Months Ended																				Six Months Ended
		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,				Jun 30,
(Dollars in thousands)		2023				2023				2022				2022				2022				2023				2022
Net income		$	14,475			$	16,187			$	20,181			$	16,715			$	17,594			$	30,662			$	37,032
Net income (annualized)			57,900				64,748				80,724				66,860				70,376				61,324				74,064
PPNR			23,266				23,098				27,452				22,996				24,767				46,364				47,048
PPNR (annualized)			93,064				92,392				109,808				91,984				99,068				92,728				94,096
Average assets			7,463,629				7,443,767				7,389,712				7,320,751				7,309,939				7,453,753				7,325,042
Return on average assets ("ROA")			0.78	%			0.87	%			1.09	%			0.91	%			0.96	%			0.82	%			1.01	%
PPNR to average assets			1.25	%			1.24	%			1.49	%			1.26	%			1.36	%			1.24	%			1.28	%

 

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Investor Contact:

Ian Tanaka

SVP, Treasury Manager

(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.