CENTRAL PACIFIC FINANCIAL REPORTS SECOND QUARTER EARNINGS OF $17.6 MILLION
07/27/2022 - 06:30 AM
Net income of $17.6 million , or $0.64 per diluted share for the quarter. ROA of 0.96% and ROE of 14.93% for the quarter. Total loans of $5.30 billion increased by $126.8 million , or 2.5% (10.0% annualized) in the second quarter. Total deposits of $6.62 billion increased by $23.0 million , or 0.3% (1.2% annualized) in the second quarter. Core deposits increased by $34.6 million , or 0.6% (2.4% annualized) in the second quarter. Net interest margin of 3.05% increased by 8 bp from the previous quarter. Central Pacific Bank named the Best Bank in Hawaii by Forbes. Board of Directors approved quarterly cash dividend of $0.26 per share.HONOLULU , July 27, 2022 /PRNewswire/ -- 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 2022 of $17.6 million , or fully diluted earnings per share ("EPS") of $0.64 , compared to net income in the second quarter of 2021 of $18.7 million , or EPS of $0.66 , and net income in the first quarter of 2022 of $19.4 million , or EPS of $0.70 . Net income for the second quarter of 2022, included an $8.5 million gain on the sale of the Company's Class B common stock of Visa, Inc., partially offset by a $4.9 million non-cash settlement charge related to the termination and settlement of the Company's defined benefit pension plan.
"We are pleased to report strong financial performance for the second quarter, highlighted by solid double-digit annualized loan growth, continued inflow of core deposits, net interest margin expansion, and excellent asset quality. With these favorable trends, we expect to drive further growth in earnings throughout the rest of 2022 and beyond," said Paul Yonamine , Chairman and Chief Executive Officer.
"Statewide Hawaii visitor arrivals are expected to exceed 90% of pre-pandemic levels in 2022, thanks in part to the gradual return of higher-spending international travelers. This will bode well for the state, creating additional opportunities for economic growth," said Arnold Martines , President and Chief Operating Officer.
During the second quarter, CPB was named the top bank in Hawaii in 2022 by Forbes. CPB finished ahead of the other local banks based on a survey that ranked all of the local banks on branch and digital services, overall customer service and trust as well as financial advice.
"This recognition validates that our digital and branch strategies are creating positive momentum in the market and is really a tribute to all of our hardworking employees who serve our valued customers to the best of their ability every day," Martines said.
Earnings Highlights
Net interest income for the second quarter of 2022 was $53.0 million , compared to $52.1 million in the year-ago quarter and $50.9 million in the previous quarter. Net interest margin for the second quarter of 2022 was 3.05% , compared to 3.16% in the year-ago quarter and 2.97% in the previous quarter. The sequential quarter increase in net interest income and net interest margin is primarily due to higher average loan balances and higher average yields earned on loans and investment securities. These increases were partially offset by lower net interest income and loan fees on PPP loans. Net interest income for the second quarter of 2022 included $0 .9 million in net interest income and loan fees on PPP loans, compared to $1 .9 million in the previous quarter. Net deferred fees on PPP loans remaining at June 30, 2022 was $0 .9 million, compared to $1 .7 million at March 31, 2022. 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 2022, the Company recorded a provision for credit losses of $1.0 million , compared to releases of the credit loss reserves of $3.4 million and $3.2 million in the year-ago and previous quarters, respectively. The provision for credit losses in the second quarter of 2022 was driven by the increase in our loan portfolio and net charge-offs.
Other operating income for the second quarter of 2022 totaled $17.1 million , compared to $10.5 million in the year-ago quarter and $9.6 million in the previous quarter. The increase from the year-ago and previous quarters was primarily due to the sale of our restricted Class B common stock of Visa, Inc. The investment was carried at a zero cost basis, therefore the entire net proceeds from the sale of $8.5 million were recorded as a gain on sale of investment securities. The increase was partially offset by lower income from bank-owned life insurance ("BOLI"). The Company recognized BOLI expense of $1 .0 million during second quarter of 2022, compared to BOLI income of $1 .2 million and $0 .5 million in the year-ago and previous quarters, respectively. The lower BOLI income was primarily attributable to market volatility, and was offset by lower deferred compensation expense in other operating expenses. Additional information on other operating income is presented in Table 3.
Other operating expense for the second quarter of 2022 totaled $45.3 million , compared to $41.4 million in the year-ago quarter and $38.2 million in the previous quarter. The increase in other operating expense from the year-ago and previous quarters was primarily due to the termination and settlement of our defined benefit pension plan resulting in a non-cash settlement charge of $4.9 million (included in other). Additional information on other operating expense is presented in Table 3.
The efficiency ratio for the second quarter of 2022 was 64.68% , compared to 66.20% in the year-ago quarter and 63.16% in the previous quarter.
The effective tax rate for the second quarter of 2022 was 26.0% , compared to 23.9% in the year-ago quarter and 23.7% in the previous quarter. The increase in the effective tax rate compared to the year-ago and previous quarters was primarily due to lower tax-exempt BOLI income.
Balance Sheet Highlights
Total assets at June 30, 2022 of $7.30 billion increased by $120 .7 million, or 1.7% from $7 .18 billion at June 30, 2021, and remained relatively unchanged from $7 .30 billion at March 31, 2022.
Total loans, net of deferred fees and costs, at June 30, 2022 of $5.30 billion increased from $5 .08 billion at June 30, 2021, and increased from $5 .17 billion at March 31, 2022. The sequential quarter increase in total loans included growth in commercial mortgage loans of $60 .1 million, consumer loans of $50 .5 million, home equity loans of $21 .9 million, construction of $21 .7 million, and residential mortgage of $16 .7 million, offset by declines in PPP loans of $24 .1 million and other commercial loans of $20 .2 million. Loans by geographic distribution are summarized in Table 6.
Total deposits at June 30, 2022 of $6.62 billion increased from $6 .40 billion at June 30, 2021, and increased 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 $6.16 billion at June 30, 2022, and increased by $34 .6 million from March 31, 2022. The Company's loan-to-deposit ratio was 80.1% at June 30, 2022, compared to 78.4% at March 31, 2022. Core deposit and total deposit balances are summarized in Table 7.
Asset Quality
Nonperforming assets at June 30, 2022 totaled $5.0 million , or 0.07% of total assets, compared to $6.7 million , or 0.09% of total assets at June 30, 2021, and $5.3 million , or 0.07% of total assets at March 31, 2022. Additional information on nonperforming assets, past due and restructured loans is presented in Table 8.
Net charge-offs in the second quarter of 2022 totaled $1.0 million , compared to net charge-offs of $0.8 million in the year-ago quarter, and net charge-offs of $0.4 million in the previous quarter.
The allowance for credit losses, as a percentage of total loans at June 30, 2022 was 1.23% , compared to 1.53% at June 30, 2021 and 1.25% at March 31, 2022. Additional information on net charge-offs and recoveries and the allowance for credit losses is presented in Tables 9 and 10.
Capital
Total shareholders' equity was $455.1 million at June 30, 2022, compared to $552.8 million and $486.3 million at June 30, 2021 and March 31, 2022, respectively. The decline in shareholders' equity was primarily due to an increase in unrealized losses on our available-for-sale investment securities portfolio which flow through accumulated other comprehensive income, and were driven by the rising interest rate environment.
During the second quarter of 2022, the Company repurchased 174,429 shares of common stock, at a total cost of $4.2 million , or an average cost per share of $24.18 . During the six months ended June 30, 2022 , the Company returned $25.3 million in capital to its shareholders through cash dividends and share repurchases.
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 June 30, 2022, the Company's leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ratios were 8.6% , 11.6% , 13.9% , and 10.7% , respectively, compared to 8.5% , 11.9% , 14.2% , and 10.9% , respectively, at March 31, 2022.
On July 26, 2022, 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, 2022 to shareholders of record at the close of business on August 31, 2022.
Non-GAAP Financial Measures
This press release contains certain references to financial measures that have been adjusted to exclude certain expenses and other specified items. These financial measures differ from comparable measures calculated and presented in accordance with accounting principles generally accepted in the United States of America ("GAAP") in that they exclude unusual or non-recurring charges, losses, credits or gains. This press release identifies the specific items excluded from the comparable GAAP financial measure in the calculation of each non-GAAP financial measure. Management believes that financial presentations excluding the impact of these items provide useful supplemental information that is important to a proper understanding of the Company's core business results by investors. These presentations should not be viewed as a substitute for results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP financial measures presented by other companies.
Conference Call
The Company's management will host a conference call today at 1:00 p.m. Eastern Time (7:00 a.m. Hawaii Time) to discuss the quarterly results. Individuals are encouraged to listen to the live webcast of the presentation by visiting the investor relations page of the Company's website at http://ir.cpb.bank. Alternatively, investors may participate in the live call by dialing 1-844-200-6205 (access code: 499388). A playback of the call will be available through August 24, 2022 by dialing 1-866-813-9403 (access code: 673448) 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 $7.30 billion in assets as of June 30, 2022. Central Pacific Bank, its primary subsidiary, operates 28 branches and 65 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
**********
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 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 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 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, 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 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"); 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 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; 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 ("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 Form 8-K. 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)
2022
2022
2021
2021
2021
2022
2021
CONDENSED INCOME STATEMENT
Net interest income
$ 52,978
$ 50,935
$ 53,096
$ 56,086
$ 52,061
$ 103,913
$ 101,865
Provision (credit) for credit losses
989
(3,195)
(7,692)
(2,635)
(3,443)
(2,206)
(4,264)
Total other operating income
17,138
9,551
11,566
10,253
10,530
26,689
21,241
Total other operating expense
45,349
38,205
42,422
41,345
41,433
83,554
79,279
Income tax expense
6,184
6,038
7,605
6,814
5,887
12,222
11,339
Net income
17,594
19,438
22,327
20,815
18,714
37,032
36,752
Basic earnings per common share
$ 0.64
$ 0.70
$ 0.80
$ 0.74
$ 0.66
$ 1.34
$ 1.31
Diluted earnings per common share
0.64
0.70
0.80
0.74
0.66
1.33
1.29
Dividends declared per common share
0.26
0.26
0.25
0.24
0.24
0.52
0.47
PERFORMANCE RATIOS
Return on average assets (ROA) [1]
0.96 %
1.06 %
1.22 %
1.15 %
1.06 %
1.01 %
1.07 %
Return on average shareholders' equity (ROE) [1]
14.93
14.44
16.05
14.82
13.56
14.67
13.31
Average shareholders' equity to average assets
6.45
7.34
7.61
7.79
7.84
6.89
8.01
Efficiency ratio [2]
64.68
63.16
65.61
62.32
66.20
63.98
64.40
Net interest margin (NIM) [1]
3.05
2.97
3.08
3.31
3.16
3.01
3.18
Dividend payout ratio [3]
40.63
37.14
31.25
32.43
36.36
39.10
36.43
SELECTED AVERAGE BALANCES
Average loans, including loans held for sale
$ 5,221,300
$ 5,114,260
$ 5,073,069
$ 5,022,909
$ 5,110,820
$ 5,168,076
$ 5,095,433
Average interest-earning assets
6,982,556
6,932,649
6,890,829
6,761,643
6,606,779
6,957,918
6,457,115
Average assets
7,309,939
7,341,850
7,315,325
7,210,210
7,039,928
7,325,042
6,890,195
Average deposits
6,626,462
6,581,593
6,536,826
6,424,768
6,269,516
6,603,467
6,114,975
Average interest-bearing liabilities
4,442,172
4,429,114
4,407,612
4,221,073
4,253,382
4,435,678
4,207,670
Average shareholders' equity
471,420
538,601
556,462
561,606
552,102
504,825
552,039
[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 (ie. 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,
2022
2022
2021
2021
2021
REGULATORY CAPITAL RATIOS
Central Pacific Financial Corp
Leverage capital ratio
8.6 %
8.5 %
8.5 %
8.5 %
8.6 %
Tier 1 risk-based capital ratio
11.6
11.9
12.2
12.2
12.7
Total risk-based capital ratio
13.9
14.2
14.5
14.6
14.9
Common equity tier 1 capital ratio
10.7
10.9
11.2
11.2
11.6
Central Pacific Bank
Leverage capital ratio
9.0
9.0
8.9
9.0
9.1
Tier 1 risk-based capital ratio
12.2
12.6
12.8
13.0
13.5
Total risk-based capital ratio
13.5
13.8
14.0
14.3
14.6
Common equity tier 1 capital ratio
12.2
12.6
12.8
13.0
13.5
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Jun 30,
(dollars in thousands, except for per share amounts)
2022
2022
2021
2021
2021
BALANCE SHEET
Total loans, net of deferred fees and costs
$ 5,301,633
$ 5,174,837
$ 5,101,649
$ 5,045,797
$ 5,077,318
Total assets
7,299,178
7,298,819
7,419,089
7,298,231
7,178,481
Total deposits
6,622,061
6,599,031
6,639,158
6,515,863
6,397,159
Long-term debt
105,738
105,677
105,616
105,556
105,495
Total shareholders' equity
455,100
486,328
558,219
555,419
552,793
Total shareholders' equity to total assets
6.23 %
6.66 %
7.52 %
7.61 %
7.70 %
ASSET QUALITY
Allowance for credit losses (ACL)
$ 65,211
$ 64,754
$ 68,097
$ 74,587
$ 77,781
Nonaccrual loans
4,983
5,336
5,881
7,237
6,745
Non-performing assets (NPA)
4,983
5,336
5,881
7,237
6,745
ACL to total loans
1.23 %
1.25 %
1.33 %
1.48 %
1.53 %
ACL to core loans (refer to Table 9)
1.23 %
1.26 %
1.36 %
1.55 %
1.68 %
ACL to nonaccrual loans
1,308.67 %
1,213.53 %
1,157.92 %
1,030.63 %
1,153.17 %
NPA to total assets
0.07 %
0.07 %
0.08 %
0.10 %
0.09 %
PER SHARE OF COMMON STOCK OUTSTANDING
Book value per common share
$ 16.57
$ 17.63
$ 20.14
$ 19.84
$ 19.59
Closing market price per common share
21.45
27.90
28.17
25.68
26.06
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)
2022
2022
2021
2021
2021
ASSETS
Cash and due from financial institutions
$ 108,389
$ 83,947
$ 81,506
$ 108,669
$ 116,009
Interest-bearing deposits in other financial institutions
22,741
118,183
247,401
240,173
224,469
Investment securities:
Available-for-sale debt securities, at fair value
787,373
1,199,482
1,631,699
1,535,450
1,407,340
Held-to-maturity debt securities, at amortized cost; fair value of:
$635,565 at June 30, 2022, $329,503 at March 31, 2022, and
none at December 31, 2021, September 30, 2021, and June 30, 2021
663,365
329,507
—
—
—
Equity securities, at fair value
—
—
—
1,593
1,578
Total investment securities
1,450,738
1,528,989
1,631,699
1,537,043
1,408,918
Loans held for sale
535
4,677
3,531
5,290
5,361
Loans, net of deferred fees and costs
5,301,633
5,174,837
5,101,649
5,045,797
5,077,318
Less: allowance for credit losses
65,211
64,754
68,097
74,587
77,781
Loans, net of allowance for credit losses
5,236,422
5,110,083
5,033,552
4,971,210
4,999,537
Premises and equipment, net
88,664
79,455
80,354
80,190
76,740
Accrued interest receivable
17,146
16,423
16,709
17,110
19,014
Investment in unconsolidated entities
37,341
31,092
29,679
30,397
31,052
Mortgage servicing rights
9,369
9,480
9,738
9,976
10,500
Bank-owned life insurance
167,202
167,407
169,148
167,961
167,289
Federal Home Loan Bank ("FHLB") stock
8,943
8,943
7,964
7,952
8,149
Right of use lease asset
36,978
38,435
39,441
40,757
41,890
Other assets
114,710
101,705
68,367
81,503
69,553
Total assets
$ 7,299,178
$ 7,298,819
$ 7,419,089
$ 7,298,231
$ 7,178,481
LIABILITIES
Deposits:
Noninterest-bearing demand
$ 2,282,967
$ 2,269,562
$ 2,291,246
$ 2,195,404
$ 2,203,806
Interest-bearing demand
1,444,566
1,433,284
1,415,277
1,372,626
1,341,280
Savings and money market
2,214,146
2,197,647
2,225,903
2,296,968
2,048,945
Time
680,382
698,538
706,732
650,865
803,128
Total deposits
6,622,061
6,599,031
6,639,158
6,515,863
6,397,159
Long-term debt
105,738
105,677
105,616
105,556
105,495
Lease liability
38,037
39,610
40,731
41,933
43,112
Other liabilities
78,242
68,123
75,317
79,412
79,874
Total liabilities
6,844,078
6,812,441
6,860,822
6,742,764
6,625,640
EQUITY
Shareholders' equity:
Preferred stock, no par value, authorized 1,000,000 shares; issued and outstanding:
none at June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021, and
June 30, 2021
—
—
—
—
—
Common stock, no par value, authorized 185,000,000 shares; issued and outstanding:
27,463,562 at June 30, 2022, 27,584,929 at March 31, 2022, 27,714,071 at
December 31, 2021, 27,999,588 at September 30, 2021, and 28,218,860 at June 30, 2021
417,862
421,153
426,091
436,957
440,854
Additional paid-in capital
98,977
98,270
98,073
97,279
96,182
Retained earnings
64,693
54,252
42,015
22,916
10,831
Accumulated other comprehensive (loss) income
(126,432)
(87,347)
(7,960)
(1,733)
4,926
Total shareholders' equity
455,100
486,328
558,219
555,419
552,793
Non-controlling interest
—
50
48
48
48
Total equity
455,100
486,378
558,267
555,467
552,841
Total liabilities and equity
$ 7,299,178
$ 7,298,819
$ 7,419,089
$ 7,298,231
$ 7,178,481
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,
June 30,
(Dollars in thousands, except per share data)
2022
2022
2021
2021
2021
2022
2021
Interest income:
Interest and fees on loans
$ 46,963
$ 44,949
$ 47,576
$ 51,104
$ 49,024
$ 91,912
$ 95,098
Interest and dividends on investment securities:
Taxable investment securities
7,200
7,134
6,667
6,210
4,447
14,334
9,553
Tax-exempt investment securities
642
651
642
470
346
1,293
860
Dividend income on investment securities
—
21
21
18
18
21
36
Interest on deposits in other financial institutions
191
72
86
105
61
263
71
Dividend income on FHLB stock
68
59
61
62
63
127
122
Total interest income
55,064
52,886
55,053
57,969
53,959
107,950
105,740
Interest expense:
Interest on deposits:
Demand
144
112
104
101
93
256
179
Savings and money market
317
329
352
332
282
646
556
Time
490
469
478
428
498
959
1,086
Interest on short-term borrowings
2
—
—
—
—
2
2
Interest on long-term debt
1,133
1,041
1,023
1,022
1,025
2,174
2,052
Total interest expense
2,086
1,951
1,957
1,883
1,898
4,037
3,875
Net interest income
52,978
50,935
53,096
56,086
52,061
103,913
101,865
Provision (credit) for credit losses
989
(3,195)
(7,692)
(2,635)
(3,443)
(2,206)
(4,264)
Net interest income after provision (credit) for credit losses
51,989
54,130
60,788
58,721
55,504
106,119
106,129
Other operating income:
Mortgage banking income
1,140
1,172
1,902
1,327
1,533
2,312
4,503
Service charges on deposit accounts
2,026
1,861
1,800
1,637
1,443
3,887
2,921
Other service charges and fees
4,610
4,488
5,016
4,942
4,619
9,098
8,409
Income from fiduciary activities
1,188
1,154
1,283
1,292
1,269
2,342
2,500
Net gain on sales of investment securities
8,506
—
—
100
50
8,506
50
Income from bank-owned life insurance
(1,028)
539
946
540
1,210
(489)
2,007
Other
696
337
619
415
406
1,033
851
Total other operating income
17,138
9,551
11,566
10,253
10,530
26,689
21,241
Other operating expense:
Salaries and employee benefits
22,369
20,942
23,030
23,566
23,790
43,311
43,617
Net occupancy
4,448
3,774
4,129
4,185
4,055
8,222
7,819
Equipment
1,075
1,082
1,207
1,089
1,048
2,157
2,048
Communication
744
806
922
824
756
1,550
1,525
Legal and professional services
2,916
2,626
2,928
2,575
2,572
5,542
4,949
Computer software
3,624
3,082
3,125
2,998
3,398
6,706
7,181
Advertising
1,150
1,150
1,179
1,329
1,329
2,300
2,987
Other
9,023
4,743
5,902
4,779
4,485
13,766
9,153
Total other operating expense
45,349
38,205
42,422
41,345
41,433
83,554
79,279
Income before income taxes
23,778
25,476
29,932
27,629
24,601
49,254
48,091
Income tax expense
6,184
6,038
7,605
6,814
5,887
12,222
11,339
Net income
$ 17,594
$ 19,438
$ 22,327
$ 20,815
$ 18,714
$ 37,032
$ 36,752
Per common share data:
Basic earnings per share
$ 0.64
$ 0.70
$ 0.80
$ 0.74
$ 0.66
$ 1.34
$ 1.31
Diluted earnings per share
0.64
0.70
0.80
0.74
0.66
1.33
1.29
Cash dividends declared
0.26
0.26
0.25
0.24
0.24
0.52
0.47
Basic weighted average shares outstanding
27,516,284
27,591,390
27,769,651
27,967,089
28,173,710
27,553,629
28,141,360
Diluted weighted average shares outstanding
27,676,619
27,874,924
28,045,826
28,175,953
28,456,624
27,759,187
28,407,479
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, 2022
March 31, 2022
June 30, 2021
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
$ 106,083
0.72 %
$ 191
$ 157,861
0.18 %
$ 72
$ 222,934
0.11 %
$ 61
Investment securities, excluding valuation allowance:
Taxable
1,532,282
1.88
7,200
1,535,039
1.86
7,155
1,172,183
1.52
4,465
Tax-exempt [1]
113,934
2.85
813
117,493
2.80
824
92,702
1.89
438
Total investment securities
1,646,216
1.95
8,013
1,652,532
1.93
7,979
1,264,885
1.55
4,903
Loans, including loans held for sale
5,221,300
3.60
46,963
5,114,260
3.54
44,949
5,110,820
3.84
49,024
Federal Home Loan Bank stock
8,957
3.02
68
7,996
2.98
59
8,140
3.11
63
Total interest-earning assets
6,982,556
3.17
55,235
6,932,649
3.08
53,059
6,606,779
3.28
54,051
Noninterest-earning assets
327,383
409,201
433,149
Total assets
$ 7,309,939
$ 7,341,850
$ 7,039,928
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits
$ 1,435,088
0.04 %
$ 144
$ 1,425,303
0.03 %
$ 112
$ 1,269,676
0.03 %
$ 93
Savings and money market deposits
2,204,934
0.06
317
2,212,426
0.06
329
2,028,583
0.06
282
Time deposits up to $250,000
217,605
0.27
148
223,661
0.28
156
231,922
0.34
196
Time deposits over $250,000
478,483
0.29
342
462,087
0.28
313
617,745
0.20
302
Total interest-bearing deposits
4,336,110
0.09
951
4,323,477
0.09
910
4,147,926
0.08
873
Federal Home Loan Bank advances and other
short-term borrowings
363
1.84
2
—
—
—
—
—
—
Long-term debt
105,699
4.30
1,133
105,637
4.00
1,041
105,456
3.90
1,025
Total interest-bearing liabilities
4,442,172
0.19
2,086
4,429,114
0.18
1,951
4,253,382
0.18
1,898
Noninterest-bearing deposits
2,290,352
2,258,116
2,121,590
Other liabilities
105,979
115,971
112,852
Total liabilities
6,838,503
6,803,201
6,487,824
Shareholders' equity
471,420
538,601
552,102
Non-controlling interest
16
48
2
Total equity
471,436
538,649
552,104
Total liabilities and equity
$ 7,309,939
$ 7,341,850
$ 7,039,928
Net interest income
$ 53,149
$ 51,108
$ 52,153
Interest rate spread
2.98 %
2.90 %
3.10 %
Net interest margin
3.05 %
2.97 %
3.16 %
[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, 2022
June 30, 2021
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
$ 131,829
0.40 %
$ 263
$ 133,684
0.11 %
$ 71
Investment securities, excluding valuation allowance:
Taxable
1,533,570
1.87
14,355
1,126,978
1.70
9,589
Tax-exempt [1]
115,964
2.82
1,637
93,181
2.34
1,089
Total investment securities
1,649,534
1.94
15,992
1,220,159
1.75
10,678
Loans, including loans held for sale
5,168,076
3.58
91,912
5,095,433
3.75
95,098
Federal Home Loan Bank stock
8,479
3.00
127
7,839
3.12
122
Total interest-earning assets
6,957,918
3.13
108,294
6,457,115
3.30
105,969
Noninterest-earning assets
367,124
433,080
Total assets
$ 7,325,042
$ 6,890,195
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits
$ 1,430,222
0.04 %
$ 256
$ 1,228,548
0.03 %
$ 179
Savings and money market deposits
2,208,659
0.06
646
2,000,845
0.06
556
Time deposits up to $250,000
220,617
0.28
303
234,361
0.38
437
Time deposits over $250,000
470,330
0.28
656
637,266
0.21
649
Total interest-bearing deposits
4,329,828
0.09
1,861
4,101,020
0.09
1,821
Federal Home Loan Bank advances and other short-term borrowings
182
1.84
2
1,221
0.30
2
Long-term debt
105,668
4.15
2,174
105,429
3.93
2,052
Total interest-bearing liabilities
4,435,678
0.18
4,037
4,207,670
0.19
3,875
Noninterest-bearing deposits
2,273,639
2,013,955
Other liabilities
110,868
116,529
Total liabilities
6,820,185
6,338,154
Shareholders' equity
504,825
552,039
Non-controlling interest
32
2
Total equity
504,857
552,041
Total liabilities and equity
$ 7,325,042
$ 6,890,195
Net interest income
$ 104,257
$ 102,094
Interest rate spread
2.95 %
3.11 %
Net interest margin
3.01 %
3.18 %
[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)
2022
2022
2021
2021
2021
HAWAII:
Commercial, financial and agricultural:
SBA Paycheck Protection Program
$ 19,469
$ 43,380
$ 87,459
$ 198,315
$ 395,352
Other
367,676
407,559
422,388
404,751
389,341
Real estate:
Construction
134,103
122,329
122,867
128,908
133,457
Residential mortgage
1,890,783
1,874,048
1,875,980
1,748,729
1,711,801
Home equity
698,209
676,326
637,249
618,951
583,430
Commercial mortgage
994,405
927,241
922,146
915,746
926,006
Consumer
341,213
337,188
333,843
331,987
328,332
Total loans, net of deferred fees and costs
4,445,858
4,388,071
4,401,932
4,347,387
4,467,719
Allowance for credit losses
(51,374)
(51,521)
(55,808)
(62,126)
(67,773)
Loans, net of allowance for credit losses
$ 4,394,484
$ 4,336,550
$ 4,346,124
$ 4,285,261
$ 4,399,946
U.S. MAINLAND: [1]
Commercial, financial and agricultural:
SBA Paycheck Protection Program
$ 712
$ 851
$ 3,868
$ 20,356
$ 39,258
Other
156,567
136,857
107,733
114,122
96,884
Real estate:
Construction
10,935
988
—
—
—
Commercial mortgage
309,230
316,258
298,058
292,671
260,424
Consumer
378,331
331,812
290,058
271,261
213,033
Total loans, net of deferred fees and costs
855,775
786,766
699,717
698,410
609,599
Allowance for credit losses
(13,837)
(13,233)
(12,289)
(12,461)
(10,008)
Loans, net of allowance for credit losses
$ 841,938
$ 773,533
$ 687,428
$ 685,949
$ 599,591
TOTAL:
Commercial, financial and agricultural:
SBA Paycheck Protection Program
$ 20,181
$ 44,231
$ 91,327
$ 218,671
$ 434,610
Other
524,243
544,416
530,121
518,873
486,225
Real estate:
Construction
145,038
123,317
122,867
128,908
133,457
Residential mortgage
1,890,783
1,874,048
1,875,980
1,748,729
1,711,801
Home equity
698,209
676,326
637,249
618,951
583,430
Commercial mortgage
1,303,635
1,243,499
1,220,204
1,208,417
1,186,430
Consumer
719,544
669,000
623,901
603,248
541,365
Total loans, net of deferred fees and costs
5,301,633
5,174,837
5,101,649
5,045,797
5,077,318
Allowance for credit losses
(65,211)
(64,754)
(68,097)
(74,587)
(77,781)
Loans, net of allowance for credit losses
$ 5,236,422
$ 5,110,083
$ 5,033,552
$ 4,971,210
$ 4,999,537
[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)
2022
2022
2021
2021
2021
Noninterest-bearing demand
$ 2,282,967
$ 2,269,562
$ 2,291,246
$ 2,195,404
$ 2,203,806
Interest-bearing demand
1,444,566
1,433,284
1,415,277
1,372,626
1,341,280
Savings and money market
2,214,146
2,197,647
2,225,903
2,296,968
2,048,945
Time deposits less than $100,000
129,103
132,712
136,584
139,358
141,498
Other time deposits $100,000 t o $250,000
84,840
87,838
88,873
87,491
89,710
Core deposits
6,155,622
6,121,043
6,157,883
6,091,847
5,825,239
Government time deposits
165,000
188,000
214,950
238,950
403,755
Other time deposits greater than $250,000
301,439
289,988
266,325
185,066
168,165
Total time deposits greater than $250,000
466,439
477,988
481,275
424,016
571,920
Total deposits
$ 6,622,061
$ 6,599,031
$ 6,639,158
$ 6,515,863
$ 6,397,159
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)
2022
2022
2021
2021
2021
Nonaccrual loans: [1]
Commercial, financial and agricultural - Other
$ 333
$ 293
$ 183
$ 689
$ 699
Real estate:
Residential mortgage
3,490
3,804
4,623
5,351
5,280
Home equity
592
820
786
880
434
Consumer
568
419
289
317
332
Total nonaccrual loans
4,983
5,336
5,881
7,237
6,745
Other real estate owned ("OREO"):
Real estate:
Residential mortgage
—
—
—
—
—
Total OREO
—
—
—
—
—
Total nonperforming assets ("NPAs")
4,983
5,336
5,881
7,237
6,745
Loans delinquent for 90 days or more still accruing interest: [1]
Commercial, financial and agricultural - Other
309
592
945
—
29
Real estate:
Residential mortgage
—
111
—
444
1,438
Home equity
—
—
44
—
—
Consumer
842
621
374
166
100
Total loans delinquent for 90 days or more still accruing interest
1,151
1,324
1,363
610
1,567
Restructured loans still accruing interest: [1]
Commercial, financial and agricultural - Other
—
—
—
12
26
Real estate:
Residential mortgage
2,006
2,751
3,768
4,458
4,258
Commercial mortgage
965
1,004
1,043
1,577
1,636
Consumer
76
83
92
99
132
Total restructured loans still accruing interest
3,047
3,838
4,903
6,146
6,052
Total NPAs and loans delinquent for 90 days or more and restructured loans still accruing interest
$ 9,181
$ 10,498
$ 12,147
$ 13,993
$ 14,364
Total nonaccrual loans as a percentage of total loans
0.09 %
0.10 %
0.12 %
0.14 %
0.13 %
Total NPAs as a percentage of total loans and OREO
0.09 %
0.10 %
0.12 %
0.14 %
0.13 %
Total NPAs and loans delinquent for 90 days or more still accruing interest as a percentage of total
loans and OREO
0.12 %
0.13 %
0.14 %
0.16 %
0.16 %
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 %
0.20 %
0.24 %
0.28 %
0.28 %
Quarter-to-quarter changes in NPAs:
Balance at beginning of quarter
$ 5,336
$ 5,881
$ 7,237
$ 6,745
$ 7,194
Additions
1,881
1,659
1,375
1,951
1,879
Reductions:
Payments
(285)
(1,598)
(933)
(767)
(1,120)
Return to accrual status
(979)
(38)
(1,034)
(141)
(84)
Charge-offs, valuation and other adjustments
(970)
(568)
(764)
(551)
(1,124)
Total reductions
(2,234)
(2,204)
(2,731)
(1,459)
(2,328)
Balance at end of quarter
$ 4,983
$ 5,336
$ 5,881
$ 7,237
$ 6,745
[1] Section 4013 of the CARES Act and the revised Interagency Statement were applied to loan modifications related to the COVID-19 pandemic as eligible and applicable. This relief ended on
January 1, 2022. These loan modifications were not included in the delinquent or restructured loan balances presented above.
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Allowance for Credit Losses on Loans
(Unaudited)
TABLE 9
Three Months Ended
Six Months Ended
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Jun 30,
June 30,
(Dollars in thousands)
2022
2022
2021
2021
2021
2022
2021
Allowance for credit losses ("ACL"):
ACL at beginning of period
$ 64,754
$ 68,097
$ 74,587
$ 77,781
$ 81,553
$ 68,097
$ 83,269
(Credit) provision for credit losses on loans [1] [2]
1,456
(2,931)
(7,417)
(2,969)
(2,963)
(1,475)
(3,937)
Charge-offs:
Commercial, financial and agricultural - Other
487
254
379
334
401
741
1,010
Consumer
1,390
1,216
952
829
1,523
2,606
2,621
Total charge-offs
1,877
1,470
1,331
1,163
1,924
3,347
3,631
Recoveries:
Commercial, financial and agricultural - Other
215
350
358
281
276
565
365
Real estate:
Construction
62
—
1,159
—
—
62
—
Residential mortgage
36
112
13
53
186
148
292
Home equity
—
—
—
—
—
—
9
Commercial mortgage
—
—
—
—
65
—
73
Consumer
565
596
728
604
588
1,161
1,341
Total recoveries
878
1,058
2,258
938
1,115
1,936
2,080
Net charge-offs (recoveries)
999
412
(927)
225
809
1,411
1,551
ACL at end of period
$ 65,211
$ 64,754
$ 68,097
$ 74,587
$ 77,781
$ 65,211
$ 77,781
Average loans, net of deferred fees and costs
$ 5,221,300
$ 5,114,260
$ 5,073,069
$ 5,022,909
$ 5,110,820
$ 5,168,076
$ 5,095,433
Annualized ratio of net charge-offs to average loans
0.08 %
0.03 %
(0.07) %
0.02 %
0.06 %
0.05 %
0.06 %
[1] In 2020, the Company recorded a reserve on accrued interest receivable ("AIR") of $0.2 million for loans on payment forbearance or deferral, which were granted to borrowers impacted by the
COVID-19 pandemic. This reserve was recorded as a contra-asset against AIR with the offset to the provision for credit losses. During the second quarter of 2021, the Company reversed the entire
reserve on AIR. The provision for credit losses presented in this table excludes the provision for credit losses on AIR.
[2] As of January 1, 2021, the provision for credit losses on off-balance sheet credit exposures (previously included in other operating expense) is included in the provision for credit losses line on the
consolidated statements of income. The allowance for off-balance sheet credit exposures continues to be included in other liabilities. For roll-forward purposes, in this table we exclude the provision
for credit losses on off-balance sheet credit exposures.
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
TABLE 10
The following table sets forth a reconciliation of our core loans and the ratios of our allowance for credit losses ("ACL") to total loans and ACL to core loans
(or total loans, excluding SBA Paycheck Protection Program ("PPP") loans), for each of the periods indicated:
Jun 30,
Mar 31,
Dec 31,
Sep 30,
Jun 30,
(Dollars in thousands)
2022
2022
2021
2021
2021
ACL
$ 65,211
$ 64,754
$ 68,097
$ 74,587
$ 77,781
Total loans
$ 5,301,633
$ 5,174,837
$ 5,101,649
$ 5,045,797
$ 5,077,318
Less: PPP loans
20,181
44,231
91,327
218,671
434,610
Core loans (or total loans, excluding PPP loans)
$ 5,281,452
$ 5,130,606
5,010,322
4,827,126
$ 4,642,708
Ratio of ACL to total loans
1.23 %
1.25 %
1.33 %
1.48 %
1.53 %
Ratio of ACL to core loans
1.23 %
1.26 %
1.36 %
1.55 %
1.68 %
View original content to download multimedia:https://www.prnewswire.com/news-releases/central-pacific-financial-reports-second-quarter-earnings-of-17-6-million-301593901.html
SOURCE Central Pacific Financial Corp.