HONOLULU, July 29 /PRNewswire-FirstCall/ -- Central Pacific Financial Corp. (NYSE: CPF), parent company of Central Pacific Bank, today reported a net loss for the second quarter of 2009 of $34.4 million, or $1.27 per diluted share, compared to a net loss of $146.3 million, or $5.10 per diluted share, reported in the second quarter of 2008 and net income of $2.6 million, or $0.03 per diluted share, reported in the first quarter of 2009. The second quarter results reflect total credit costs of $79.9 million, compared to $116.1 million in the year-ago quarter and $29.6 million in the first quarter of 2009. The net loss for the second quarter of 2008 included a non-cash goodwill impairment charge of $94.3 million compared to no charge in the current quarter. The net loss, net loss per diluted share and total credit costs for the second quarter of 2009 were all within the ranges previously announced.
"As we previously announced, our second quarter results were impacted by higher credit costs resulting from the weak economy and further deterioration in the Hawaii and California commercial real estate markets," said Ronald K. Migita, Chairman, President, and Chief Executive Officer. "As we continue to navigate through these turbulent times, although we remain focused on reducing credit risk, our customers will continue to receive the high level of quality service and innovative products they have come to expect from us."
The Company also reported that it is postponing its previously announced stock offering. The Company was unable to raise the additional capital it targeted given the number of its authorized but unissued common shares combined with the current price level of its common stock. The Company plans to increase its number of authorized common shares, subject to shareholder approval, which will provide the Company with increased flexibility as it proceeds with its capital raising efforts.
At June 30, 2009, the Company's capital ratios continue to exceed the amounts required for a regulatory designation of 'well-capitalized' with Tier 1 risk-based capital, total risk-based capital, and leverage capital ratios of 13.28%, 14.57%, and 10.61%, respectively.
"The current market conditions prevented us from completing our capital raising objectives at this time," said Migita. "While we remain 'well-capitalized' for regulatory purposes, we continue to believe that proactively raising additional capital is appropriate and prudent."
Second Quarter Highlights
- Increased core deposits by $201.7 million, or 6.8%.
- Originated $558.4 million in residential mortgage loans in Hawaii, up 14.7% from the quarter ended June 30, 2008, and up 35.1% year-to-date for the six months ended June 30, 2008. These loans were sold in the secondary market, primarily to Fannie Mae and Freddie Mac.
- Increased allowance for loan and lease losses, as a percentage of total loans and leases, to 4.50% at June 30, 2009 from 3.20% at March 31, 2009.
- Recognized total credit costs of $79.9 million comprised of a provision for loan and lease losses of $74.3 million, an increase to the reserve for unfunded commitments of $2.4 million, foreclosed asset expense of $2.3 million and write-downs of loans held for sale of $0.9 million.
- Lowered loan-to-deposit ratio from 95.4% at March 31, 2009 to 93.0% at June 30, 2009.
- Maintained capital levels required to be "well-capitalized" for regulatory purposes at June 30, 2009, with Tier 1 risk-based capital, total risk-based capital, and leverage capital ratios of 13.28%, 14.57%, and 10.61%, respectively. The Company also reported a tangible common equity ratio of 5.76% at June 30, 2009.
Earnings Highlights
Net interest income for the second quarter of 2009 was $46.1 million, compared to $51.4 million in the year-ago quarter and $46.5 million in the first quarter of 2009. The net interest margin for the current quarter was 3.77%, compared to 3.97% in the year-ago quarter and 3.82% in the first quarter of 2009. The sequential-quarter decrease was primarily attributable to higher reversals of interest on nonaccrual loans totaling $0.5 million and lower interest income due to lower loan yields. Excluding the effects of interest reversals on nonaccrual loans, the net interest margin was 3.89% for the current quarter, compared to 4.13% in the year-ago quarter and 3.90% in the first quarter of 2009.
The provision for loan and lease losses in the second quarter of 2009 was $74.3 million, compared to $87.8 million in the year-ago quarter and $26.8 million in the first quarter of 2009. The sequential-quarter increase was directly attributable to the challenging economic environment and further deterioration in the Hawaii and California commercial real estate markets.
Other operating income totaled $14.6 million for the second quarter of 2009, compared to $11.9 million in the year-ago quarter and $15.7 million in the first quarter of 2009. The increase from the year-ago quarter was primarily due to: (1) higher non-cash gains related to the ineffective portion of a cash flow hedge totaling $2.6 million, (2) higher gains on sales of loans totaling $2.3 million and (3) higher income from bank-owned life insurance totaling $0.7 million, partially offset by an other-than-temporary impairment (OTTI) charge totaling $2.6 million. The sequential-quarter decrease was primarily due to: (1) the OTTI charge totaling $2.6 million and (2) $3.6 million gain related to the sale of a parcel of land in the first quarter of 2009, partially offset by: (1) the non-cash gain related to the ineffective portion of a cash flow hedge, (2) lower unrealized losses on outstanding interest rate locks totaling $0.9 million, (3) higher gains on sales of loans totaling $0.5 million, (4) higher income from bank-owned life insurance totaling $0.4 million and (5) higher service charges on deposit accounts totaling $0.4 million. The OTTI charge, attributable to three non-agency collateralized mortgage obligations, was a result of the Company's assessment that a portion of the principal and interest payments due on these securities may not be collected as a result of credit weakness in the underlying collateral.
Other operating expense for the second quarter of 2009 was $45.8 million, compared to $160.3 million in the year-ago quarter and $37.7 million in the first quarter of 2009. The decrease from the year-ago quarter was primarily due to: (1) the aforementioned non-cash goodwill impairment charge recorded in the year-ago quarter totaling $94.3 million, (2) lower credit related charges (which includes write-downs of loans held for sale, foreclosed asset expense, and losses on sales of loans) totaling $24.9 million and (3) lower salaries and employee benefits totaling $1.0 million, partially offset by higher FDIC insurance expense totaling $4.8 million. The sequential-quarter increase was primarily due to: (1) higher FDIC insurance expense totaling $3.2 million, (2) higher credit related charges totaling $2.6 million and (3) higher salaries and employee benefits totaling $1.4 million. The current quarter increase in FDIC insurance expense was primarily due to a special assessment charge imposed on all FDIC-insured institutions totaling $2.5 million, or five basis points of Central Pacific Bank's total assets minus Tier 1 capital as of June 30, 2009.
The efficiency ratio for the second quarter of 2009 was 65.64% (excluding foreclosed asset expense of $2.3 million and write-downs of loans held for sale of $0.9 million), compared with 58.37% in the year-ago quarter (excluding the non-cash goodwill impairment charge totaling $94.3 million, write-downs of loans held for sale totaling $22.4 million, foreclosed asset expense of $4.0 million, and loss on sale of commercial real estate loans totaling $1.7 million) and 57.85% (excluding foreclosed asset expense of $0.1 million and write-downs of loans held for sale of $0.4 million) in the first quarter of 2009. The variance from the year-ago quarter was primarily attributable to the fluctuations in other operating expenses described above. Excluding the impact of the aforementioned FDIC special assessment charge, the current quarter's efficiency ratio was 61.75%.
During the current quarter, the Company recognized an income tax benefit of $25.0 million on a pre-tax net loss of $59.5 million. Comparatively, during the first quarter of 2009, the Company recognized an income tax benefit of $4.9 million on a pre-tax net loss of $2.3 million during the first quarter of 2009. The effective tax rate for the first quarter of 2009 was impacted by the settlement of a state tax contingency resulting in an income tax benefit totaling $2.2 million.
Balance Sheet Highlights
Total assets of $5.5 billion at June 30, 2009, decreased $125.1 million, or 2.2%, from a year ago and increased $93.7 million, or 1.7%, from March 31, 2009.
Total loans and leases of $3.7 billion at June 30, 2009, decreased $389.4 million, or 9.5%, from a year ago and decreased $130.4 million, or 3.4%, from March 31, 2009. The current quarter decrease was primarily due to a decrease in the Hawaii construction and commercial real estate portfolio totaling $40.2 million and a decrease in the mainland loan portfolio totaling $61.7 million.
Total deposits of $4.0 billion at June 30, 2009 reflected an increase of $45.9 million, or 1.2%, from a year ago and a decrease of $36.0 million, or 0.9%, from March 31, 2009. Core deposits of $3.2 billion at June 30, 2009 grew by $201.7 million, or 6.8%, from March 31, 2009. Noninterest-bearing demand, interest-bearing demand and savings and money market deposits increased during the current quarter by $11.7 million, $36.2 million, and $138.4 million, respectively, while time deposits decreased by $222.3 million. The decrease in time deposits was directly attributable to a large customer converting $225.7 million of time deposits into repurchase agreements during the quarter. This conversion was done at the Company's request and the Company considers these repurchase agreements analogous to time deposits.
Total equity was $625.1 million at June 30, 2009, compared to $517.2 million and $667.4 million at June 30, 2008 and March 31, 2009, respectively. The increase from a year-ago was primarily attributable to the issuance of senior preferred stock totaling $135.0 million in connection with the Company's participation in the U.S. Treasury's Capital Purchase Program in January 2009.
Asset Quality
Nonperforming assets as of June 30, 2009 totaled $261.2 million, or 4.73%, of total assets, compared to $159.9 million, or 2.94%, of total assets at March 31, 2009. As previously announced, the sequential-quarter increase reflects further deterioration in the Hawaii and California commercial real estate markets and was primarily attributable to the addition of four Hawaii residential construction loans totaling $36.4 million, five Hawaii commercial construction loans totaling $30.3 million and four California commercial construction loans totaling $25.1 million.
While nonperforming assets increased during the quarter, loans delinquent for 90 days or more still accruing interest fell to $4.4 million at June 30, 2009 from $20.3 million at March 31, 2009. In addition, loans delinquent for 30 days or more still accruing interest dropped significantly to $21.1 million at June 30, 2009 from $107.9 million at March 31, 2009.
Net loan charge-offs in the second quarter of 2009 totaled $30.5 million, compared to $73.9 million in the year-ago quarter and $24.3 million in the first quarter of 2009.
The allowance for loan and lease losses as a percentage of total loans and leases was 4.50% at June 30, 2009, compared to 3.20% at March 31, 2009. The increase was attributable to the decrease in the loan portfolio and the $74.3 million provision for loan and lease losses, offset by net loan charge-offs totaling $30.5 million.
Total nonperforming assets, loans delinquent for 30 days or more still accruing interest, net loan charge-offs and the allowance for loan and lease losses as a percentage of total loans and leases were all within the ranges previously announced.
Hawaii Construction and Commercial Real Estate Loans
At June 30, 2009, the Hawaii construction and commercial real estate loan portfolio totaled $1.2 billion. This loan portfolio decreased by $40.2 million from March 31, 2009.
Hawaii construction and commercial real estate loans represented 31.4% of total loans and leases at both June 30, 2009 and March 31, 2009. Of the $1.2 billion balance in the Hawaii construction and commercial real estate portfolio, the allowance for loan and lease losses established for these loans was $58.7 million at June 30, 2009, or 5.07%, of the total outstanding balance.
Nonperforming assets related to this sector were comprised of 16 loans totaling $87.5 million at June 30, 2009, or 1.58%, of total assets. Nonperforming assets related to this sector totaled $23.1 million at March 31, 2009.
Mainland Construction and Commercial Real Estate Loans
At June 30, 2009, mainland construction and commercial real estate loans totaled $953.8 million and mainland construction and commercial real estate foreclosed properties totaled $17.3 million. The portfolio balance consisted of $649.5 million in California and $304.3 million in other Western states. The Company's total exposure to this sector decreased by $65.3 million from March 31, 2009.
Mainland construction and commercial real estate loans represented 25.9% and 26.6% of total loans and leases at June 30, 2009 and March 31, 2009, respectively. Of the $953.8 million balance in the mainland construction and commercial real estate portfolio, the allowance for loan and lease losses established for these loans was $73.4 million at June 30, 2009, or 7.70%, of the total outstanding balance.
Nonperforming assets related to this sector totaled $142.8 million at June 30, 2009, or 2.58%, of total assets. This balance was comprised of 27 loans totaling $125.5 million and four foreclosed properties totaling $17.3 million. Nonperforming assets related to this sector totaled $114.6 million at March 31, 2009.
Capital Levels
The Company continues to exceed the capital levels required to be "well-capitalized" for regulatory purposes with Tier 1 risk-based capital, total risk-based capital, and leverage capital ratios of 13.28%, 14.57%, and 10.61%, respectively, at June 30, 2009. At March 31, 2009, these capital ratios were 13.93%, 15.20%, and 11.31%, respectively. The tangible common equity ratio was 5.76% at June 30, 2009 as compared to 6.66% at March 31, 2009.
Conference Call and Slide Presentation
The Company's management will host a conference call on Thursday, July 30, 2009, 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 as well as view a slide presentation by visiting the investor relations page of the Company's website athttp://investor.centralpacificbank.com. Alternatively, investors may download the slide presentation from the "Presentations" tab of the investor relations page and participate in the live call by dialing 1-800-860-2442. A playback of the call will be available through August 31, 2009 by dialing 1-877-344-7529 (passcode: 432312) and on the Company's website.
About Central Pacific Financial Corp.
Central Pacific Financial Corp. is one of the largest financial institutions in Hawaii with more than $5.5 billion in assets. Central Pacific Bank, its primary subsidiary, operates 39 branches and more than 100 ATMs throughout Hawaii. For additional information, please visit the Company's website athttp://www.centralpacificbank.com.
Forward-Looking Statements
This document may contain forward-looking statements concerning projections of revenues, income, earnings per share, capital expenditures, dividends, capital structure, or other financial items, concerning plans and objectives of management for future operations, concerning future economic performance, or concerning any of the assumptions underlying or relating to any of the foregoing. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts, and may include the words "believes", "plans", "intends", "expects", "anticipates", "forecasts" or words of similar meaning. While we believe that our forward-looking statements and the assumptions underlying them are reasonably based, such statements and assumptions are by their nature subject to risks and uncertainties, and thus could later prove to be inaccurate or incorrect. Accordingly, actual results could materially differ from projections for a variety of reasons, to include, but not limited to: the impact of local, national, and international economies and events, including natural disasters, 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; the impact of legislation affecting the banking industry including the Emergency Economic Stabilization Act of 2008; the impact of competitive products, services, pricing, and other competitive forces; movements in interest rates; loan delinquency rates and changes in asset quality generally; the price of the Company's stock; and volatility in the financial markets and uncertainties concerning the availability of debt or equity financing. For further information on factors that could cause actual results to materially differ from projections, please see the Company's publicly available Securities and Exchange Commission filings, including the Company's Form 10-K/A for the last fiscal year. The Company does not update any of its forward-looking statements.
Additional Information And Where To Find It
This release may be deemed to be solicitation material in respect of the shareholder meeting to be called to consider the increase in the number of authorized shares of the Company. The Company will be filing a proxy statement with the Securities and Exchange Commission ("SEC"). INVESTORS AND SECURITYHOLDERS ARE URGED TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and securityholders will be able to receive the proxy statement and other relevant documents free of charge at the SEC's web site, www.sec.gov, or from the investor relations page of the Company's website.
Participants In Solicitation
CPF and its directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the shareholders meeting. Information regarding the interests of CPF's directors and executive officers in the proxy contest will be included in CPF's definitive proxy statement.
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Financial Highlights - June 30, 2009
(Unaudited)
(in thousands, Three Months Ended Six Months Ended
except per June 30, % June 30, %
share data) 2009 2008 Change 2009 2008 Change
INCOME STATEMENT
Net loss $34,442 $146,258 (76.5)% $31,813 $144,600 (78.0)%
Per share data:
Diluted (after
dividends on
preferred
stock) (1.27) (5.10) (75.1) (1.24) (5.04) (75.4)
Cash dividends - 0.25 (100.0) - 0.50 (100.0)
PERFORMANCE RATIOS
Return on average
assets (1) (2.51)% (9.96)% (1.16)% (4.98)%
Return on average
shareholders'
equity (1) (20.88) (86.27) (9.96) (42.27)
Net loss to
average tangible
shareholders'
equity (1) (28.67) (143.86) (13.85) (70.22)
Efficiency ratio
(2) 65.64 58.37 61.77 50.47
Net interest
margin (1) 3.77 3.97 3.80 3.98
June 30, %
2009 2008 Change
BALANCE SHEET
Total assets $5,525,287 $5,650,349 (2.2)%
Loans and leases, net of unearned interest 3,688,519 4,077,956 (9.5)
Net loans and leases 3,522,448 3,991,906 (11.8)
Deposits 3,966,524 3,920,630 1.2
Total shareholders' equity 615,047 507,103 21.3
Book value per share 16.94 17.66 (4.1)
Tangible book value per common share 10.71 11.46 (6.5)
Market value per common share 3.75 10.66 (64.8)
Tangible common equity ratio 5.76% 6.02%
Three Months Ended Six Months Ended
June 30, % June 30, %
2009 2008 Change 2009 2008 Change
SELECTED
AVERAGE
BALANCES
Total assets $5,487,486 $5,876,047 (6.6)% $5,482,984 $5,812,250 (5.7)%
Interest-
earning
assets 4,953,798 5,262,311 (5.9) 4,958,641 5,226,481 (5.1)
Loans and
leases,
net of
unearned
interest 3,862,201 4,346,980 (11.2) 3,938,559 4,297,175 (8.3)
Other real
Estate 19,061 3,856 394.3 15,872 2,721 483.3
Deposits 4,079,127 3,835,941 6.3 3,999,846 3,832,501 4.4
Interest-bearing
liabilities 4,164,701 4,495,589 (7.4) 4,165,070 4,437,532 (6.1)
Total
shareholders'
equity 659,954 678,112 (2.7) 639,087 684,144 (6.6)
June 30, %
2009 2008 Change
NONPERFORMING ASSETS
Nonaccrual loans (including
loans held for sale) $243,303 $142,408 70.8%
Other real estate, net 17,862 3,501 410.2
------ -----
Total nonperforming assets 261,165 145,909 79.0
======= =======
Loans delinquent for 90 days or more
(still accruing interest) 4,447 508 775.4
Total nonperforming assets and, loans
delinquent for 90 days or more (still
accruing interest) $265,612 $146,417 81.4
======== ========
Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008
Loan charge-
Offs $30,943 $74,257 (58.3)% $55,758 $129,067 (56.8)%
Recoveries 404 399 1.3 877 996 (11.9)
Net loan
charge-offs $30,539 $73,858 (58.7) $54,881 $128,071 (57.1)
Net loan charge-
offs to average
loans (1) 3.16% 6.80% 2.79% 5.96%
June 30,
2009 2008
ASSET QUALITY RATIOS
Nonaccrual loans (including
loans held for sale) to
total loans and leases and
loans held for sale 6.45% 3.40%
Nonperforming assets to total assets 4.73 2.58
Nonperforming assets, loans delinquent
for 90 days or more (still
accruing interest)
to total loans and leases, loans
held for sale &
other real estate 7.01 3.49
Allowance for loan and lease losses
to total loans and leases 4.50 2.11
Allowance for loan and lease
losses to nonaccrual loans (including
loans held for sale) 68.26 60.42
(1) Annualized.
(2) Efficiency ratio is derived by dividing other operating expense
excluding amortization, impairment and write-down of intangible
assets, goodwill, loans held for sale and foreclosed property, loss
on investment transaction and loss on sale of commercial real estate
loans by net operating revenue (net interest income on a taxable
equivalent basis plus other operating income before securities
transactions).
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
Quarter Quarter Quarter
Ended Ended Ended
June 30, March 31, June 30,
2009 2009 2008
--------- --------- --------
Net Interest Margin
Annualized net interest income for
the quarter as a percentage of
quarter-to-date average interest earning
assets 3.77% 3.82% 3.97%
Reversal of interest on nonaccrual loans 0.12 0.08 0.16
---- ---- ----
Net interest margin, excluding reversal
of interest on nonaccrual loans 3.89% 3.90% 4.13%
==== ==== ====
Efficiency Ratio
Total operating expenses as a percentage
of net operating revenue 71.77% 59.90% 251.13%
Goodwill impairment - - (147.72)
Amortization and impairment of other
intangible assets (1.12) (1.15) (1.05)
Foreclosed asset expense (3.59) (0.21) (6.24)
Loss on commercial real estate loans - - (2.62)
Write down of assets (1.42) (0.69) (35.13)
----- ----- -----
Efficiency ratio 65.64% 57.85% 58.37%
----- ----- -----
FDIC special assessment charge (3.89) - -
----- --- ---
Efficiency ratio, excluding FDIC special
assessment charge 61.75% 57.85% 58.37%
===== ===== =====
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except per share June 30, March 31, June 30,
data) 2009 2009 2008
---- ---- ----
ASSETS
Cash and due from banks $161,985 $78,170 $97,657
Interest-bearing deposits in other
banks 23,071 10,199 545
Federal funds sold 19,000 7,000 14,900
Investment securities:
Trading - - 5,077
Available for sale 1,049,949 933,215 809,965
Held to maturity (fair value of
$6,906,857.18 at June 30, 2009,
$7,622 at March 31, 2009 and
$25,976 at June 30, 2008) 6,830 7,523 26,023
----- ----- ------
Total investment securities 1,056,779 940,738 841,065
--------- ------- -------
Loans held for sale 84,748 63,056 108,535
Loans and leases 3,688,519 3,818,900 4,077,956
Less allowance for loan and lease
losses 166,071 122,286 86,050
------- ------- ------
Net loans and leases 3,522,448 3,696,614 3,991,906
--------- --------- ---------
Premises and equipment 77,142 77,828 82,724
Accrued interest receivable 18,724 20,887 22,687
Investment in unconsolidated
subsidiaries 17,534 14,338 16,697
Other real estate 17,862 16,558 3,501
Goodwill 152,689 152,689 150,514
Other intangible assets 26,239 26,957 27,413
Mortgage servicing rights 18,474 16,165 13,622
Bank-owned life insurance 137,946 136,437 133,317
Federal Home Loan Bank stock 48,797 48,797 48,797
Other assets 141,849 125,126 96,469
------- ------- ------
Total assets $5,525,287 $5,431,559 $5,650,349
========== ========== ==========
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand $623,698 $612,045 $649,950
Interest-bearing demand 548,166 511,919 471,294
Savings and money market 1,428,881 1,290,521 1,151,821
Time 1,365,779 1,588,088 1,647,565
--------- --------- ---------
Total deposits 3,966,524 4,002,573 3,920,630
Short-term borrowings 267,155 83,474 275,186
Long-tem debt 608,554 623,903 885,019
Other liabilities 57,970 54,227 52,350
------ ------ ------
Total liabilities 4,900,203 4,764,177 5,133,185
--------- --------- ---------
Equity:
Preferred stock, no par value,
authorized 1,000,000 shares;
issued and outstanding
135,000 shares at June 30, 2009
and March 31, 2009, none at
June 30, 2008 128,239 127,836 -
Common stock, no par value,
authorized 100,000,000 shares;
issued and outstanding 28,745,214
shares at June 30, 2009,
28,740,217 shares at March 31,
2009 and 28,716,667 at
June 30, 2008 403,219 403,203 402,985
Surplus 62,549 62,276 55,039
Retained earnings 28,083 64,524 63,321
Accumulated other comprehensive
loss (7,043) (500) (14,242)
------ ---- -------
Total shareholders' equity 615,047 657,339 507,103
Non-controlling interest 10,037 10,043 10,061
------ ------ ------
Total equity 625,084 667,382 517,164
------- ------- -------
Total liabilities and equity $5,525,287 $5,431,559 $5,650,349
========== ========== ==========
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
(In thousands, ------------------ ----------------
except per share June 30, March 31, June 30, June 30,
data) 2009 2009 2008 2009 2008
---- ---- ---- ---- ----
Interest income:
Interest and
fees on loans
and leases $54,218 $56,505 $65,677 $110,723 $135,971
Interest and
dividends on
investment
securities:
Taxable
interest 9,058 8,729 9,308 17,787 18,579
Tax-exempt
interest 1,146 1,171 1,416 2,317 2,805
Dividends 2 3 11 5 35
Interest on
deposits in
other banks 11 - 3 11 7
Interest on federal
funds sold and securities
purchased under
agreements to
resell 6 - 22 6 43
Dividends on
Federal Home
Loan Bank stock - - 171 - 293
--- --- --- --- ---
Total interest
income 64,441 66,408 76,608 130,849 157,733
------ ------ ------ ------- -------
Interest expense:
Demand 355 321 179 676 316
Savings and
money market 3,414 2,863 2,980 6,277 6,765
Time 8,219 9,894 11,706 18,113 26,435
Interest on
short-term
borrowings 34 238 2,357 272 4,280
Interest on long-
term debt 6,359 6,619 8,002 12,978 17,696
----- ----- ----- ------ ------
Total interest
expense 18,381 19,935 25,224 38,316 55,492
------ ------ ------ ------ ------
Net interest
income 46,060 46,473 51,384 92,533 102,241
Provision for
loan and lease
losses 74,324 26,750 87,800 101,074 122,072
------ ------ ------ ------- -------
Net interest
income (loss)
after provision
for loan and
lease
losses (28,264) 19,723 (36,416) (8,541) (19,831)
------- ------ ------- ------ -------
Other operating income:
Service charges
on deposit
accounts 3,948 3,537 3,511 7,485 7,054
Other service
charges and
fees 3,584 3,320 3,710 6,904 7,125
Income from
fiduciary
activities 999 970 990 1,969 1,995
Equity in
earnings of
unconsolidated
subsidiaries 205 274 131 479 414
Fees on foreign
exchange 145 116 112 261 306
Investment
securities gains
(losses) (2,564) (150) 253 (2,714) 253
Income from bank-
owned life
insurance 1,514 1,070 845 2,584 2,715
Loan placement
fees 312 248 213 560 366
Net gain on
sales of
residential
loans 4,539 4,009 2,241 8,548 4,039
Other 1,917 2,290 (75) 4,207 1,943
----- ----- --- ----- -----
Total other
operating
income 14,599 15,684 11,931 30,283 26,210
------ ------ ------ ------ ------
Other operating expense:
Salaries and
employee
benefits 17,684 16,260 18,648 33,944 36,012
Net occupancy 3,101 3,279 3,266 6,380 6,119
Equipment 1,562 1,512 1,433 3,074 2,828
Amortization and
impairment of
intangible
assets 1,550 1,421 1,281 2,971 2,450
Communication
expense 975 1,139 1,125 2,114 2,210
Legal and
professional
services 2,846 2,716 2,615 5,562 5,028
Computer
software
expense 840 912 809 1,752 1,672
Advertising
expense 713 755 700 1,468 1,382
Goodwill
impairment - - 94,279 - 94,279
Foreclosed asset
expense 2,294 135 3,984 2,429 6,574
Loss on sale of
commercial real
estate loans - - 1,671 - 1,671
Write down of
assets 904 435 22,424 1,339 22,424
Other 13,349 9,134 8,048 22,483 9,094
------ ----- ----- ------ -----
Total other
operating
expense 45,818 37,698 160,283 83,516 191,743
------ ------ ------- ------ -------
Loss before
income
taxes (59,483) (2,291) (184,768) (61,774) (185,364)
Income tax
benefit (25,041) (4,920) (38,510) (29,961) (40,764)
------- ------ ------- ------- -------
Net income
(loss) (34,442) 2,629 (146,258) (31,813) (144,600)
======= ===== ======== ======= ========
Per common share data:
Basic earnings
per share $(1.27) $0.03 $(5.10) $(1.24) $(5.04)
Diluted earnings
per share (after
dividends and
accretion on
preferred
stock) (1.27) 0.03 (5.10) (1.24) (5.04)
Cash dividends
declared - - 0.25 - 0.50
Basic weighted
average shares
outstanding 28,687 28,681 28,652 28,684 28,670
Diluted weighted
average shares
outstanding 28,687 28,692 28,652 28,684 28,670
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Average Balances, Interest Income & Expense, Yields and
Rates (Taxable Equivalent)
Three Months Ended
(Dollars in thousands) June 30, 2009
-------------
Average Average
Balance Yield/Rate Interest
------- ---------- --------
Assets:
Interest earning assets:
Interest-bearing
deposits in other
banks $66,158 0.07% $11
Federal funds sold &
securities purchased
under agreements to
resell 17,181 0.13% 6
Taxable investment
securities, excluding
valuation allowance 840,598 4.31% 9,060
Tax-exempt investment
securities, excluding
valuation allowance 118,863 5.94% 1,764
Loans and leases, net
of unearned income 3,862,201 5.63% 54,218
Federal Home Loan
Bank stock 48,797 0.00% 0
------ ---- ---
Total interest
earning assets 4,953,798 5.26% 65,059
Nonearning assets 533,688
-------
Total assets $5,487,486
==========
Liabilities & Equity:
Interest-bearing liabilities:
Interest-bearing
demand deposits $540,416 0.26% $355
Savings and money
market deposits 1,345,028 1.02% 3,414
Time deposits under
$100,000 668,096 2.62% 4,364
Time deposits
$100,000 and over 942,322 1.64% 3,855
Short-term borrowings 52,895 0.25% 34
Long-term debt 615,944 4.14% 6,359
------- ---- -----
Total interest-
bearing liabilities 4,164,701 1.77% 18,381
------
Noninterest-bearing
deposits 583,265
Other liabilities 69,526
------
Total liabilities 4,817,492
---------
Shareholders' equity 659,954
Non-controlling interest 10,040
------
Total equity 669,994
-------
Total liabilities &
equity $5,487,486
==========
Net interest income $46,678
=======
Net interest margin 3.77%
====
Three Months Ended
(Dollars in thousands) June 30, 2008
-------------
Average Average
Balance Yield/Rate Interest
------- ---------- --------
Assets:
Interest earning assets:
Interest-bearing
deposits in other
banks $700 1.71% $3
Federal funds sold &
securities purchased
under agreements to
resell 4,385 2.04% 22
Taxable investment
securities, excluding
valuation allowance 710,653 5.25% 9,319
Tax-exempt investment
securities, excluding
valuation allowance 150,796 5.78% 2,179
Loans and leases, net
of unearned income 4,346,980 6.07% 65,677
Federal Home Loan
Bank stock 48,797 1.40% 171
------ ---- ---
Total interest
earning assets 5,262,311 5.90% 77,371
Nonearning assets 613,736
-------
Total assets $5,876,047
==========
Liabilities & Equity:
Interest-bearing liabilities:
Interest-bearing
demand deposits $472,037 0.15% $179
Savings and money
market deposits 1,111,289 1.08% 2,980
Time deposits under
$100,000 590,750 2.81% 4,126
Time deposits
$100,000 and over 1,054,284 2.89% 7,580
Short-term borrowings 369,489 2.57% 2,357
Long-term debt 897,740 3.58% 8,002
------- ---- -----
Total interest-
bearing liabilities 4,495,589 2.26% 25,224
------
Noninterest-bearing
deposits 607,581
Other liabilities 84,702
------
Total liabilities 5,187,872
---------
Shareholders' equity 678,112
Non-controlling interest 10,063
------
Total equity 688,175
-------
Total liabilities &
equity $5,876,047
==========
Net interest income $52,147
=======
Net interest margin 3.97%
====
Six Months Ended
(Dollars in thousands) June 30, 2009
-------------
Average Average
Balance Yield/Rate Interest
------- ---------- --------
Assets:
Interest earning assets:
Interest-bearing
deposits in other
banks $35,299 0.06% $11
Federal funds sold &
securities purchased
under agreements to
resell 8,827 0.13% 6
Taxable investment
securities, excluding
valuation allowance 806,133 4.41% 17,792
Tax-exempt investment
securities, excluding
valuation allowance 121,026 5.89% 3,565
Loans and leases, net
of unearned income 3,938,559 5.66% 110,723
Federal Home Loan
Bank stock 48,797 0.00% 0
------ ---- ---
Total interest
earning assets 4,958,641 5.36% 132,097
Nonearning assets 524,343
-------
Total assets $5,482,984
==========
Liabilities & Equity:
Interest-bearing liabilities:
Interest-bearing
demand deposits $519,598 0.26% $676
Savings and money
market deposits 1,266,405 1.00% 6,277
Time deposits under
$100,000 689,396 2.73% 9,344
Time deposits
$100,000 and over 939,956 1.88% 8,769
Short-term borrowings 125,324 0.44% 272
Long-term debt 624,391 4.19% 12,978
------- ---- ------
Total interest-
bearing liabilities 4,165,070 1.86% 38,316
------
Noninterest-bearing
deposits 584,491
Other liabilities 84,293
------
Total liabilities 4,833,854
---------
Shareholders' equity 639,087
Non-controlling interest 10,043
------
Total equity 649,130
-------
Total liabilities &
equity $5,482,984
==========
Net interest income $93,781
=======
Net interest margin 3.80%
====
Six Months Ended
(Dollars in thousands) June 30, 2008
-------------
Average Average
Balance Yield/Rate Interest
------- ---------- --------
Assets:
Interest earning assets:
Interest-bearing
deposits in other
banks $597 2.32% $7
Federal funds sold &
securities purchased
under agreements to
resell 3,513 2.48% 43
Taxable investment
securities, excluding
valuation allowance 724,843 5.14% 18,614
Tax-exempt investment
securities, excluding
valuation allowance 151,556 5.70% 4,316
Loans and leases, net
of unearned income 4,297,175 6.36% 135,971
Federal Home Loan
Bank stock 48,797 1.20% 293
------ ---- ---
Total interest
earning assets 5,226,481 6.12% 159,244
Nonearning assets 585,769
-------
Total assets $5,812,250
==========
Liabilities & Equity:
Interest-bearing liabilities:
Interest-bearing
demand deposits $461,548 0.14% $316
Savings and money
market deposits 1,126,287 1.21% 6,765
Time deposits under
$100,000 561,634 3.08% 8,607
Time deposits
$100,000 and over 1,079,719 3.32% 17,828
Short-term borrowings 299,471 2.87% 4,280
Long-term debt 908,873 3.92% 17,696
------- ---- ------
Total interest-
bearing liabilities 4,437,532 2.51% 55,492
------
Noninterest-bearing
deposits 603,313
Other liabilities 77,195
------
Total liabilities 5,118,040
---------
Shareholders' equity 684,144
Non-controlling interest 10,066
------
Total equity 694,210
-------
Total liabilities &
equity $5,812,250
==========
Net interest income $103,752
========
Net interest margin 3.98%
====
