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Investor Contact:  David Morimoto Media Contact: 
Wayne Kirihara
  SVP & Treasurer   SVP - Corporate Communications
  (808) 544-3627   (808) 544-3687
  david.morimoto@centralpacificbank.com wayne.kirihara@centralpacificbank.com
 
NEWS RELEASE


 
CENTRAL PACIFIC FINANCIAL CORP. REPORTS
CONTINUED STRONG EARNINGS WITH $12.4 MILLION NET INCOME

2012 EARNINGS UP 30% OVER PREVIOUS YEAR

HONOLULU, HI, January 31, 2013 – Central Pacific Financial Corp. (NYSE: CPF), parent company of Central Pacific Bank (the “Bank”), today reported net income for the fourth quarter of 2012 of $12.4 million, or $0.29 per diluted share, compared to net income in the fourth quarter of 2011 of $12.1 million, or $0.29 per diluted share, and net income in the third quarter of 2012 of $10.7 million, or $0.26 per diluted share.  For the year ended December 31, 2012, the Company’s net income was $47.4 million, a 30% increase over net income of $36.6 million in the previous year. On a diluted per share basis, net income was $1.13 and $3.31 for 2012 and 2011, respectively.  Net income per diluted share in 2011 included the impact of a one-time accounting adjustment from the previously reported exchange of the Company’s preferred stock issued to the U.S. Department of Treasury for common stock as part of its recapitalization.

“We are pleased at the progress our Company continued to make in 2012”, said John C. Dean, President and Chief Executive Officer.  “The 30% increase in net income, year over year, is a reflection of significant improvements in our credit risk profile.  In addition, we were also encouraged by the fact that we enjoyed strong growth in both loans and core deposits during the quarter.”

Significant Highlights and Fourth Quarter Results

§  
Reported eighth consecutive profitable quarter since the company’s recapitalization with net income of $12.4 million, compared to net income of $10.7 million in the third quarter of 2012.

§  
For the seventh consecutive quarter, the Company did not incur credit costs as it reduced its allowance for loan and lease losses (ALLL) by an amount greater than net foreclosed asset expense, write-downs of loans held for sale and changes to the reserve for unfunded commitments.  The reduction in the ALLL resulted in a credit to the provision for loan and lease losses of $2.3 million, compared to a credit of $5.0 million for the third quarter of 2012.

§  
Reduced nonperforming assets by $50.3 million to $90.0 million at December 31, 2012 from $140.3 million at September 30, 2012.

§  
The ALLL, as a percentage of total loans and leases, decreased to 4.37% at December 31, 2012, compared to 4.59% at September 30, 2012.  In addition, the Company’s ALLL, as a percentage of nonperforming assets, increased significantly to 107.10% at December 31, 2012 from 69.08% at September 30, 2012 and the Company’s ALLL, as a percentage of nonaccrual loans, increased to 121.53% at December 31, 2012 from 104.30% at September 30, 2012.

§  
Increased the loans and leases portfolio by $93.8 million to $2.20 billion at December 31, 2012, compared to $2.11 billion at September 30, 2012.

§  
Increased total deposits by $59.2 million to $3.68 billion at December 31, 2012, compared to $3.62 billion at September 30, 2012.
 
 

 
§  
Maintained a strong capital position with Tier 1 risk-based capital, total risk-based capital, and leverage capital ratios of 22.54%, 23.83%, and 14.32%, respectively, as of December 31, 2012, compared to 23.34%, 24.63%, and 14.06%, respectively, as of September 30, 2012.  The Company’s capital ratios continue to be well in excess of the minimum levels required for a “well-capitalized” regulatory designation.

Earnings Highlights
Net interest income for the fourth quarter of 2012 was $29.4 million, compared to $30.8 million in the year-ago quarter and $29.6 million in the third quarter of 2012.  Net interest margin was 3.00%, compared to 3.25% in the year-ago quarter and 3.02% in the third quarter of 2012. The decrease in both net interest income and the net interest margin from both the year-ago and sequential quarters was primarily due to lower yields on the Company’s interest-earning assets resulting from the continuing lower interest rate environment.

The provision for loan and lease losses for the fourth quarter of 2012 was a credit of $2.3 million, compared to a credit of $11.2 million in the year-ago quarter and a credit of $5.0 million in the third quarter of 2012.  The credit to the provision for loan and lease losses was the result of continued improvement in the Company’s credit risk profile, as evidenced by the previously mentioned decrease in nonperforming assets and further reductions in the historical quarterly charge-off data used to calculate the ALLL.

Other operating income for the fourth quarter of 2012 totaled $13.0 million, compared to $15.2 million in the year-ago quarter and $15.9 million in the third quarter of 2012. The decrease from the year-ago quarter was primarily due to lower rental income from foreclosed properties of $1.9 million, lower unrealized gains on interest rate locks of $1.1 million, lower investment securities gains of $1.0 million, lower service charges on deposit accounts of $0.8 million and lower income from bank-owned life insurance of $0.5 million, partially offset by higher gains on sales of residential mortgage loans of $2.3 million. The sequential quarter decrease was primarily due to lower unrealized gains on interest rate locks of $2.1 million, lower investment securities gains of $0.8 million, lower rental income from foreclosed properties of $0.6 million and lower service charges on deposit accounts of $0.5 million, partially offset by higher gains on sales of residential mortgage loans of $1.3 million.

Other operating expense for the fourth quarter of 2012 totaled $32.3 million, compared to $45.2 million in the year-ago quarter and $39.8 million in the third quarter of 2012.  The decrease from the year-ago quarter was primarily due to lower net credit-related charges (which includes changes in the reserve for unfunded commitments, write-downs of loans held for sale and foreclosed asset expense) of $9.2 million, lower charitable contributions of $3.1 million and a lower provision for repurchased residential mortgage loans of $1.5 million. The sequential quarter decrease was primarily attributable to lower net credit-related charges of $9.9 million, partially offset by a lower credit to the provision for repurchased residential mortgage loans of $0.7 million and higher salaries and employee benefits of $0.6 million.

The efficiency ratio for the fourth quarter of 2012 was 81.7% (excluding foreclosed asset income of $3.5 million, and amortization expense related to certain intangible assets totaling $0.7 million), compared to 92.0% in the year-ago quarter (excluding foreclosed asset expense of $3.0 million and amortization expense related to certain intangible assets totaling $0.7 million) and 78.51% (excluding foreclosed asset expense of $2.9 million, loss on sale of loans held for sale of $0.8 million and amortization expense related to certain intangible assets totaling $0.7 million) in the third quarter of 2012.

The Company continues to recognize a full valuation allowance against its net deferred tax assets and did not record any net income tax benefit or expense during the fourth quarter of 2012.

Balance Sheet Highlights
Total assets at December 31, 2012 of $4.37 billion increased by $237.5 million and $60.8 million from December 31, 2011 and September 30, 2012, respectively.

Total loans and leases at December 31, 2012 of $2.20 billion increased by $139.5 million and $93.8 million from December 31, 2011 and September 30, 2012, respectively.  The increase in total loans and leases from the third quarter of 2012 was due to an increase in the residential mortgage, commercial and consumer loan portfolios of $50.0 million, $34.8 million and $20.0 million, respectively, partially offset by a decrease in the construction and development, leases and commercial mortgage loan portfolios of $8.1 million, $1.6 million and $1.3 million, respectively.

Total deposits at December 31, 2012 were $3.68 billion, compared to $3.44 billion and $3.62 billion at December 31, 2011 and September 30, 2012, respectively.  Core deposits, which include demand deposits, savings and money market deposits, and time deposits less than $100,000, totaled $3.01 billion at December 31, 2012.  This represents an increase of $220.4 million from a year ago and an increase of $63.3 million from September 30, 2012.  Changes in total deposits during the quarter included an increase in non-interest bearing demand deposits, interest-bearing demand deposits and savings and money market deposits of $39.5 million, $24.5 million and $8.8 million, respectively, offset by a decrease in time deposits of $13.7 million.
 
 

 
Total shareholders’ equity was $504.8 million at December 31, 2012, compared to $456.4 million and $501.0 million at December 31, 2011 and September 30, 2012, respectively.

Asset Quality
Nonperforming assets at December 31, 2012 totaled $90.0 million, or 2.06% of total assets, compared to $140.3 million, or 3.26% of total assets at September 30, 2012.  The sequential-quarter change reflects net decreases in Hawaii construction and development assets of $33.9 million, Mainland construction and development assets of $9.0 million, Hawaii residential mortgage assets of $6.5 million, Mainland commercial mortgage assets of $0.4 million, Hawaii commercial mortgage assets totaling $0.3 million, Hawaii lease assets of $0.2 million and Hawaii commercial assets of $0.1 million.

Loans delinquent for 90 days or more still accruing interest totaled $0.5 million at both December 31, 2012 and September 30, 2012.  In addition, loans delinquent for 30 days or more still accruing interest totaled $10.4 million at December 31, 2012, compared to $5.7 million at September 30, 2012.

Net recoveries in the fourth quarter of 2012 totaled $1.8 million, compared to net charge-offs of $10.1 million and $1.9 million in the year-ago quarter and third quarter of 2012, respectively.

The ALLL, as a percentage of total loans and leases, was 4.37% at December 31, 2012, compared to 4.59% at September 30, 2012.  The ALLL, as a percentage of nonperforming assets, was 107.10% at December 31, 2012, compared to 69.08% at September 30, 2012.  The ALLL, as a percentage of nonaccrual loans, was 121.53% at December 31, 2012, compared to 104.30% at September 30, 2012.

Capital Levels
At December 31, 2012, the Company’s Tier 1 risk-based capital, total risk-based capital, and leverage capital ratios were 22.54%, 23.83%, and 14.32%, respectively, compared to 23.34%, 24.63%, and 14.06%, respectively, at September 30, 2012.  The Company’s capital ratios continue to exceed the levels required to be considered a “well-capitalized” institution for regulatory purposes.

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 12:00 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://investor.centralpacificbank.com.  Alternatively, investors may participate in the live call by dialing 1-888-317-6016.  A playback of the call will be available through February 28, 2013 by dialing 1-877-344-7529 (passcode: 10023257) and on the Company's website.

About Central Pacific Financial Corp.
Central Pacific Financial Corp. is a Hawaii-based bank holding company with approximately $4.37 billion in assets.  Central Pacific Bank, its primary subsidiary, operates 34 branches and 116 ATMs in the state of Hawaii, as of December 31, 2012.  For additional information, please visit the Company’s website at http://www.centralpacificbank.com.
 
 
**********

 
 
 

 
Forward-Looking Statements
This document may contain forward-looking statements concerning projections of revenues, income/loss, earnings/loss per share, capital expenditures, dividends, capital structure, or other financial items, plans and objectives of management for future operations, future economic performance, or 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,” “expects,” “anticipates,” “forecasts,” “intends,” “hopes,” “should,” “estimates,” or words of similar meaning.  While the Company believes 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 effect of, and our failure to comply with all of the requirements of, the Memorandum of Understanding with the Federal Deposit Insurance Corporation (“FDIC”) and the Hawaii Division of Financial Institutions (“DFI”), effective May 5, 2011, the Written Agreement with the Federal Reserve Bank of San Francisco and DFI, dated July 2, 2010, and any further regulatory orders we are or may become subject to; our ability to continue making progress on our recovery plan; oversupply of inventory and adverse conditions in the Hawaii and California real estate markets and recurring weakness in the construction industry;  adverse changes in the financial performance and/or condition of our borrowers and, as a result, increased loan delinquency rates, further deterioration in asset quality and further losses in our loan portfolio; the impact of local, national, and international economies and events (including political events, acts of war or terrorism, natural disasters such as wildfires, tsunamis and earthquakes) 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 economic conditions, including the continued destabilizing factors 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;  the impact of regulatory action on the Company and Central Pacific Bank and legislation affecting the banking industry; 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, other regulatory reform, and any related rules and regulations on our business operations and competitiveness; the costs and effects of legal and regulatory developments, including the resolution of legal proceedings or regulatory or other governmental inquiries and the results of regulatory examinations or reviews;  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; inflation, interest rate, securities market and monetary fluctuations;  negative trends in our market capitalization and adverse changes in the price of the Company’s common shares; changes in consumer spending, borrowings and savings habits; technological changes; changes in the competitive environment among financial holding companies and other financial service providers; the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters; our ability to attract and retain skilled executives and employees; changes in our organization, compensation and benefit plans; and our success at managing the risks involved in the foregoing items.

#####
 
 
 

 
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
 
Financial Highlights - December 31, 2012
 
(Unaudited)
 
                                     
   
Three Months Ended
       
Year Ended
     
(in thousands, except per share data)
December 31,
       
December 31,
     
 
2012
 
2011
       
2012
 
2011
     
INCOME STATEMENT
                                 
Net income
$ 12,410     $ 12,095           $ 47,421     $ 36,571        
Per common share data:
                                         
 
Basic earnings per share (after preferred stock dividends,
                             
     accretion of discount, and conversion of preferred                                          
 
   stock to common stock)
  0.30       0.29             1.14       3.36        
 
Diluted earnings per share (after preferred stock dividends,
                             
     accretion of discount, and conversion of preferred                                          
 
   stock to common stock)
  0.29       0.29             1.13       3.31        
                                             
PERFORMANCE RATIOS
                                         
Return on average assets (1)
  1.16 %     1.19 %           1.13 %     0.90 %      
Return on average shareholders' equity (1)
  9.81       10.78             9.81       9.83        
Net income to average tangible shareholders' equity (1)
  10.13       11.27             10.17       10.41        
Efficiency ratio (2)
  81.70       91.99             78.89       92.06        
Net interest margin (1)
  3.00       3.25             3.10       3.09        
                                             
                         
December 31,
     
REGULATORY CAPITAL RATIOS
                      2012   2011      
Central Pacific Financial Corp.
                                         
 
Tier 1 risk-based capital
                        22.54 %     22.94 %      
 
Total risk-based capital
                        23.83       24.24        
 
Leverage capital
                        14.32       13.78        
                                             
Central Pacific Bank
                                         
 
Tier 1 risk-based capital
                        21.47 %     21.63 %      
 
Total risk-based capital
                        22.75       22.93        
 
Leverage capital
                        13.65       13.00        
                                             
                         
December 31,
 
%
                          2012   2011  
Change
BALANCE SHEET
                                         
Total assets
                      $ 4,370,368     $ 4,132,865     5.7 %
Loans and leases
                        2,203,944       2,064,447     6.8  
Net loans and leases
                        2,107,531       1,942,354     8.5  
Deposits
                        3,680,772       3,443,528     6.9  
Total shareholders' equity
                        504,822       456,440     10.6  
Book value per common share
                        12.06       10.93     10.3  
Tangible book value per common share
                        11.69       10.48     11.5  
Market value per common share
                        15.59       12.92     20.7  
Tangible common equity ratio (3)
                        11.24 %     10.63 %   5.7  
                                             
   
Three Months Ended
       
Year Ended
     
   
December 31,
 
%
 
December 31,
 
%
    2012   2011  
Change
  2012   2011  
Change
SELECTED AVERAGE BALANCES
                                         
Total assets
$ 4,293,042     $ 4,064,411     5.6 %   $ 4,207,655     $ 4,054,628     3.8 %
Interest-earning assets
  3,983,983       3,787,703     5.2       3,898,677       3,822,410     2.0  
Loans and leases, including loans held for sale
  2,172,818       2,114,686     2.7       2,130,758       2,121,544     0.4  
Other real estate
  28,692       62,685     (54.2 )     46,913       53,033     (11.5 )
Deposits
  3,596,155       3,348,719     7.4       3,532,318       3,212,540     10.0  
Interest-bearing liabilities
  2,879,056       2,846,075     1.2       2,868,352       2,925,423     (2.0 )
Total shareholders' equity
  505,805       448,759     12.7       483,435       371,922     30.0  
 
 

 
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Financial Highlights - December 31, 2012
(Unaudited)
                                           
(in thousands, except per share data)
                     
December 31,
 
%
                          2012   2011  
Change
NONPERFORMING ASSETS
                                         
Nonaccrual loans (including loans held for sale)
                $ 79,332     $ 133,913     (40.8 ) %
Other real estate
                        10,686       61,681     (82.7 )
 
Total nonperforming assets
                        90,018       195,594     (54.0 )
Loans delinquent for 90 days or more (still accruing interest)
              503       28     1696.4  
Restructured loans (still accruing interest)
                31,760       8,263     284.4  
 
Total nonperforming assets, loans delinquent for 90 days or more (still
                       
 
   accruing interest) and restructured loans (still accruing interest)
    $ 122,281     $ 203,885     (40.0 )
                                             
   
Three Months Ended
       
Year Ended
     
   
December 31,
 
%
 
December 31,
 
%
    2012   2011  
Change
  2012   2011  
Change
Loan charge-offs
$ 4,098     $ 11,275     (63.7 ) %   $ 17,429     $ 41,543     (58.0 ) %
Recoveries
  5,866       1,153     408.8       10,634       11,472     (7.3 )
 
Net loan charge-offs
$ (1,768 )   $ 10,122     (117.5 )   $ 6,795     $ 30,071     (77.4 )
Net loan charge-offs to average loans (1)
  (0.33 ) %     1.91 %           0.32 %     1.42 %      
                                             
                         
December 31,
     
                          2012   2011      
ASSET QUALITY RATIOS
                                         
Nonaccrual loans (including loans held for sale) to total loans and leases and                    
     loans held for sale
  3.54 %     6.33 %      
Nonperforming assets to total assets
            2.06       4.73        
Nonperforming assets, loans delinquent for 90 days or more (still accruing interest)
               
  and restructured loans (still accruing interest) to total loans and leases, loans                    
 
held for sale & other real estate
      5.43       9.37        
Allowance for loan and lease losses to total loans and leases
        4.37       5.91        
Allowance for loan and lease losses to nonaccrual loans (including loans held for sale)
  121.53       91.17        
Allowance for loan and lease losses to nonperforming assets
            107.10       62.42        
                                             
(1)
Annualized
                                         
                                             
(2)
The efficiency ratio is a non-GAAP financial measure which should be read and used in conjunction with the Company's GAAP financial information. Comparison of our efficiency ratio with those of other companies may not be possible because other companies may calculate the efficiency ratio differently. Our 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 early extinguishment of debt, 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). See Reconciliation of Non-GAAP Financial Measures.
 
 
(3)
The tangible common equity ratio is a non-GAAP financial measure which should be read and used in conjunction with the Company's GAAP financial information. Comparison of our tangible common equity ratio with those of other companies may not be possible because other companies may calculate the tangible common equity ratio differently. Our tangible common equity ratio is derived by dividing common shareholders' equity, less intangible assets (excluding mortgage servicing rights (MSRs)) by total assets, less intangible assets (excluding MSRs).
 
 
 

 
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
                 
 
Quarter Ended
 
(Dollars in thousands, except per share data)
December 31, 2012
   
September 30, 2012
   
December 31, 2011
 
                 
Efficiency Ratio
               
Total operating expenses as a percentage of net operating revenue
  75.17 %     88.17 %   100.14 %
Amortization of other intangible assets
  (1.56 )     (1.48 )   (1.59 )
Foreclosed asset expense
  8.09       (6.35 )   (6.56 )
Write down of assets
  -       (1.83 )   -  
Loss on early extinguishment of debt
  -       -     -  
Efficiency ratio
  81.70 %     78.51 %   91.99 %
                     
 
Year Ended
       
 
December 31, 2012
   
December 31, 2011
       
                     
Total operating expenses as a percentage of net operating revenue
  83.52 %     103.01 %      
Amortization of other intangible assets
  (2.09 )     (1.72 )      
Foreclosed asset expense
  (1.07 )     (2.73 )      
Write down of assets
  (1.47 )     (2.77 )      
Loss on early extinguishment of debt
  -       (3.73 )      
Efficiency ratio
  78.89 %     92.06 %      
                     
Tangible Common Equity Ratio
December 31, 2012
   
December 31, 2011
       
Total shareholders' equity
$ 504,822     $ 456,440        
Less: Other intangible assets
  (15,378 )     (19,053 )      
Tangible common equity
  489,444       437,387        
                     
Total assets
  4,370,368       4,132,865        
Less: Other intangible assets
  (15,378 )     (19,053 )      
Tangible assets
  4,354,990       4,113,812        
Tangible common equity / Tangible assets
  11.24 %     10.63 %      
 
 
 

 
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
                 
(In thousands, except share data)
December 31,
   
September 30,
   
December 31,
 
 
2012
   
2012
   
2011
 
ASSETS
               
Cash and due from banks
$ 56,473     $ 61,078     $ 76,233  
Interest-bearing deposits in other banks
  120,902       159,595       180,839  
Investment securities:
                     
  Available for sale
  1,536,745       1,499,546       1,492,994  
  Held to maturity (fair value of $162,528 at December 31, 2012,
                     
       $165,012 at September 30, 2012 and $976 at December 31, 2011)
  161,848       163,733       931  
      Total investment securities
  1,698,593       1,663,279       1,493,925  
                       
Loans held for sale
  38,283       24,080       50,290  
Loans and leases
  2,203,944       2,110,163       2,064,447  
  Less allowance for loan and lease losses
  96,413       96,928       122,093  
      Net loans and leases
  2,107,531       2,013,235       1,942,354  
                       
Premises and equipment, net
  48,759       49,424       51,414  
Accrued interest receivable
  13,896       13,198       11,674  
Investment in unconsolidated subsidiaries
  10,975       11,244       12,697  
Other real estate
  10,686       47,378       61,681  
Mortgage servicing rights
  22,121       22,726       22,933  
Other intangible assets
  15,378       16,047       19,053  
Bank-owned life insurance
  147,411       146,680       144,474  
Federal Home Loan Bank stock
  47,928       48,363       48,797  
Other assets
  31,432       33,291       16,501  
      Total assets
$ 4,370,368     $ 4,309,618     $ 4,132,865  
                       
LIABILITIES AND EQUITY
                     
Deposits:
                     
  Noninterest-bearing demand
$ 843,292     $ 803,796     $ 729,149  
  Interest-bearing demand
  672,838       648,331       569,371  
  Savings and money market
  1,186,011       1,177,164       1,136,180  
  Time
  978,631       992,299       1,008,828  
      Total deposits
  3,680,772       3,621,590       3,443,528  
Short-term borrowings
  -       -       34  
Long-tem debt
  108,281       108,285       158,298  
Other liabilities
  66,536       68,738       64,585  
      Total liabilities
  3,855,589       3,798,613       3,666,445  
                       
Equity:
                     
  Preferred stock, no par value, authorized 1,000,000 shares; issued and
                     
        outstanding none at December 31, 2012, September 30, 2012, and
                     
        December 31, 2011
  -       -       -  
  Common stock, no par value, authorized 185,000,000 shares; issued and
                     
        outstanding 41,867,046 shares at December 31, 2012, 41,859,566 shares
                 
        at September 30, 2012 and 41,749,116 shares at December 31, 2011
  784,512       784,512       784,539  
  Surplus
  70,567       69,094       66,585  
  Accumulated deficit
  (349,427 )     (361,837 )     (396,848 )
  Accumulated other comprehensive income (loss)
  (830 )     9,273       2,164  
      Total shareholders' equity
  504,822       501,042       456,440  
Non-controlling interest
  9,957       9,963       9,980  
      Total equity
  514,779       511,005       466,420  
      Total liabilities and equity
$ 4,370,368     $ 4,309,618     $ 4,132,865  
 
 

 
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
                             
 
Three Months Ended
   
Year Ended
 
 
December 31,
   
September 30,
   
December 31,
   
December 31,
 
(In thousands, except per share data)
2012
   
2012
   
2011
   
2012
   
2011
 
                             
Interest income:
                           
  Interest and fees on loans and leases
$ 23,387     $ 24,241     $ 26,097     $ 97,029     $ 107,089  
  Interest and dividends on investment securities:
                                     
        Taxable interest
  6,959       6,641       7,179       28,803       27,559  
        Tax-exempt interest
  965       704       189       2,312       738  
        Dividends
  5       4       4       16       12  
  Interest on deposits in other banks
  73       84       104       285       1,052  
      Total interest income
  31,389       31,674       33,573       128,445       136,450  
                                       
Interest expense:
                                     
  Interest on deposits:
                                     
    Demand
  81       83       94       339       500  
    Savings and money market
  223       232       353       1,006       2,044  
    Time
  784       869       1,288       3,688       7,066  
  Interest on short-term borrowings
  -       -       -       -       204  
  Interest on long-term debt
  911       930       1,026       3,701       8,815  
      Total interest expense
  1,999       2,114       2,761       8,734       18,629  
                                       
      Net interest income
  29,390       29,560       30,812       119,711       117,821  
Provision (credit) for loan and lease losses
  (2,283 )     (4,982 )     (11,215 )     (18,885 )     (40,690 )
      Net interest income after provision for loan and lease losses
  31,673       34,542       42,027       138,596       158,511  
                                       
Other operating income:
                                     
  Service charges on deposit accounts
  1,648       2,130       2,460       8,367       10,024  
  Other service charges and fees
  4,454       4,538       4,286       17,569       17,239  
  Income from fiduciary activities
  669       662       658       2,599       2,794  
  Equity in earnings of unconsolidated subsidiaries
  188       171       157       574       458  
  Fees on foreign exchange
  104       165       180       551       664  
  Investment securities gains
  -       789       1,045       789       1,306  
  Income from bank-owned life insurance
  625       741       1,103       2,899       4,139  
  Loan placement fees
  143       114       193       690       541  
  Net gains on sales of residential loans
  6,011       4,713       3,670       17,095       8,050  
  Other
  (873 )     1,906       1,483       4,611       4,966  
      Total other operating income
  12,969       15,929       15,235       55,744       50,181  
                                       
Other operating expense:
                                     
  Salaries and employee benefits
  17,833       17,256       17,344       69,344       63,675  
  Net occupancy
  3,761       3,629       3,559       13,920       13,793  
  Equipment
  958       1,030       1,070       3,966       4,702  
  Amortization of other intangible assets
  2,689       2,698       2,148       10,179       7,033  
  Communication expense
  886       872       886       3,428       3,517  
  Legal and professional services
  3,189       2,772       3,536       13,824       13,506  
  Computer software expense
  1,109       959       923       3,961       3,629  
  Advertising expense
  884       906       453       3,516       2,961  
  Foreclosed asset expense
  (3,470 )     2,863       2,959       1,888       4,557  
  Write down of assets
  -       827       -       2,586       4,624  
  Loss on early extinguishment of debt
  -       -       -       -       6,234  
  Other
  4,393       5,938       12,289       20,307       43,890  
      Total other operating expense
  32,232       39,750       45,167       146,919       172,121  
                                       
  Income before income taxes
  12,410       10,721       12,095       47,421       36,571  
Income tax expense
  -       -       -       -       -  
      Net income
$ 12,410     $ 10,721     $ 12,095     $ 47,421     $ 36,571  
                                       
Per common share data:
                                     
  Basic earnings per share
$ 0.30     $ 0.26     $ 0.29     $ 1.14     $ 3.36  
  Diluted earnings per share
  0.29       0.26       0.29       1.13       3.31  
                                       
Basic weighted average shares outstanding
  41,766       41,764       41,628       41,720       35,891  
Diluted weighted average shares outstanding
  42,183       42,016       41,709       42,084       36,342  
 
 

 
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Average Balances, Interest Income & Expense, Yields and Rates (Taxable Equivalent)
                                                       
 
Three Months Ended
 
Three Months Ended
 
Year Ended
 
Year Ended
(Dollars in thousands)
December 31, 2012
 
December 31, 2011
 
December 31, 2012
 
December 31, 2011
 
Average
 
Average
     
Average
 
Average
     
Average
 
Average
     
Average
 
Average
   
 
Balance
 
Yield/Rate
 
Interest
 
Balance
 
Yield/Rate
 
Interest
 
Balance
 
Yield/Rate
 
Interest
 
Balance
 
Yield/Rate
 
Interest
Assets:
                                                     
Interest earning assets:
                                                     
Interest-bearing deposits in other banks
$ 115,841   0.25 %   $ 73   $ 162,592   0.25 %   $ 104   $ 114,438   0.25 %   $ 285   $ 412,351   0.26 %   $ 1,052
  Taxable investment securities, excluding
                                                                 
   valuation allowance
  1,489,529   1.87       6,964     1,449,324   1.98       7,183     1,521,164   1.89       28,819     1,227,181   2.25       27,571
Tax-exempt investment securities,
                                                                     
   excluding valuation allowance
  157,536   3.77       1,485     12,304   9.47       291     83,663   4.25       3,557     12,537   9.05       1,135
Loans and leases, including loans held for sale
  2,172,818   4.29       23,387     2,114,686   4.91       26,097     2,130,758   4.55       97,029     2,121,544   5.05       107,089
Federal Home Loan Bank stock
  48,259   -       -     48,797   -       -     48,654   -       -     48,797   -       -
Total interest earning assets
  3,983,983   3.20       31,909     3,787,703   3.54       33,675     3,898,677   3.33       129,690     3,822,410   3.58       136,847
Nonearning assets
  309,059                 276,708                 308,978                 232,218            
Total assets
$ 4,293,042               $ 4,064,411               $ 4,207,655               $ 4,054,628            
                                                                       
Liabilities & Equity:
                                                                     
Interest-bearing liabilities:
                                                                     
Interest-bearing demand deposits
$ 648,630   0.05 %   $ 81   $ 555,624   0.07 %   $ 94   $ 615,960   0.05 %   $ 339   $ 539,519   0.09 %   $ 500
Savings and money market deposits
  1,178,745   0.08       223     1,130,165   0.12       353     1,163,963   0.09       1,006     1,117,183   0.18       2,044
Time deposits under $100,000
  308,619   0.52       405     359,076   0.76       688     326,288   0.59       1,937     395,500   0.99       3,900
Time deposits $100,000 and over
  634,748   0.24       379     611,662   0.39       600     652,339   0.27       1,751     484,734   0.65       3,166
Short-term borrowings
  32   0.63       -     1,878   0.01       -     11   0.67       -     35,810   0.57       204
Long-term debt
  108,282   3.34       911     187,670   2.17       1,026     109,791   3.37       3,701     352,677   2.50       8,815
Total interest-bearing liabilities
  2,879,056   0.28       1,999     2,846,075   0.38       2,761     2,868,352   0.30       8,734     2,925,423   0.64       18,629
Noninterest-bearing deposits
  825,413                 692,192                 773,768                 675,604            
Other liabilities
  72,807                 67,402                 72,131                 71,687            
Total liabilities
  3,777,276                 3,605,669                 3,714,251                 3,672,714            
Shareholders' equity
  505,805                 448,759                 483,435                 371,922            
Non-controlling interest
  9,961                 9,983                 9,969                 9,992            
Total equity
  515,766                 458,742                 493,404                 381,914            
Total liabilities & equity
$ 4,293,042               $ 4,064,411               $ 4,207,655               $ 4,054,628            
                                                                       
Net interest income
            $ 29,910               $ 30,914               $ 120,956               $ 118,218
                                                                       
                                                                       
Net interest margin
      3.00 %  
 
        3.25 %  
 
        3.10 %  
 
        3.09 %