Central Pacific Financial Reports First Quarter Earnings of $16.2 Million
Central Pacific Financial Corp. (NYSE: CPF) (the "Company"), parent company of Central Pacific Bank (the "Bank" or "CPB"), today reported net income for the first quarter of 2023 of $16.2 million, or fully diluted earnings per share ("EPS") of $0.60, compared to net income of $20.2 million, or EPS of $0.74 in the previous quarter and net income of $19.4 million, or EPS of $0.70 in the year-ago quarter.
"We are pleased with our first quarter financial results, highlighted by stable deposit balances, continued solid asset quality and strong liquidity and capital positions," said Arnold Martines, President and Chief Executive Officer. "Despite the recent events affecting the national banking industry, Central Pacific Bank remains financially strong and committed to supporting our customers and community."
Earnings Highlights
Net interest income for the first quarter of 2023 was $54.2 million, which decreased by $2.1 million, or 3.7% from the previous quarter, and increased by $3.3 million, or 6.4% from the year-ago quarter. The sequential quarter decrease in net interest income is primarily due to increases in average balances and rates paid on interest-bearing deposits and borrowings, which outpaced the increases in average loan balances and asset yields.
Net interest margin ("NIM") for the first quarter of 2023 was 3.08%, which decreased by 9 basis points ("bps") from the previous quarter and increased by 11 bps from the year-ago quarter. The sequential quarter decrease in NIM is primarily due to higher rates paid on deposits and borrowings, which outpaced the increase in asset yields. Additional information on average balances, interest income and expenses and yields and rates is presented in Table 4.
In the first quarter of 2023, the Company recorded a provision for credit losses of $1.9 million, compared to a provision of $0.6 million in the previous quarter and a release of credit loss reserves of $3.2 million in the year-ago quarter.
Other operating income for the first quarter of 2023 totaled $11.0 million, compared to $11.6 million in the previous quarter and $9.6 million in the year-ago quarter. The decrease from the previous quarter was primarily due to lower income from bank-owned life insurance of $0.9 million, partially offset by higher income from fiduciary activities of $0.3 million. Additional information on other operating income is presented in Table 3.
Other operating expense for the first quarter of 2023 totaled $42.1 million, compared to $40.4 million in the previous quarter and $38.2 million in the year-ago quarter. The increase in other operating expense was primarily due to higher computer software expense of $0.6 million, higher net occupancy expense of $0.5 million and a higher FDIC insurance assessment of $0.5 million (included in other), partially offset by lower salaries and employee benefits expense of $0.7 million. Additional information on other operating expense is presented in Table 3.
The efficiency ratio for the first quarter of 2023 was 64.58%, compared to 59.56% in the previous quarter and 63.16% in the year-ago quarter.
The effective tax rate for the first quarter of 2023 was 23.8%, compared to 24.9% in the previous quarter and 23.7% in the year-ago quarter.
Balance Sheet Highlights
Total assets at March 31, 2023 of $7.52 billion increased by $88.5 million, or 1.2% from $7.43 billion at December 31, 2022, and increased by $222.4 million, or 3.0% from $7.30 billion at March 31, 2022.
Total loans, net of deferred fees and costs, at March 31, 2023 of $5.56 billion increased by $1.9 million from $5.56 billion at December 31, 2022, and increased by $382.6 million, or 7.4% from $5.17 billion at March 31, 2022. Loans by type and geographic distribution are summarized in Table 5.
Total deposits at March 31, 2023 of $6.75 billion increased by $10.7 million or 0.2% from $6.74 billion at December 31, 2022, and increased by $147.9 million, or 2.2% from $6.60 billion at March 31, 2022. Core deposits, which include demand deposits, savings and money market deposits and time deposits up to $250,000, totaled $5.97 billion at March 31, 2023, and decreased by $103.3 million, or 1.7% from December 31, 2022. Average rates paid on total deposits during the first quarter of 2023 was 0.61%, compared to 0.41% in the previous quarter and 0.06% in the year-ago quarter. At March 31, 2023, approximately 66% of the Company's total deposits were FDIC-insured or fully collateralized. Core deposit and total deposit balances are summarized in Table 6.
At March 31, 2023, the Company had $198.8 million in cash on balance sheet and $2.83 billion in total other liquidity sources, including available borrowing capacity plus unpledged investment securities.
Asset Quality
Nonperforming assets at March 31, 2023 totaled $5.3 million, or 0.07% of total assets, and remained relatively unchanged from December 31, 2022 and March 31, 2022. Additional information on nonperforming assets, past due and restructured loans is presented in Table 7.
Net charge-offs in the first quarter of 2023 totaled $2.3 million, compared to net charge-offs of $1.7 million in the previous quarter, and net charge-offs of $0.4 million in the year-ago quarter. Annualized net charge-offs as a percentage of average loans was 0.16%, 0.12% and 0.03% during the three months ended March 31, 2023, December 31, 2022 and March 31, 2022, respectively.
The allowance for credit losses, as a percentage of total loans at March 31, 2023 was 1.14%, compared to 1.15% at December 31, 2022, and 1.25% at March 31, 2022. Additional information on net charge-offs and recoveries and the allowance for credit losses is presented in Table 8.
Total shareholders' equity was $470.9 million at March 31, 2023, compared to $452.9 million and $486.3 million at December 31, 2022 and March 31, 2022, respectively. The increase in shareholders' equity from the previous quarter was primarily due to net income of $16.2 million and a decline in unrealized losses on our available-for-sale investment securities portfolio which flow through accumulated other comprehensive loss.
During the first quarter of 2023, the Company repurchased 101,760 shares of common stock, at a total cost of $2.2 million, or an average cost per share of $21.67. As of March 31, 2023, $23.8 million remained available for repurchase under the Company's share repurchase program. In March 2023, the Company temporarily suspended share repurchases while market conditions continue to be evaluated.
At March 31, 2023, the Company's leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ratios were 8.6%, 11.5%, 13.6%, and 10.6%, respectively, compared to 8.5%, 11.3%, 13.5%, and 10.5%, respectively, at December 31, 2022.
On April 25, 2023, the Company's Board of Directors declared a quarterly cash dividend of $0.26 per share on its outstanding common shares. The dividend will be payable on June 15, 2023 to shareholders of record at the close of business on May 31, 2023.
During the quarter, CPB was named Lender of the Year (Category 2), by the Small Business Administration. In January 2023, the Bank also launched its unique Friendship Floor, a newly-remodeled co-working hub on the third floor of Central Pacific Plaza, with eight conference rooms and 80 hybrid workspaces and other conveniences to promote employee engagement.
Conference Call
The Company's management will host a conference call today at 1:00 p.m. Eastern Time (7:00 a.m. Hawaii Time) to discuss the quarterly results. Individuals are encouraged to listen to the live webcast of the presentation by visiting the investor relations page of the Company's website at http://ir.cpb.bank. Alternatively, investors may participate in the live call by dialing 1-833-470-1428 (access code: 500446). A playback of the call will be available through May 26, 2023 by dialing 1-866-813-9403 (access code: 402781) and on the Company's website. Information which may be discussed in the conference call is provided in an earnings supplement presentation on the Company's website at http://ir.cpb.bank.
About Central Pacific Financial Corp.
Central Pacific Financial Corp. is a Hawaii-based bank holding company with approximately $7.52 billion in assets as of March 31, 2023. Central Pacific Bank, its primary subsidiary, operates 27 branches and 61 ATMs in the state of Hawaii. For additional information, please visit the Company's website at http://www.cpb.bank.
Equal Housing Lender
Member FDIC
NYSE Listed: CPF
Forward-Looking Statements ("FLS")
This document may contain FLS concerning: projections of revenues, expenses, income or loss, earnings or loss per share, capital expenditures, the payment or nonpayment of dividends, capital position, credit losses, net interest margin or other financial items; statements of plans, objectives and expectations of Central Pacific Financial Corp. or its management or Board of Directors, including those relating to business plans, use of capital resources, products or services and regulatory developments and regulatory actions; statements of future economic performance including anticipated performance results from our business initiatives; or any statements of the assumptions underlying or relating to any of the foregoing. Words such as "believes," "plans," "anticipates," "expects," "intends," "forecasts," "hopes," "targeting," "continue," "remain," "will," "should," "estimates," "may" and other similar expressions are intended to identify FLS but are not the exclusive means of identifying such statements.
While we believe that our FLS and the assumptions underlying them are reasonably based, such statements and assumptions are by their nature subject to risks and uncertainties, and thus could later prove to be inaccurate or incorrect. Accordingly, actual results could differ materially from those statements or projections for a variety of reasons, including, but not limited to: the effects of inflation and rising interest rates; the adverse effects of recent bank failures and the potential impact of such developments on customer confidence, deposit behavior, liquidity and regulatory responses thereto; the adverse effects of the COVID-19 pandemic virus (and ongoing pandemic variants) on local, national and international economies, including, but not limited to, the adverse impact on tourism and construction in the State of Hawaii, our borrowers, customers, third-party contractors, vendors and employees; supply chain disruptions; the increase in inventory or adverse conditions in the real estate market and deterioration in the construction industry; adverse changes in the financial performance and/or condition of our borrowers and, as a result, increased loan delinquency rates, deterioration in asset quality, and losses in our loan portfolio; our ability to achieve the objectives of our RISE2020 initiative; our ability to successfully implement and achieve the objectives of our Banking-as-a-Service ("BaaS") initiatives, including adoption of the initiatives by customers and risks faced by any of our bank collaborations including reputational and regulatory risk; the impact of local, national, and international economies and events (including natural disasters such as wildfires, volcanic eruptions, hurricanes, tsunamis, storms, earthquakes and pandemic viruses and diseases) on the Company's business and operations and on tourism, the military, and other major industries operating within the Hawaii market and any other markets in which the Company does business; deterioration or malaise in domestic economic conditions, including any destabilization in the financial industry and deterioration of the real estate market, as well as the impact of declining levels of consumer and business confidence in the state of the economy in general and in financial institutions in particular; changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), changes in capital standards, other regulatory reform and federal and state legislation, including but not limited to regulations promulgated by the Consumer Financial Protection Bureau (the "CFPB"), government-sponsored enterprise reform, and any related rules and regulations which affect our business operations and competitiveness; the costs and effects of legal and regulatory developments, including legal proceedings or regulatory or other governmental inquiries and proceedings and the resolution thereof, the results of regulatory examinations or reviews and the effect of, and our ability to comply with, any regulations or regulatory orders or actions we are or may become subject to; ability to successfully implement our initiatives to lower our efficiency ratio; the effects of and changes in trade, monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System (the "FRB" or the "Federal Reserve"); securities market and monetary fluctuations, including the replacement of the London Interbank Offered Rate ("LIBOR") Index and the impact on our loans and debt which are tied to that index and uncertainties regarding potential alternative reference rates, including the Secured Overnight Financing Rate ("SOFR"); negative trends in our market capitalization and adverse changes in the price of the Company's common stock; political instability; acts of war or terrorism; changes in consumer spending, borrowings and savings habits; failure to maintain effective internal control over financial reporting or disclosure controls and procedures; cybersecurity and data privacy breaches and the consequence therefrom; the ability to address deficiencies in our internal controls over financial reporting or disclosure controls and procedures; technological changes and developments; changes in the competitive environment among financial holding companies and other financial service providers; the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board ("PCAOB"), the Financial Accounting Standards Board ("FASB") and other accounting standard setters and the cost and resources required to implement such changes; our ability to attract and retain key personnel; changes in our personnel, organization, compensation and benefit plans; and our success at managing the risks involved in the foregoing items.
For further information with respect to factors that could cause actual results to materially differ from the expectations or projections stated in the FLS, please see the Company's publicly available Securities and Exchange Commission filings, including the Company's Form 10-K for the last fiscal year and, in particular, the discussion of "Risk Factors" set forth therein. We urge investors to consider all of these factors carefully in evaluating the FLS contained in this document. FLS speak only as of the date on which such statements are made. We undertake no obligation to update any FLS to reflect events or circumstances after the date on which such statements are made, or to reflect the occurrence of unanticipated events except as required by law.
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Financial Highlights
(Unaudited)
TABLE 1
Three Months Ended
(Dollars in thousands,
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
except for per share amounts)
2023
2022
2022
2022
2022
CONDENSED INCOME STATEMENT
Net interest income
$
54,196
$
56,285
$
55,365
$
52,978
$
50,935
Provision (credit) for credit losses
1,852
571
362
989
(3,195
)
Total other operating income
11,009
11,601
9,629
17,138
9,551
Total other operating expense
42,107
40,434
41,998
45,349
38,205
Income tax expense
5,059
6,700
5,919
6,184
6,038
Net income
16,187
20,181
16,715
17,594
19,438
Basic earnings per common share
$
0.60
$
0.74
$
0.61
$
0.64
$
0.70
Diluted earnings per common share
0.60
0.74
0.61
0.64
0.70
Dividends declared per common share
0.26
0.26
0.26
0.26
0.26
PERFORMANCE RATIOS
Return on average assets (ROA) [1]
0.87
%
1.09
%
0.91
%
0.96
%
1.06
%
Return on average shareholders’ equity (ROE) [1]
13.97
18.30
14.49
14.93
14.44
Average shareholders’ equity to average assets
6.23
5.97
6.30
6.45
7.34
Efficiency ratio [2]
64.58
59.56
64.62
64.68
63.16
Net interest margin (NIM) [1]
3.08
3.17
3.17
3.05
2.97
Dividend payout ratio [3]
43.33
35.14
42.62
40.63
37.14
SELECTED AVERAGE BALANCES
Average loans, including loans held for sale
$
5,525,988
$
5,498,800
$
5,355,088
$
5,221,300
$
5,114,260
Average interest-earning assets
7,112,377
7,103,841
6,991,773
6,982,556
6,933,007
Average assets
7,443,767
7,389,712
7,320,751
7,309,939
7,341,850
Average deposits
6,655,660
6,673,922
6,535,321
6,626,462
6,581,593
Average interest-bearing liabilities
4,820,660
4,708,045
4,538,893
4,442,172
4,429,114
Average shareholders’ equity
463,556
441,084
461,328
471,420
538,601
[1]
ROA and ROE are annualized based on a 30/360 day convention. Annualized net interest income and expense in the NIM calculation are based on the day count interest payment conventions at the interest-earning asset or interest-bearing liability level (i.e. 30/360, actual/actual).
[2]
Efficiency ratio is defined as total operating expense divided by total revenue (net interest income and total other operating income).
[3]
Dividend payout ratio is defined as dividends declared per share divided by diluted earnings per share.
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Financial Highlights
(Unaudited)
TABLE 1 (CONTINUED)
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
2023
2022
2022
2022
2022
REGULATORY CAPITAL RATIOS
Central Pacific Financial Corp.
8.6
%
8.5
%
8.7
%
8.6
%
8.5
%
Tier 1 risk-based capital ratio
11.5
11.3
11.5
11.6
11.9
Total risk-based capital ratio
13.6
13.5
13.7
13.9
14.2
Common equity tier 1 capital ratio
10.6
10.5
10.6
10.7
10.9
Central Pacific Bank
9.0
9.0
9.1
9.0
9.0
Tier 1 risk-based capital ratio
12.0
11.9
12.2
12.2
12.6
Total risk-based capital ratio
13.2
13.1
13.4
13.5
13.8
Common equity tier 1 capital ratio
12.0
11.9
12.2
12.2
12.6
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
(dollars in thousands, except for per share amounts)
2023
2022
2022
2022
2022
BALANCE SHEET
Total loans, net of deferred fees and costs
$
5,557,397
$
5,555,466
$
5,422,212
$
5,301,633
$
5,174,837
Total assets
7,521,247
7,432,763
7,337,631
7,299,178
7,298,819
Total deposits
6,746,968
6,736,223
6,556,434
6,622,061
6,599,031
Long-term debt
155,920
105,859
105,799
105,738
105,677
Total shareholders’ equity
470,926
452,871
438,468
455,100
486,328
Total shareholders’ equity to total assets
6.26
%
6.09
%
5.98
%
6.23
%
6.66
%
ASSET QUALITY
Allowance for credit losses (ACL)
$
63,099
$
63,738
$
64,382
$
65,211
$
64,754
Nonaccrual loans
5,313
5,251
4,220
4,983
5,336
Non-performing assets (NPA)
5,313
5,251
4,220
4,983
5,336
ACL to total loans
1.14
%
1.15
%
1.19
%
1.23
%
1.25
%
ACL to nonaccrual loans
1,187.63
%
1,213.83
%
1,525.64
%
1,308.67
%
1,213.53
%
NPA to total assets
0.07
%
0.07
%
0.06
%
0.07
%
0.07
%
PER SHARE OF COMMON STOCK OUTSTANDING
Book value per common share
$
17.44
$
16.76
$
16.08
$
16.57
$
17.63
Closing market price per common share
17.90
20.28
20.69
21.45
27.90
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
TABLE 2
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
(Dollars in thousands, except share data)
2023
2022
2022
2022
2022
ASSETS
Cash and due from financial institutions
$
108,535
$
97,150
$
116,365
$
108,389
$
83,947
Interest-bearing deposits in other financial institutions
90,247
14,894
22,332
22,741
118,183
Investment securities:
Available-for-sale debt securities, at fair value
687,188
671,794
686,681
787,373
1,199,482
Held-to-maturity debt securities, at amortized cost; fair value of: $599,300 at March 31, 2023, $596,780 at December 31, 2022, $590,880 at September 30, 2022, $635,565 at June 30, 2022, and $329,503 at March 31, 2022
658,596
664,883
662,827
663,365
329,507
Total investment securities
1,345,784
1,336,677
1,349,508
1,450,738
1,528,989
Loans held for sale
—
1,105
1,701
535
4,677
Loans, net of deferred fees and costs
5,557,397
5,555,466
5,422,212
5,301,633
5,174,837
Less: allowance for credit losses
63,099
63,738
64,382
65,211
64,754
Loans, net of allowance for credit losses
5,494,298
5,491,728
5,357,830
5,236,422
5,110,083
Premises and equipment, net
93,761
91,634
89,979
88,664
79,455
Accrued interest receivable
20,473
20,345
18,134
17,146
16,423
Investment in unconsolidated entities
45,953
46,641
36,769
37,341
31,092
Mortgage servicing rights
8,943
9,074
9,216
9,369
9,480
Bank-owned life insurance
168,244
167,967
167,761
167,202
167,407
Federal Home Loan Bank ("FHLB") stock
11,960
9,146
13,546
8,943
8,943
Right of use lease asset
34,237
34,985
35,978
36,978
38,435
Other assets
98,812
111,417
118,512
114,710
101,705
Total assets
$
7,521,247
$
7,432,763
$
7,337,631
$
7,299,178
$
7,298,819
LIABILITIES
Deposits:
Noninterest-bearing demand
$
2,028,087
$
2,092,823
$
2,138,083
$
2,282,967
$
2,269,562
Interest-bearing demand
1,386,913
1,453,167
1,441,302
1,444,566
1,433,284
Savings and money market
2,184,675
2,199,028
2,194,991
2,214,146
2,197,647
Time
1,147,293
991,205
782,058
680,382
698,538
Total deposits
6,746,968
6,736,223
6,556,434
6,622,061
6,599,031
FHLB advances and other short-term borrowings
25,000
5,000
115,000
—
—
Long-term debt, net of unamortized debt issuance costs of: $627 at March 31, 2023, $688 at December 31, 2022, $748 at September 30, 2022, $809 at June 30, 2022 and $870 at March 31, 2022
155,920
105,859
105,799
105,738
105,677
Lease liability
35,076
35,889
36,941
38,037
39,610
Other liabilities
87,357
96,921
84,989
78,242
68,123
Total liabilities
7,050,321
6,979,892
6,899,163
6,844,078
6,812,441
EQUITY
Shareholders' equity:
Preferred stock, no par value, authorized 1,000,000 shares; issued and outstanding: none at March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022, and March 31, 2022
—
—
—
—
—
Common stock, no par value, authorized 185,000,000 shares; issued and outstanding: 27,005,545 at March 31, 2023, 27,025,070 at December 31, 2022, 27,262,879 at September 30, 2022, 27,463,562 at June 30, 2022, and 27,584,929 at March 31, 2022
405,866
408,071
412,994
417,862
421,153
Additional paid-in capital
101,188
101,346
100,426
98,977
98,270
Retained earnings
96,600
87,438
74,301
64,693
54,252
Accumulated other comprehensive loss
(132,728
)
(143,984
)
(149,253
)
(126,432
)
(87,347
)
Total shareholders' equity
470,926
452,871
438,468
455,100
486,328
Non-controlling interest
—
—
—
—
50
Total equity
470,926
452,871
438,468
455,100
486,378
Total liabilities and equity
$
7,521,247
$
7,432,763
$
7,337,631
$
7,299,178
$
7,298,819
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
TABLE 3
Three Months Ended
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
(Dollars in thousands, except per share data)
2023
2022
2022
2022
2022
Interest income:
Interest and fees on loans
$
58,269
$
56,682
$
51,686
$
46,963
$
44,949
Interest and dividends on investment securities:
Taxable investment securities
7,336
7,104
6,933
7,035
6,969
Tax-exempt investment securities
790
776
805
807
816
Dividend income on investment securities
—
—
—
—
21
Interest on deposits in other financial institutions
277
370
107
191
72
136
105
138
68
59
Total interest income
66,808
65,037
59,669
55,064
52,886
Interest expense:
Interest on deposits:
363
333
217
144
112
Savings and money market
3,386
2,488
1,054
317
329
Time
6,264
4,063
1,092
490
469
Interest on short-term borrowings
761
393
660
2
—
Interest on long-term debt
1,838
1,475
1,281
1,133
1,041
Total interest expense
12,612
8,752
4,304
2,086
1,951
Net interest income
54,196
56,285
55,365
52,978
50,935
Provision (credit) for credit losses
1,852
571
362
989
(3,195
)
Net interest income after provision (credit) for credit losses
52,344
55,714
55,003
51,989
54,130
Other operating income:
Mortgage banking income
526
667
831
1,140
1,172
Service charges on deposit accounts
2,111
2,172
2,138
2,026
1,861
Other service charges and fees
4,985
4,972
4,955
4,610
4,488
Income from fiduciary activities
1,321
1,058
1,165
1,188
1,154
Net gain on sales of investment securities
—
—
—
8,506
—
Income from bank-owned life insurance
1,291
2,187
167
(1,028
)
539
Other
775
545
373
696
337
Total other operating income
11,009
11,601
9,629
17,138
9,551
Other operating expense:
Salaries and employee benefits
22,023
22,692
22,778
22,369
20,942
Net occupancy
4,474
3,998
4,743
4,448
3,774
Equipment
946
996
1,085
1,075
1,082
Communication
778
696
712
744
806
Legal and professional services
2,886
2,677
2,573
2,916
2,626
Computer software
4,606
3,996
4,138
3,624
3,082
Advertising
933
701
1,150
1,150
1,150
Other
5,461
4,678
4,819
9,023
4,743
Total other operating expense
42,107
40,434
41,998
45,349
38,205
21,246
26,881
22,634
23,778
25,476
Income tax expense
5,059
6,700
5,919
6,184
6,038
Net income
$
16,187
$
20,181
$
16,715
$
17,594
$
19,438
Per common share data:
Basic earnings per share
$
0.60
$
0.74
$
0.61
$
0.64
$
0.70
Diluted earnings per share
0.60
0.74
0.61
0.64
0.70
Cash dividends declared
0.26
0.26
0.26
0.26
0.26
Basic weighted average shares outstanding
26,999,138
27,134,970
27,356,614
27,516,284
27,591,390
Diluted weighted average shares outstanding
27,122,012
27,303,249
27,501,212
27,676,619
27,874,924
Note: Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period.
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Average Balances, Interest Income Expense, Yields and Rates (Taxable Equivalent)
(Unaudited)
TABLE 4
Three Months Ended
Three Months Ended
Three Months Ended
March 31, 2023
December 31, 2022
March 31, 2022
Average
Average
Average
Average
Average
Average
(Dollars in thousands)
Balance
Yield/Rate
Interest
Balance
Yield/Rate
Interest
Balance
Yield/Rate
Interest
ASSETS
Interest-earning assets:
Interest-bearing deposits in other financial institutions
$
24,957
4.51
%
$
277
$
38,610
3.80
%
$
370
$
157,861
0.18
%
$
72
Investment securities, excluding valuation allowance:
Taxable
1,395,985
2.10
7,336
1,399,627
2.03
7,104
1,489,538
1.88
6,990
Tax-exempt [1]
153,067
2.61
1,000
156,079
2.52
982
163,352
2.53
1,033
Total investment securities
1,549,052
2.15
8,336
1,555,706
2.08
8,086
1,652,890
1.94
8,023
Loans, including loans held for sale
5,525,988
4.26
58,269
5,498,800
4.10
56,682
5,114,260
3.54
44,949
Federal Home Loan Bank stock
12,380
4.40
136
10,725
3.90
105
7,996
2.98
59
Total interest-earning assets
7,112,377
3.80
67,018
7,103,841
3.66
65,243
6,933,007
3.09
53,103
Noninterest-earning assets
331,390
285,871
408,843
Total assets
$
7,443,767
$
7,389,712
$
7,341,850
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits
$
1,415,155
0.10
%
$
363
$
1,441,787
0.09
%
$
333
$
1,425,303
0.03
%
$
112
Savings and money market deposits
2,182,942
0.63
3,386
2,209,166
0.45
2,488
2,212,426
0.06
329
Time deposits up to $250,000
341,396
2.22
1,870
311,639
1.50
1,174
223,661
0.28
156
Time deposits over $250,000
689,432
2.58
4,394
595,133
1.93
2,889
462,087
0.28
313
Total interest-bearing deposits
4,628,925
0.88
10,013
4,557,725
0.60
6,884
4,323,477
0.09
910
Federal Home Loan Bank advances and other short-term borrowings
64,462
4.79
761
44,491
3.51
393
—
—
—
Long-term debt
127,273
5.86
1,838
105,829
5.53
1,475
105,637
4.00
1,041
Total interest-bearing liabilities
4,820,660
1.06
12,612
4,708,045
0.74
8,752
4,429,114
0.18
1,951
Noninterest-bearing deposits
2,026,735
2,116,197
2,258,116
Other liabilities
132,816
124,386
115,971
Total liabilities
6,980,211
6,948,628
6,803,201
Shareholders’ equity
463,556
441,084
538,601
Non-controlling interest
—
—
48
Total equity
463,556
441,084
538,649
Total liabilities and equity
$
7,443,767
$
7,389,712
$
7,341,850
Net interest income
$
54,406
$
56,491
$
51,152
Interest rate spread
2.74
%
2.92
%
2.91
%
Net interest margin
3.08
%
3.17
%
2.97
%
[1]
Interest income and resultant yield information for tax-exempt investment securities is expressed on a taxable-equivalent basis using a federal statutory tax rate of 21%.
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Loans by Geographic Distribution
(Unaudited)
TABLE 5
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
(Dollars in thousands)
2023
2022
2022
2022
2022
HAWAII:
Commercial, financial and agricultural:
SBA Paycheck Protection Program
$
1,821
$
2,555
$
5,208
$
19,469
$
43,380
Other
375,158
383,665
358,805
367,676
407,559
Real estate:
Construction
154,303
150,208
138,724
134,103
122,329
Residential mortgage
1,941,230
1,940,999
1,923,068
1,890,783
1,874,048
Home equity
743,908
739,380
719,399
698,209
676,326
Commercial mortgage
1,030,086
1,029,708
1,002,874
994,405
927,241
Consumer
342,922
346,789
347,388
341,213
337,188
Total loans, net of deferred fees and costs
4,589,428
4,593,304
4,495,466
4,445,858
4,388,071
Allowance for credit losses
(44,062
)
(45,169
)
(47,814
)
(51,374
)
(51,521
)
Loans, net of allowance for credit losses
$
4,545,366
$
4,548,135
$
4,447,652
$
4,394,484
$
4,336,550
U.S. MAINLAND: [1]
Commercial, financial and agricultural:
SBA Paycheck Protection Program
$
—
$
—
$
—
$
712
$
851
Other
179,906
160,282
158,474
156,567
136,857
Real estate:
Construction
27,171
16,515
12,872
10,935
988
Commercial mortgage
331,546
333,367
332,872
309,230
316,258
Consumer
429,346
451,998
422,528
378,331
331,812
Total loans, net of deferred fees and costs
967,969
962,162
926,746
855,775
786,766
Allowance for credit losses
(19,037
)
(18,569
)
(16,568
)
(13,837
)
(13,233
)
Loans, net of allowance for credit losses
$
948,932
$
943,593
$
910,178
$
841,938
$
773,533
TOTAL:
Commercial, financial and agricultural:
SBA Paycheck Protection Program
$
1,821
$
2,555
$
5,208
$
20,181
$
44,231
Other
555,064
543,947
517,279
524,243
544,416
Real estate:
Construction
181,474
166,723
151,596
145,038
123,317
Residential mortgage
1,941,230
1,940,999
1,923,068
1,890,783
1,874,048
Home equity
743,908
739,380
719,399
698,209
676,326
Commercial mortgage
1,361,632
1,363,075
1,335,746
1,303,635
1,243,499
Consumer
772,268
798,787
769,916
719,544
669,000
Total loans, net of deferred fees and costs
5,557,397
5,555,466
5,422,212
5,301,633
5,174,837
Allowance for credit losses
(63,099
)
(63,738
)
(64,382
)
(65,211
)
(64,754
)
Loans, net of allowance for credit losses
$
5,494,298
$
5,491,728
$
5,357,830
$
5,236,422
$
5,110,083
[1]
U.S. Mainland includes territories of the United States.
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Deposits
(Unaudited)
TABLE 6
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
(Dollars in thousands)
2023
2022
2022
2022
2022
Noninterest-bearing demand
$
2,028,087
$
2,092,823
$
2,138,083
$
2,282,967
$
2,269,562
Interest-bearing demand
1,386,913
1,453,167
1,441,302
1,444,566
1,433,284
Savings and money market
2,184,675
2,199,028
2,194,991
2,214,146
2,197,647
Time deposits less than $100,000
188,289
181,547
153,238
129,103
132,712
Other time deposits $100,000 to $250,000
183,861
148,601
108,723
84,840
87,838
Core deposits
5,971,825
6,075,166
6,036,337
6,155,622
6,121,043
Government time deposits
360,501
290,057
195,057
165,000
188,000
Other time deposits greater than $250,000
414,642
371,000
325,040
301,439
289,988
Total time deposits greater than $250,000
775,143
661,057
520,097
466,439
477,988
Total deposits
$
6,746,968
$
6,736,223
$
6,556,434
$
6,622,061
$
6,599,031
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Nonperforming Assets, Past Due and Restructured Loans
(Unaudited)
TABLE 7
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
(Dollars in thousands)
2023
2022
2022
2022
2022
Nonaccrual loans:
Commercial, financial and agricultural - Other
$
264
$
297
$
277
$
333
$
293
Real estate:
Residential mortgage
3,445
3,808
2,771
3,490
3,804
Home equity
712
570
584
592
820
Commercial mortgage
77
—
—
—
—
Consumer
815
576
588
568
419
Total nonaccrual loans
5,313
5,251
4,220
4,983
5,336
Other real estate owned ("OREO"):
Real estate:
Residential mortgage
—
—
—
—
—
Total OREO
—
—
—
—
—
Total nonperforming assets ("NPAs")
5,313
5,251
4,220
4,983
5,336
Loans delinquent for 90 days or more still accruing interest:
Commercial, financial and agricultural:
SBA PPP
—
13
—
—
—
Other
—
26
669
309
592
Real estate:
Residential mortgage
—
559
503
—
111
Consumer
1,908
1,240
623
842
621
Total loans delinquent for 90 days or more still accruing interest
1,908
1,838
1,795
1,151
1,324
Restructured loans still accruing interest:
Real estate:
Residential mortgage
1,376
1,845
2,030
2,006
2,751
Commercial mortgage
846
886
925
965
1,004
Consumer
54
62
69
76
83
Total restructured loans still accruing interest
2,276
2,793
3,024
3,047
3,838
Total NPAs and loans delinquent for 90 days or more and restructured loans still accruing interest
$
9,497
$
9,882
$
9,039
$
9,181
$
10,498
Total nonaccrual loans as a percentage of total loans
0.10
%
0.09
%
0.08
%
0.09
%
0.10
%
Total NPAs as a percentage of total loans and OREO
0.10
%
0.09
%
0.08
%
0.09
%
0.10
%
Total NPAs and loans delinquent for 90 days or more still accruing interest as a percentage of total loans and OREO
0.13
%
0.13
%
0.11
%
0.12
%
0.13
%
Total NPAs, loans delinquent for 90 days or more and restructured loans still accruing interest as a percentage of total loans and OREO
0.17
%
0.18
%
0.17
%
0.17
%
0.20
%
Quarter-to-quarter changes in NPAs:
Balance at beginning of quarter
$
5,251
$
4,220
$
4,983
$
5,336
$
5,881
Additions
1,626
2,162
1,072
1,881
1,659
Reductions:
Payments
(857
)
(198
)
(329
)
(285
)
(1,598
)
Return to accrual status
(15
)
(44
)
(616
)
(979
)
(38
)
Charge-offs, valuation and other adjustments
(692
)
(889
)
(890
)
(970
)
(568
)
Total reductions
(1,564
)
(1,131
)
(1,835
)
(2,234
)
(2,204
)
Balance at end of quarter
$
5,313
$
5,251
$
4,220
$
4,983
$
5,336
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Allowance for Credit Losses on Loans
(Unaudited)
TABLE 8
Three Months Ended
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
(Dollars in thousands)
2023
2022
2022
2022
2022
Allowance for credit losses ("ACL"):
ACL at beginning of period
$
63,738
$
64,382
$
65,211
$
64,754
$
68,097
Provision (credit) for credit losses on loans
1,615
1,032
731
1,456
(2,931
)
Charge-offs:
Commercial, financial and agricultural - Other
779
678
550
487
254
Consumer
2,686
1,881
1,912
1,390
1,216
Total charge-offs
3,465
2,559
2,462
1,877
1,470
Recoveries:
Commercial, financial and agricultural - Other
250
210
220
215
350
Real estate:
Construction
—
—
14
62
—
Residential mortgage
53
133
14
36
112
Home equity
—
—
36
—
—
Consumer
908
540
618
565
596
Total recoveries
1,211
883
902
878
1,058
Net charge-offs
2,254
1,676
1,560
999
412
ACL at end of period
$
63,099
$
63,738
$
64,382
$
65,211
$
64,754
Average loans, net of deferred fees and costs
$
5,525,988
$
5,498,800
$
5,355,088
$
5,221,300
$
5,114,260
Annualized ratio of net charge-offs to average loans
0.16
%
0.12
%
0.12
%
0.08
%
0.03
%
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