Central Pacific Financial Corp. Reports Earnings Of $12.2 Million For The Fourth Quarter And $47.0 Million For The 2016 Year

Central Pacific Financial Corp. Reports Earnings Of $12.2 Million For The Fourth Quarter And $47.0 Million For The 2016 Year

PR Newswire

HONOLULU, Jan. 25, 2017 /PRNewswire/ --

  • Net income of $12.2 million, or fully diluted EPS of $0.39 during the quarter. Net income of $47.0 million, or fully diluted EPS of $1.50 for the year ended December 31, 2016.
  • ROA of 0.92% and ROE of 9.46% during the quarter. ROA of 0.90% and ROE of 9.16% for the year ended December 31, 2016.
  • Total loans increased by $85.2 million, or 2.5%, during the quarter and by $313.4 million, or 9.8% during the year.
  • Total deposits increased by $89.6 million, or 2.0% during the quarter and by $174.8 million, or 3.9% during the year.

Central Pacific Financial Corp. (NYSE: CPF), (the "Company"), today reported net income  in the fourth quarter of 2016 of $12.2 million, or diluted earnings per share ("EPS") of $0.39, compared to net income in the fourth quarter of 2015 of $10.9 million, or EPS of $0.34, and net income in the third quarter of 2016 of $11.5 million, or EPS of $0.37. For the year ended December 31, 2016, net income was $47.0 million, or EPS of $1.50, compared to net income of $45.9 million, or EPS of $1.40 in 2015.

Central Pacific Financial Corp. Logo

"We are pleased to have a very good end to 2016, and are pleased to report strong loan and deposit growth for the year, along with year-over-year improvement in net income and efficiency ratio," said Catherine Ngo, President and CEO of Central Pacific Financial Corp. "With a positive market environment and a continued focus on customer relationships, our consistent financial performance has allowed us to continue stock repurchases and quarterly cash dividends."

On January 24, 2017, the Company's Board of Directors declared a quarterly cash dividend of $0.16 per share on its outstanding common shares. The dividend will be payable on March 15, 2017 to shareholders of record at the close of business on February 28, 2017.

During the fourth quarter of 2016, the Company repurchased 159,900 shares of common stock at a total cost of $4.1 million. The average cost per share was $25.78. During the year ended December 31, 2016, the Company repurchased a total of 796,822 shares of common stock, or approximately 2.5% of its common stock outstanding as of December 31, 2015 for a total cost of $18.2 million.

On January 24, 2017, the Company's Board of Directors also authorized the repurchase of up to $30 million of its common stock from time to time in the open market or in privately negotiated transactions, pursuant to a newly authorized share repurchase program (the "2017 Repurchase Plan"). The 2017 Repurchase Plan replaces and supersedes in its entirety the share repurchase program previously approved by the Company's Board of Directors, which had $11.8 million in remaining repurchase authority at December 31, 2016.

Earnings Highlights
Net interest income for the fourth quarter of 2016 was $39.7 million, compared to $38.2 million in the year-ago quarter and $39.4 million in the previous quarter. Net interest margin was 3.22%, compared to 3.30% in the year-ago quarter and 3.25% in the previous quarter. Steady loan portfolio growth continues to support net interest income, however, the investment securities portfolio yields have declined due to higher premium amortization on mortgage backed securities. Additionally, funding costs related to time deposits and borrowings have increased slightly with the recent increase in the Fed Funds rate. The Company's checking and savings deposits, which represent over 70% of its average total liabilities, are less volatile during periods of rising market interest rates.

Other operating income for the fourth quarter of 2016 totaled $13.8 million, compared to $9.0 million in the year-ago quarter and $10.0 million in the previous quarter. The increase from the year-ago quarter was primarily due to a $3.5 million gain on the sale of the Company's fee interest in a former branch location. In addition, the Company recorded higher mortgage banking income of $0.9 million compared to the year-ago quarter, primarily attributable to higher net gains on sales of residential mortgage loans of $0.8 million. The sequential quarter increase was primarily due to the aforementioned $3.5 million gain on sale of property.

Other operating expense for the fourth quarter of 2016 totaled $37.5 million, compared to $31.7 million in the year-ago quarter and $32.3 million in the previous quarter. The increases from the year-ago and previous quarters were primarily attributable to higher pension expense included in salaries and employee benefits. In the fourth quarter of 2016, the Company executed a defined benefit pension plan de-risking strategy whereby the Company purchased non-participating annuity contracts to settle the pension obligation for a portion of its plan participants. This resulted in the immediate recognition of $3.8 million in net actuarial losses during the quarter. In addition to the higher pension expense, the Company recognized a $0.7 million charge (included in other) related to the early termination of a lease.

The efficiency ratio for the fourth quarter of 2016 was 70.08%, an increase from 67.24% in the year-ago quarter and 65.34% in the previous quarter. The efficiency ratio during the current quarter was negatively impacted by the aforementioned charges related to the pension obligation settlement and lease termination completed during the quarter, partially offset by the $3.5 million gain on sale of property. The efficiency ratio for the year ended December 31, 2016 was 66.69%, which declined from 2015 of 68.92% and reflects management's continued priority and focus on revenue generation and expense management.

In the fourth quarter of 2016, the Company recorded income tax expense of $6.4 million, compared to $6.5 million in the year-ago quarter and $6.4 million in the previous quarter. The effective tax rate for the fourth quarter of 2016 was 34.5%, compared to 37.2% in the year-ago quarter and 35.8% in the previous quarter.

Balance Sheet Highlights
Total assets at December 31, 2016 of $5.38 billion increased by $252.9 million from December 31, 2015, and increased by $64.3 million from September 30, 2016.

Total loans and leases at December 31, 2016 of $3.52 billion increased by $313.4 million, or 9.8% and $85.2 million, or 2.5% from December 31, 2015 and September 30, 2016, respectively.  Total loans and leases grew from December 31, 2015 across all major categories, with the exception of the commercial loan portfolio which declined by $10.6 million due to a planned reduction in the mainland commercial loan portfolio. The growth in total loans and leases from the third quarter of 2016 was due to strong loan origination activities with significant net increases in the residential mortgage loan portfolio of $56.5 million and commercial mortgage loan portfolio of $22.7 million.

Total deposits at December 31, 2016 of $4.61 billion increased by $174.8 million from December 31, 2015, and increased by $89.6 million from September 30, 2016.  Core deposits, which include demand deposits, savings and money market deposits, and time deposits less than $100,000, totaled $3.71 billion at December 31, 2016.  This represents an increase of $131.4 million from December 31, 2015, and an increase of $92.3 million from September 30, 2016.

Asset Quality
Nonperforming assets at December 31, 2016 totaled $9.2 million, or 0.17% of total assets, compared to $16.2 million, or 0.32% of total assets at December 31, 2015, and $11.7 million, or 0.22% of total assets at September 30, 2016. The sequential quarter decrease was primarily attributable to the payoff of a single borrower of $2.1 million.

Loans delinquent for 90 days or more still accruing interest totaled $1.4 million at December 31, 2016, compared to $0.3 million and $0.4 million at December 31, 2015 and September 30, 2016, respectively. The increases from December 31, 2015 and September 30, 2016 were primarily attributable to the addition of a single borrower of $1.1 million.

Net charge-offs in the fourth quarter of 2016 totaled $0.1 million, compared to net charge-offs of $1.4 million in the year-ago quarter, and net charge-offs of $0.6 million in the previous quarter. Net charge-offs in the fourth quarter of 2016 included a $0.9 million recovery from a commercial mortgage borrower.

In the fourth quarter of 2016, the Company recorded a credit to the provision for loan and lease losses of $2.6 million, compared to a credit of $2.0 million in the year-ago quarter and a credit of $0.7 million in the previous quarter. The credit to the provision for loan and lease losses in the fourth quarter of 2016 was primarily attributable to improving trends in credit quality and the aforementioned recovery of a commercial mortgage loan. After this credit, the allowance for loan and lease losses, as a percentage of total loans and leases at December 31, 2016 was 1.61%, compared to 1.97% at December 31, 2015 and 1.73% at September 30, 2016.

Capital
Total shareholders' equity was $504.7 million at December 31, 2016, compared to $494.6 million and $519.5 million at December 31, 2015 and September 30, 2016, respectively.

The Company maintained its strong capital position and its capital ratios continue to exceed the levels required to be considered a "well-capitalized" institution for regulatory purposes under Basel III. At December 31, 2016, the Company's leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ratios were 10.6%, 14.2%, 15.5%, and 12.3%, respectively, compared to 10.9%, 14.6%, 15.9%, and 12.5%, respectively, at September 30, 2016.

Non-GAAP Financial Measures
This press release contains certain references to financial measures that have been adjusted to exclude certain expenses and other specified items.  These financial measures differ from comparable measures calculated and presented in accordance with accounting principles generally accepted in the United States of America ("GAAP") in that they exclude unusual or non-recurring charges, losses, credits or gains.  This press release identifies the specific items excluded from the comparable GAAP financial measure in the calculation of each non-GAAP financial measure. Management believes that financial presentations excluding the impact of these items provide useful supplemental information that is important to a proper understanding of the Company's core business results by investors.  These presentations should not be viewed as a substitute for results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP financial measures presented by other companies.

Conference Call
The Company's management will host a conference call today at 1:00 p.m. Eastern Time (8:00 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.centralpacificbank.com.  Alternatively, investors may participate in the live call by dialing 1-877-505-7644.  A playback of the call will be available through February 25, 2017 by dialing 1-877-344-7529 (passcode: 10098984) and on the Company's website.

About Central Pacific Financial Corp.
Central Pacific Financial Corp. is a Hawaii-based bank holding company with approximately $5.4 billion in assets.  Central Pacific Bank, its primary subsidiary, operates 35 branches and 103 ATMs in the state of Hawaii, as of December 31, 2016.  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 any regulatory orders we are or may become subject to; oversupply of inventory and adverse conditions in the Hawaii and California real estate markets and any 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,  deterioration in asset quality, and 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 destabilizing factors in the financial industry and deterioration of the real estate market, as well as the impact from any 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 financial services 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 legal proceedings or regulatory or other governmental inquiries and proceedings and the resolution thereof, 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 and developments; changes in the competitive environment among financial holding companies and other financial service providers, including fintech businesses; 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; changes in our capital position; 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 any of the foregoing items. 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 for the last fiscal year and, in particular, the discussion of "Risk Factors" set forth therein. The Company does not update any of its forward-looking statements except as required by law.

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Financial Highlights

(Unaudited)

TABLE 1




Three Months Ended


Year Ended

(Dollars in thousands,


Dec 31,


Sep 30,


Jun 30,


Mar 31,


Dec 31,


Dec 31,

except for per share amounts)


2016


2016


2016


2016


2015


2016


2015

CONDENSED INCOME STATEMENT















Net interest income


$

39,704



$

39,426



$

39,609



$

39,211



$

38,194



$

157,950



$

149,528


Provision (credit) for loan and lease losses


(2,645)



(743)



(1,382)



(747)



(1,958)



(5,517)



(15,671)


Net interest income after provision (credit) for loan and lease losses


42,349



40,169



40,991



39,958



40,152



163,467



165,199


Total other operating income (1)


13,769



9,954



9,937



8,656



8,997



42,316



34,799


Total other operating expense (1)


37,472



32,265



32,460



31,366



31,732



133,563



127,042


Income before taxes


18,646



17,858



18,468



17,248



17,417



72,220



72,956


Income tax expense


6,438



6,392



6,331



6,067



6,485



25,228



27,088


Net income


12,208



11,466



12,137



11,181



10,932



46,992



45,868


Basic earnings per common share


$

0.40



$

0.37



$

0.39



$

0.36



$

0.35



$

1.52



$

1.42


Diluted earnings per common share


0.39



0.37



0.39



0.35



0.34



1.50



1.40


Dividends declared per common share (2)


0.16



0.16



0.14



0.14



0.46



0.60



0.82

















PERFORMANCE RATIOS















Return on average assets (3)


0.92

%


0.87

%


0.93

%


0.87

%


0.87

%


0.90

%


0.92

%

Return on average shareholders' equity (3)


9.46



8.81



9.51



8.85



8.68



9.16



8.91


Efficiency ratio (4)


70.08



65.34



65.51



65.53



67.24



66.69



68.92


Net interest margin (3)


3.22



3.25



3.29



3.33



3.30



3.27



3.30


Dividend payout ratio (2) (5)


41.03



43.24



35.90



40.00



135.29



40.00



58.57


Average shareholders' equity to average assets


9.67



9.89



9.73



9.81



9.97



9.78



10.37

















SELECTED AVERAGE BALANCES















Average loans and leases, including loans held for sale


$

3,489,757



$

3,415,505



$

3,377,362



$

3,258,872



$

3,142,895



$

3,385,741



$

3,038,100


Average interest-earning assets


4,981,766



4,902,151



4,890,398



4,786,256



4,676,931



4,890,426



4,590,686


Average assets


5,335,909



5,266,588



5,248,088



5,148,744



5,049,232



5,250,113



4,965,689


Average deposits


4,558,589



4,486,064



4,459,019



4,468,070



4,327,908



4,496,096



4,223,613


Average interest-bearing liabilities


3,568,767



3,532,334



3,565,530



3,492,748



3,370,560



3,539,903



3,335,445


Average shareholders' equity


516,067



520,757



510,753



505,330



503,570



513,255



515,043


 




Dec 31,


Sep 30,


Jun 30,


Mar 31,


Dec 31,

(dollars in thousands)


2016


2016


2016


2016


2015

REGULATORY CAPITAL











Central Pacific Financial Corp.











   Leverage capital


$

562,460



$

567,891



$

560,674



$

547,195



$

532,787


   Tier 1 risk-based capital


562,460



567,891



560,674



547,195



532,787


   Total risk-based capital


612,202



616,858



609,012



594,801



579,651


   Common equity tier 1 capital


485,268



487,097



481,209



472,171



472,698


Central Pacific Bank











   Leverage capital


541,577



545,578



529,754



533,307



518,617


   Tier 1 risk-based capital


541,577



545,578



529,754



533,307



518,617


   Total risk-based capital


591,185



594,407



577,966



580,715



565,231


   Common equity tier 1 capital


541,577



545,578



529,754



533,307



518,617













REGULATORY CAPITAL RATIOS











Central Pacific Financial Corp.











   Leverage capital ratio


10.6

%


10.9

%


10.8

%


10.8

%


10.7

%

   Tier 1 risk-based capital ratio


14.2



14.6



14.6



14.5



14.4


   Total risk-based capital ratio


15.5



15.9



15.9



15.8



15.7


   Common equity tier 1 capital ratio


12.3



12.5



12.5



12.5



12.8


Central Pacific Bank











   Leverage capital ratio


10.2



10.6



10.2



10.5



10.4


   Tier 1 risk-based capital ratio


13.7



14.1



13.8



14.2



14.1


   Total risk-based capital ratio


15.0



15.3



15.1



15.4



15.3


   Common equity tier 1 capital ratio


13.7



14.1



13.8



14.2



14.1


























Dec 31,


Sep 30,


Jun 30,


Mar 31,


Dec 31,

(dollars in thousands, except for per share amounts)


2016


2016


2016


2016


2015

BALANCE SHEET











Loans and leases


$

3,524,890



$

3,439,654



$

3,403,947



$

3,308,968



$

3,211,532


Total assets


5,384,236



5,319,947



5,282,967



5,242,202



5,131,288


Total deposits


4,608,201



4,518,578



4,405,142



4,496,602



4,433,439


Long-term debt


92,785



92,785



92,785



92,785



92,785


Total shareholders' equity


504,650



519,466



517,607



509,358



494,614


Total shareholders' equity to total assets


9.37

%


9.76

%


9.80

%


9.72

%


9.64

%

Tangible common equity to tangible assets (6)


9.29

%


9.67

%


9.69

%


9.60

%


9.51

%












ASSET QUALITY











Allowance for loan and lease losses


$

56,631



$

59,384



$

60,764



$

62,149



$

63,314


Non-performing assets


9,187



11,666



14,907



15,944



16,230


Allowance to loans and leases outstanding


1.61

%


1.73

%


1.79

%


1.88

%


1.97

%

Allowance to non-performing assets


616.43



509.03



407.62



389.80



390.10













PER SHARE OF COMMON STOCK











Book value per common share


$

16.39



$

16.79



$

16.68



$

16.34



$

15.77


Tangible book value per common share


16.23



16.62



16.48



16.13



15.54


Closing market price per common share


31.42



25.19



23.60



21.77



22.02

























(1) Loan servicing fees, amortization of mortgage servicing rights, net gain on sale of residential mortgage loans, and unrealized gain (loss) on interest rate locks have been reclassified into mortgage banking income in the consolidated statements of income. Prior period amounts in the consolidated statements of income have been reclassified to conform to the current period presentation.

(2) Dividends declared in the fourth quarter of 2015 include a special cash dividend of $0.32 per share.

(3) Annualized.

(4) Efficiency ratio is defined as total operating expense divided by total revenue (net interest income and total other operating income). Prior period amounts have been revised to conform to current period which reflects reclassifications referred to in note (1).

(5) Dividend payout ratio is defined as dividends declared per share divided by diluted earnings per share.

(6) The tangible common equity ratio is a non-GAAP measure which should be read in conjunction with the Company's GAAP financial information. Comparison of our ratio with those of other companies may not be possible because other companies may calculate the ratio differently. See Reconciliation of Non-GAAP Financial Measures in Table 2.

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures

(Unaudited)

TABLE 2





December 31,


September 30,


June 30,


March 31,


December 31,

(Dollars in thousands)


2016


2016


2016


2016


2015

Tangible Common Equity Ratio:











Total shareholders' equity


$

504,650



$

519,466



$

517,607



$

509,358



$

494,614


   Less: Other intangible assets


(4,680)



(5,349)



(6,018)



(6,686)



(7,355)


Tangible common equity


$

499,970



$

514,117



$

511,589



$

502,672



$

487,259













Total assets


$

5,384,236



$

5,319,947



$

5,282,967



$

5,242,202



$

5,131,288


   Less: Other intangible assets


(4,680)



(5,349)



(6,018)



(6,686)



(7,355)


Tangible assets


$

5,379,556



$

5,314,598



$

5,276,949



$

5,235,516



$

5,123,933













Tangible common equity to tangible assets


9.29

%


9.67

%


9.69

%


9.60

%


9.51

%

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)

TABLE 3




December 31,


September 30,


June 30,


March 31,


December 31,

(Dollars in thousands, except share data)


2016


2016


2016


2016


2015

ASSETS











Cash and due from banks


$

75,272



$

79,647



$

76,482



$

85,495



$

71,797

Interest-bearing deposits in other banks


9,069



23,727



14,184



7,180



8,397

Investment securities:











Available for sale


1,243,847



1,262,224



1,260,593



1,299,176



1,272,255

Held to maturity, fair value of: $214,366 at December 31, 2016, $230,529 at September 30, 2016, $238,066 at June 30, 2016, $243,072 at March 31, 2016, and $244,136 at December 31, 2015


217,668



226,573



234,230



241,597



247,917

Total investment securities


1,461,515



1,488,797



1,494,823



1,540,773



1,520,172

Loans held for sale


31,881



12,755



9,921



11,270



14,109

Loans and leases


3,524,890



3,439,654



3,403,947



3,308,968



3,211,532

Less allowance for loan and lease losses


56,631



59,384



60,764



62,149



63,314

Net loans and leases


3,468,259



3,380,270



3,343,183



3,246,819



3,148,218

Premises and equipment, net


48,258



48,242



48,370



48,322



49,161

Accrued interest receivable


15,675



14,554



15,339



14,818



14,898

Investment in unconsolidated subsidiaries


6,889



7,011



7,204



5,627



6,157

Other real estate owned


791



791



1,032



1,260



1,962

Mortgage servicing rights


15,779



15,638



15,778



16,800



17,797

Other intangible assets


4,680



5,349



6,018



6,686



7,355

Bank-owned life insurance


155,593



155,233



154,678



154,592



153,967

Federal Home Loan Bank stock


11,572



12,173



15,218



10,420



8,606

Other assets


79,003



75,760



80,737



92,140



108,692

Total assets


$

5,384,236



$

5,319,947



$

5,282,967



$

5,242,202



$

5,131,288

LIABILITIES AND EQUITY











Deposits:











Noninterest-bearing demand


$

1,265,246



$

1,194,557



$

1,152,666



$

1,140,741



$

1,145,244

Interest-bearing demand


862,991



849,128



846,589



849,880



824,895

Savings and money market


1,390,600



1,379,484



1,371,163



1,465,524



1,399,093

Time


1,089,364



1,095,409



1,034,724



1,040,457



1,064,207

Total deposits


4,608,201



4,518,578



4,405,142



4,496,602



4,433,439

Short-term borrowings


135,000



150,000



226,000



106,000



69,000

Long-term debt


92,785



92,785



92,785



92,785



92,785

Other liabilities


43,575



39,092



41,424



37,438



41,425

Total liabilities


4,879,561



4,800,455



4,765,351



4,732,825



4,636,649

Equity:











Preferred stock, no par value, authorized 1,000,000 shares; issued and outstanding none at:  December 31, 2016, September 30, 2016, June 30, 2016, March 31, 2016, and December 31, 2015










Common stock, no par value, authorized 185,000,000 shares; issued and outstanding:  30,796,243 at December 31, 2016, 30,930,598 at September 30, 2016, 31,036,895 at June 30, 2016, 31,164,287 at March 31, 2016, and 31,361,452 at December 31, 2015


530,932



534,856



538,434



544,029



548,878

Surplus


84,180



84,207



83,482



83,534



82,847

Accumulated deficit


(108,941)



(116,225)



(122,730)



(130,511)



(137,314)

Accumulated other comprehensive income (loss)


(1,521)



16,628



18,421



12,306



203

Total shareholders' equity


504,650



519,466



517,607



509,358



494,614

Non-controlling interest


25



26



9



19



25

Total equity


504,675



519,492



517,616



509,377



494,639

Total liabilities and equity


$

5,384,236



$

5,319,947



$

5,282,967



$

5,242,202



$

5,131,288

 



CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

TABLE 4




Three Months Ended


Year Ended



Dec 31,


Sep 30,


Jun 30,


Mar 31,


Dec 31,


Dec 31,

(Dollars in thousands, except per share data)


2016


2016


2016


2016


2015


2016


2015

Interest income:















Interest and fees on loans and leases


$

33,973



$

33,384



$

32,878



$

31,793



$

30,565



$

132,028



$

118,887


Interest and dividends on investment securities:















  Taxable interest


7,203



7,296



7,953



8,396



8,282



30,848



32,969


  Tax-exempt interest


989



995



995



996



1,006



3,975



4,022


  Dividends


12



10



10



10



10



42



36


Interest on deposits in other banks


22



17



11



17



7



67



35


Dividends on Federal Home Loan Bank stock


56



63



23



37



46



179



86


Total interest income


42,255



41,765



41,870



41,249



39,916



167,139



156,035


Interest expense:















Interest on deposits:















Demand


129



126



123



111



101



489



399


Savings and money market


257



254



269



263



238



1,043



916


Time


1,175



1,044



957



898



647



4,074



2,312


Interest on short-term borrowings


191



160



177



50



59



578



254


Interest on long-term debt


799



755



735



716



677



3,005



2,626


Total interest expense


2,551



2,339



2,261



2,038



1,722



9,189



6,507


Net interest income


39,704



39,426



39,609



39,211



38,194



157,950



149,528


Provision (credit) for loan and lease losses


(2,645)



(743)



(1,382)



(747)



(1,958)



(5,517)



(15,671)


Net interest income after provision for loan and lease losses


42,349



40,169



40,991



39,958



40,152



163,467



165,199


Other operating income:















Mortgage banking income (1)


2,845



2,561



1,423



1,240



1,941



8,069



7,254


Service charges on deposit accounts


2,065



1,954



1,908



1,964



1,999



7,891



7,829


Other service charges and fees


2,833



2,821



3,028



2,767



2,772



11,449



11,461


Income from fiduciary activities


858



880



857



840



825



3,435



3,343


Equity in earnings of unconsolidated subsidiaries


267



182



184



90



88



723



578


Fees on foreign exchange


116



129



126



148



98



519



450


Investment securities gains (losses)














(1,866)


Income from bank-owned life insurance


273



555



1,232



625



465



2,685



2,034


Loan placement fees


175



140



133



46



146



494



720


Net gains on sales of foreclosed assets


1



57



241



308



189



607



568


Gain on sale of premises and equipment


3,537











3,537




Other (refer to Table 5)


799



675



805



628



474



2,907



2,428


Total other operating income


13,769



9,954



9,937



8,656



8,997



42,316



34,799


Other operating expense:















Salaries and employee benefits


21,254



17,459



17,850



16,937



16,895



73,500



66,429


Net occupancy


3,606



3,588



3,557



3,314



3,981



14,065



14,432


Equipment


967



852



769



811



858



3,399



3,475


Amortization of core deposit premium


669



669



668



669



668



2,675



2,674


Communication expense


868



948



919



959



822



3,694



3,483


Legal and professional services


1,821



1,699



1,723



1,613



1,671



6,856



7,340


Computer software expense


2,332



2,217



2,222



2,704



2,067



9,475



8,831


Advertising expense


562



772



433



634



964



2,401



2,550


Foreclosed asset expense


16



72



49



15



154



152



486


Other (refer to Table 5)


5,377



3,989



4,270



3,710



3,652



17,346



17,342


Total other operating expense


37,472



32,265



32,460



31,366



31,732



133,563



127,042


Income before income taxes


18,646



17,858



18,468



17,248



17,417



72,220



72,956


Income tax expense


6,438



6,392



6,331



6,067



6,485



25,228



27,088


Net income


$

12,208



$

11,466



$

12,137



$

11,181



$

10,932



$

46,992



$

45,868


Per common share data:















Basic earnings per share


$

0.40



$

0.37



$

0.39



$

0.36



$

0.35



$

1.52



$

1.42


Diluted earnings per share


0.39



0.37



0.39



0.35



0.34



1.50



1.40


Cash dividends declared


0.16



0.16



0.14



0.14



0.46



0.60



0.82


Basic weighted average shares outstanding


30,770,528



30,943,756



31,060,593



31,263,433



31,317,627



31,008,744



32,238,237


Diluted weighted average shares outstanding


31,001,246



31,142,128



31,262,525



31,506,307



31,727,478



31,224,894



32,652,495

















(1) Loan servicing fees, amortization of mortgage servicing rights, net gain on sale of residential mortgage loans, and unrealized gain (loss) on interest rate locks have been reclassified into mortgage banking income in the consolidated statements of income. Prior period amounts in the consolidated statements of income have been reclassified to conform to the current period presentation.

 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Other Operating Income and Other Operating Expense - Detail

(Unaudited)

TABLE 5


The following table sets forth the components of mortgage banking income for the periods indicated:




Three Months Ended


Year Ended



Dec 31,


Sep 30,


Jun 30,


Mar 31,


Dec 31,


December 31,

(Dollars in thousands)


2016


2016


2016


2016


2015


2016


2015

Mortgage banking income:















Loan servicing fees


$

1,340



$

1,357



$

1,362



$

1,362



$

1,399



$

5,421



$

5,656

Amortization of mortgage servicing rights


(781)



(1,021)



(1,755)



(1,509)



(844)



(5,066)



(4,185)

Net gains on sales of residential mortgage loans


2,108



2,212



1,845



1,466



1,332



7,631



6,107

Unrealized gains (losses) on loans-held-for-sale and interest rate locks


178



13



(29)



(79)



54



83



(324)

   Total mortgage banking income


$

2,845



$

2,561



$

1,423



$

1,240



$

1,941



$

8,069



$

7,254



The following table sets forth the components of other operating income - other for the periods indicated:




Three Months Ended


Year Ended



Dec 31,


Sep 30,


Jun 30,


Mar 31,


Dec 31,


Dec 31,

(Dollars in thousands)


2016


2016


2016


2016


2015


2016


2015

Other operating income - other:















Income recovered on nonaccrual loans previously charged-off


$

444



$

423



$

301



$

157



$

104



$

1,325



$

794

Other recoveries


19



24



249



21



17



313



550

Commissions on sale of checks


84



84



86



86



79



340



325

Other


252



144



169



364



274



929



759

   Total other operating income - other


$

799



$

675



$

805



$

628



$

474



$

2,907



$

2,428



The following table sets forth the components of other operating expense - other for the periods indicated:




Three Months Ended


Year Ended



Dec 31,


Sep 30,


Jun 30,


Mar 31,


Dec 31,


December 31,

(Dollars in thousands)


2016


2016


2016


2016


2015


2016


2015

Other operating expense - other:















Charitable contributions


$

102



$

156



$

184



$

218



$

103



$

660



$

2,559

FDIC insurance assessment


420



430



563



639



622



2,052



2,706

Miscellaneous loan expenses


271



358



306



254



325



1,189



1,348

ATM and debit card expenses


444



451



448



428



407



1,771



1,538

Amortization of investments in low-income housing tax credit partnerships


271



259



258



257



258



1,045



1,078

Armored car expenses


219



258



201



201



254



879



896

Entertainment and promotions


449



198



223



231



405



1,101



1,059

Stationery and supplies


221



242



172



267



230



902



1,026

Directors' fees and expenses


208



215



199



205



101



827



662

Provision (credit) for residential mortgage loan repurchase losses






(36)



(351)



(596)



(387)



(1,352)

Increase (decrease) to the reserve for unfunded commitments


40



37



20



44



(223)



141



(271)

Other


2,732



1,385



1,732



1,317



1,766



7,166



6,093

   Total other operating expense - other


$

5,377



$

3,989



$

4,270



$

3,710



$

3,652



$

17,346



$

17,342

 

 


 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Average Balances, Interest Income & Expense, Yields and Rates (Taxable Equivalent)

(Unaudited)

TABLE 6




Three Months Ended


Three Months Ended


Three Months Ended



December 31, 2016


September 30, 2016


December 31, 2015



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 banks


$

15,458



0.57

%


$

22



$

14,140



0.49

%


$

17



$

10,504



0.27

%


$

7

Investment securities, excluding valuation allowance:



















   Taxable


1,293,291



2.23



7,215



1,288,569



2.27



7,306



1,339,764



2.48



8,292

   Tax-exempt


172,081



3.54



1,522



172,743



3.54



1,531



174,681



3.54



1,547

Total investment securities


1,465,372



2.39



8,737



1,461,312



2.42



8,837



1,514,445



2.60



9,839

Loans and leases, incl. loans held for sale


3,489,757



3.88



33,973



3,415,505



3.90



33,384



3,142,895



3.87



30,565

Federal Home Loan Bank stock


11,179



2.02



56



11,194



2.25



63



9,087



2.00



46

   Total interest-earning assets


4,981,766



3.43



42,788



4,902,151



3.44



42,301



4,676,931



3.45



40,457

Noninterest-earning assets


354,143







364,437







372,301






Total assets


$

5,335,909







$

5,266,588







$

5,049,232

























LIABILITIES AND EQUITY

Interest-bearing liabilities:



















Interest-bearing demand deposits


$

854,946



0.06

%


$

129



$

851,775



0.06

%


$

126



$

804,544



0.05

%


$

101

Savings and money market deposits


1,396,615



0.07



257



1,367,459



0.07



254



1,322,220



0.07



238

Time deposits under $100,000


198,145



0.38



188



202,719



0.37



190



218,188



0.36



201

Time deposits $100,000 and over


901,102



0.44



987



892,188



0.38



854



851,796



0.21



446

   Total interest-bearing deposits


3,350,808



0.19



1,561



3,314,141



0.17



1,424



3,196,748



0.12



986

Short-term borrowings


125,174



0.61



191



125,408



0.50



160



81,027



0.29



59

Long-term debt


92,785



3.43



799



92,785



3.24



755



92,785



2.90



677

   Total interest-bearing liabilities


3,568,767



0.28



2,551



3,532,334



0.26



2,339



3,370,560



0.20



1,722

Noninterest-bearing deposits


1,207,781







1,171,923







1,131,160






Other liabilities


43,268







41,558







43,941






Total liabilities


4,819,816







4,745,815







4,545,661






Shareholders' equity


516,067







520,757







503,570






Non-controlling interest


26







16







1






Total equity


516,093







520,773







503,571






Total liabilities and equity


$

5,335,909







$

5,266,588







$

5,049,232

























Net interest income






$

40,237







$

39,962







$

38,735




















Interest rate spread




3.15

%






3.18

%






3.25

%






















Net interest margin




3.22

%






3.25

%






3.30

%



 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Average Balances, Interest Income & Expense, Yields and Rates (Taxable Equivalent)

(Unaudited)

TABLE 7




Year Ended


Year Ended



December 31, 2016


December 31, 2015



Average


Average




Average


Average



(Dollars in thousands)


Balance


Yield/Rate


Interest


Balance


Yield/Rate


Interest

ASSETS

Interest-earning assets:













Interest-bearing deposits in other banks


$

13,143



0.51

%


$

67



$

13,966



0.25

%


$

35

Investment securities, excluding valuation allowance:













   Taxable


1,307,946



2.36



30,890



1,339,070



2.46



33,005

   Tax-exempt


173,062



3.53



6,116



175,919



3.52



6,188

   Total investment securities


1,481,008



2.50



37,006



1,514,989



2.59



39,193

Loans and leases, including loans held for sale


3,385,741



3.90



132,028



3,038,100



3.91



118,887

Federal Home Loan Bank stock


10,534



1.70



179



23,631



0.36



86

   Total interest earning assets


4,890,426



3.46



169,280



4,590,686



3.45



158,201

Noninterest-earning assets


359,687







375,003






Total assets


$

5,250,113







$

4,965,689



















LIABILITIES AND EQUITY

Interest-bearing liabilities:













Interest-bearing demand deposits


$

844,507



0.06

%


$

489



$

802,121



0.05

%


$

399

Savings and money market deposits


1,406,754



0.07



1,043



1,276,830



0.07



916

Time deposits under $100,000


204,940



0.38



770



227,288



0.37



838

Time deposits $100,000 and over


879,989



0.38



3,304



844,376



0.17



1,474

   Total interest-bearing deposits


3,336,190



0.17



5,606



3,150,615



0.12



3,627

Short-term borrowings


110,928



0.52



578



92,045



0.28



254

Long-term debt


92,785



3.24



3,005



92,785



2.83



2,626

   Total interest-bearing liabilities


3,539,903



0.26



9,189



3,335,445



0.20



6,507

Noninterest-bearing deposits


1,156,906







1,072,998






Other liabilities


40,029







42,203






Total liabilities


4,736,838







4,450,646






Shareholders' equity


513,255







515,043






Non-controlling interest


20












Total equity


513,275







515,043






Total liabilities and equity


$

5,250,113







$

4,965,689



















Net interest income






$

160,091







$

151,694














Interest rate spread




3.20

%






3.25

%
















Net interest margin




3.27

%






3.30

%



 

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Loans and Leases by Geographic Distribution

(Unaudited)

TABLE 8




December 31,


September 30,


June 30,


March 31,


December 31,

(Dollars in thousands)


2016


2016


2016


2016


2015

HAWAII:











Commercial, financial and agricultural


$

373,006



$

367,527



$

360,102



$

358,432



$

339,738

Real estate:











   Construction


97,873



105,234



95,355



98,203



81,655

   Residential mortgage


1,217,234



1,160,741



1,167,428



1,147,446



1,134,325

   Home equity


361,209



351,256



334,347



311,756



301,980

   Commercial mortgage


767,586



742,584



716,452



646,013



642,845

Consumer:











   Automobiles


131,037



125,556



116,809



112,106



110,285

   Other consumer


177,122



163,703



161,065



155,749



162,963

Leases


677



756



843



936



1,028

Total loans and leases


3,125,744



3,017,357



2,952,401



2,830,641



2,774,819

Allowance for loan and lease losses


(49,350)



(50,948)



(52,375)



(52,068)



(54,141)

Net loans and leases


$

3,076,394



$

2,966,409



$

2,900,026



$

2,778,573



$

2,720,678












U.S. MAINLAND:











Commercial, financial and agricultural


$

137,434



$

140,457



$

143,965



$

176,659



$

181,348

Real estate:











   Construction


3,665



2,994



3,073



3,151



3,230

   Residential mortgage










   Home equity










   Commercial mortgage


117,853



120,133



126,132



127,023



117,904

Consumer:











   Automobiles


81,889



91,970



103,098



95,124



79,917

   Other consumer


58,305



66,743



75,278



76,370



54,314

Leases










Total loans and leases


399,146



422,297



451,546



478,327



436,713

Allowance for loan and lease losses


(7,281)



(8,436)



(8,389)



(10,081)



(9,173)

Net loans and leases


$

391,865



$

413,861



$

443,157



$

468,246



$

427,540












TOTAL:











Commercial, financial and agricultural


$

510,440



$

507,984



$

504,067



$

535,091



$

521,086

Real estate:











   Construction


101,538



108,228



98,428



101,354



84,885

   Residential mortgage


1,217,234



1,160,741



1,167,428



1,147,446



1,134,325

   Home equity


361,209



351,256



334,347



311,756



301,980

   Commercial mortgage


885,439



862,717



842,584



773,036



760,749

Consumer:











   Automobiles


212,926



217,526



219,907



207,230



190,202

   Other consumer


235,427



230,446



236,343



232,119



217,277

Leases


677



756



843



936



1,028

Total loans and leases


3,524,890



3,439,654



3,403,947



3,308,968



3,211,532

Allowance for loan and lease losses


(56,631)



(59,384)



(60,764)



(62,149)



(63,314)

Net loans and leases


$

3,468,259



$

3,380,270



$

3,343,183



$

3,246,819



$

3,148,218

 


CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES

Deposits

(Unaudited)

TABLE 9




December 31,


September 30,


June 30,


March 31,


December 31,

(Dollars in thousands)


2016


2016


2016


2016


2015

Noninterest-bearing demand


$

1,265,246



$

1,194,557



$

1,152,666



$

1,140,741



$

1,145,244

Interest-bearing demand


862,991



849,128



846,589



849,880



824,895

Savings and money market


1,390,600



1,379,484



1,371,163



1,465,524



1,399,093

Time deposits less than $100,000


194,730



198,055



202,733



207,757



212,946

Core deposits


3,713,567



3,621,224



3,573,151



3,663,902



3,582,178












Government time deposits


701,417



708,034



645,134



644,877



664,756

Other time deposits $100,000 and over


193,217



189,320



186,857



187,823



186,505

Total time deposits $100,000 and over


894,634



897,354



831,991



832,700



851,261

      Total deposits


$

4,608,201



$

4,518,578



$

4,405,142



$

4,496,602



$

4,433,439

 

CENTRAL PACIFIC FINANCIAL CORP AND SUBSIDIARIES


Nonperforming Assets, Past Due and Restructured Loans


(Unaudited)  

TABLE 10






December 31,


September 30,


June 30,


March 31,


December 31,


(Dollars in thousands)


2016


2016


2016


2016


2015


Nonaccrual loans (including loans held for sale):












Commercial, financial and agricultural


$

1,877



$

2,005



$

2,132



$

2,244



$

1,044


Real estate:












   Residential mortgage


5,322



5,424



8,059



5,227



5,464


   Home equity


333



479



611



300



666


   Commercial mortgage


864



2,967



3,073



6,913



7,094


   Total nonaccrual loans


8,396



10,875



13,875



14,684



14,268














Other real estate owned ("OREO"):












Residential mortgage


791



791



1,032



1,260



1,962


   Total OREO


791



791



1,032



1,260



1,962


   Total nonperforming assets ("NPAs")


9,187



11,666



14,907



15,944



16,230














Loans delinquent for 90 days or more:












Real estate:












   Residential mortgage




200








   Home equity


1,120





135



656




Consumer:












   Automobiles


208



131



78



125



151


   Other consumer


63



106



56





122


   Total loans delinquent for 90 days or more


1,391



437



269



781



273














Restructured loans still accruing interest:












Commercial, financial and agricultural











Real estate:












   Construction


21



51



745



776



809


   Residential mortgage


14,292



15,818



15,729



16,197



16,224


   Commercial mortgage


1,879



1,979



3,020



3,128



3,224


   Total restructured loans still accruing interest


16,192



17,848



19,494



20,101



20,257


   Total NPAs, loans delinquent for 90 days or more and restructured loans still accruing interest


$

26,770



$

29,951



$

34,670



$

36,826



$

36,760














Total nonaccrual loans as a percentage of loans and leases


0.24

%


0.32

%


0.41

%


0.44

%


0.44

%

Total NPAs as a percentage of loans and leases and OREO


0.26

%


0.34

%


0.44

%


0.48

%


0.51

%

Total NPAs and loans delinquent for 90 days or more as a percentage of loans and leases and OREO


0.30

%


0.35

%


0.45

%


0.51

%


0.51

%

Total NPAs, loans delinquent for 90 days or more, and restructured loans still accruing interest as a percentage of loans and leases and OREO


0.76

%


0.87

%


1.02

%


1.11

%


1.14

%













Quarter-to-quarter changes in NPAs:












Balance at beginning of quarter


$

11,666



$

14,907



$

15,944



$

16,230



$

14,001


Additions


39



650



4,334



1,303



2,992


Reductions:












Payments


(2,400)



(2,309)



(927)



(754)



(439)


Return to accrual status


(118)



(578)



(3,717)



(133)



(216)


Sales of NPAs




(1,032)



(865)



(702)



(71)


Charge-offs/valuation adjustments




28



138





(37)


Total reductions


(2,518)



(3,891)



(5,371)



(1,589)



(763)


Balance at end of quarter


$

9,187



$

11,666



$

14,907



$

15,944



$

16,230


 

CENTRAL PACIFIC FINANCIAL CORP AND SUBSIDIARIES


Allowance for Loan and Lease Losses


(Unaudited)

TABLE 11












Three Months Ended


Year Ended




Dec 31,


Sep 30,


Jun 30,


Mar 31,


Dec 31,


December 31,


(Dollars in thousands)


2016


2016


2016


2016


2015


2016


2015


Allowance for loan and lease losses:
















Balance at beginning of period


$

59,384



$

60,764



$

62,149



$

63,314



$

66,644



$

63,314



$

74,040


















Provision (credit) for loan and lease losses


(2,645)



(743)



(1,382)



(747)



(1,958)



(5,517)



(15,671)


















Charge-offs:
















Commercial, financial and agricultural


510



465



272



352



554



1,599



5,658


Real estate:
















  Home equity














110


  Commercial mortgage


209









838



209



838


Consumer:
















  Automobiles


381



409



392



381



433



1,563



1,479


  Other consumer


1,077



940



743



731



288



3,491



3,171


   Total charge-offs


2,177



1,814



1,407



1,464



2,113



6,862



11,256


















Recoveries:
















Commercial, financial and agricultural


490



555



720



349



411



2,114



4,788


Real estate:
















   Construction


24



91



9



9



10



133



880


   Residential mortgage


315



173



173



34



91



695



1,121


   Home equity


4



4



4



3



5



15



1,056


   Commercial mortgage


869



128



14



13



14



1,024



6,719


Consumer:
















   Automobiles


214



115



365



194



183



888



948


   Other consumer


153



111



119



444



27



827



662


Leases














27


Total recoveries


2,069



1,177



1,404



1,046



741



5,696



16,201


Net charge-offs (recoveries)


108



637



3



418



1,372



1,166



(4,945)


Balance at end of period


$

56,631



$

59,384



$

60,764



$

62,149



$

63,314



$

56,631



$

63,314


















Average loans and leases, net of unearned


$

3,489,757



$

3,415,505



$

3,377,362



$

3,258,872



$

3,142,895



$

3,385,741



$

3,038,100


















Annualized ratio of net charge-offs (recoveries) to average loans and leases


0.01

%


0.07

%


%


0.05

%


0.17

%


0.03

%


(0.16)

%

















Ratio of allowance for loan and lease losses to loans and leases


1.61

%


1.73

%


1.79

%


1.88

%


1.97

%


1.61

%


1.97

%

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/central-pacific-financial-corp-reports-earnings-of-122-million-for-the-fourth-quarter-and-470-million-for-the-2016-year-300396191.html

SOURCE Central Pacific Financial Corp.

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