CENTRAL PACIFIC FINANCIAL CORP. 
By HONOLULU, Jan. 25, 2012 /PRNewswire/ -- Central Pacific Financial Corp. (NYSE: CPF), parent company of Central Pacific Bank (the "Bank"), today reported net income for the fourth quarter of 2011 of $12.1 million, or $0.29 per diluted share, compared to a net loss in the fourth quarter of 2010 of $2.1 million, or $2.78 per diluted share, and net income in the third quarter of 2011 of $11.6 million, or $0.28 per diluted share. For the year ended December 31, 2011, the Company's net income was $36.6 million, or $3.31 per diluted share, compared to a net loss of $251.0 million, or $171.13 per diluted share in the previous year.
"In a year where we believe we have made tremendous progress in executing our recovery plan, we are pleased to end 2011 with our fourth consecutive profitable quarter," said John C. Dean, President and Chief Executive Officer. "As we saw during the year, continued improvement in our credit risk profile and further reductions in our nonperforming assets allowed us to once again meaningfully reduce our allowance for loan and lease losses, which contributed greatly to our profitable quarter."
Significant Highlights and Fourth Quarter Results
-- Reported fourth consecutive profitable quarter with net income of $12.1
million, compared to net income of $11.6 million in the third quarter of
2011.
-- For the third 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 the increase to the reserve for unfunded commitments.
The reduction in the ALLL resulted in a credit to the provision for loan
and lease losses of $11.2 million, compared to a credit of $19.1 million
during the third quarter of 2011.
-- Reduced nonperforming assets by $27.7 million to $195.6 million at
December 31, 2011 from $223.3 million at September 30, 2011.
-- The ALLL, as a percentage of total loans and leases, decreased to 5.91%
at December 31, 2011, compared to 6.96% at September 30, 2011. In
addition, the Company had an ALLL, as a percentage of nonperforming
assets, of 62.42% at December 31, 2011, compared to 64.23% at September
30, 2011.
-- Agreed to contribute $3.5 million to the Central Pacific Bank Foundation
(the "Foundation") to continue the Company's longstanding commitment to
support its local communities. During the third quarter of 2011, the
Company agreed to contribute $5.0 million to the Foundation.
-- Increased Tier 1 risk-based capital, total risk-based capital, and
leverage capital ratios as of December 31, 2011 to 22.94%, 24.24%, and
13.78%, respectively, compared to 22.63%, 23.94%, and 13.19%,
respectively, as of September 30, 2011. The Company's capital ratios
continue to exceed the minimum levels required to be considered
"well-capitalized" for regulatory purposes.
Earnings Highlights
Net interest income for the fourth quarter of 2011 was $30.8 million, compared to $27.0 million in the year-ago quarter and $29.8 million in the third quarter of 2011. Net interest margin was 3.25%, compared to 2.76% in the year-ago quarter and 3.05% in the third quarter of 2011. The improvement reflects the Company's continued redeployment of its excess liquidity into higher yielding assets and further declines in its overall funding costs. The current quarter decrease in the Company's funding costs was largely attributable to the previously reported prepayment of long-term borrowings at the Federal Home Loan Bank of Seattle totaling $120.5 million with a weighted average interest rate of 4.36% during the third quarter of 2011.
The provision for loan and lease losses for the fourth quarter of 2011 was a credit of $11.2 million, compared to a credit of $19.1 million in the third quarter of 2011 and a charge of $0.4 million in the fourth quarter of 2010. The reduction was the result of further improvement in the Company's credit risk profile as evidenced by continued declines in nonperforming assets during the quarter, which is described more fully below.
Other operating income for the fourth quarter of 2011 totaled $15.2 million, compared to $19.9 million in the year-ago quarter and $11.5 million in the third quarter of 2011. The decrease from the year-ago quarter was primarily due to the recognition of a $7.7 million gain on the sale of a building during the fourth quarter of 2010, partially offset by the recognition of a $1.0 million gain on the sale of investment securities during the fourth quarter of 2011. The sequential-quarter increase was primarily due to higher gains on sales of residential mortgage loans of $2.5 million and the previously mentioned investment securities gain, partially offset by lower unrealized gains on interest rate locks of $1.1 million.
Other operating expense for the fourth quarter of 2011 totaled $45.2 million, compared to $48.6 million in the year-ago quarter and $48.8 million in the third quarter of 2011. The decrease from the year-ago quarter was primarily attributable to a nonrecurring loss on the early extinguishment of debt of $5.7 million recorded in the fourth quarter of 2010, a lower provision for repurchased residential mortgage loans of $4.3 million, and lower FDIC insurance expense of $1.7 million, partially offset by higher salaries and employee benefits of $4.3 million and higher charitable contributions of $3.5 million. The sequential quarter decrease was primarily attributable to a nonrecurring loss on the early extinguishment of debt of $6.2 million recorded in the third quarter of 2011 and lower charitable contributions of $1.6 million, partially offset by higher net credit-related charges (which includes changes in the reserve for unfunded commitments and foreclosed asset expense) of $4.6 million and higher salaries and employee benefits of $1.5 million
The efficiency ratio for the fourth quarter of 2011 was 92.0% (excluding gains on sale of investment securities of $1.0 million and foreclosed asset expense of $3.0 million), compared to 80.0% in the year-ago quarter (excluding the loss on early extinguishment of debt of $5.7 million, foreclosed asset expense of $4.1 million and write-downs of loans held for sale of $0.5 million) and 99.1% (excluding the loss on early extinguishment of debt of $6.2 million and foreclosed asset expense of $0.8 million) in the third quarter of 2011.
The Company continues to recognize a full valuation allowance against its net deferred tax assets and did not record any income tax benefit or expense during the fourth quarter of 2011.
Balance Sheet Highlights
Total assets at December 31, 2011 of $4.1 billion increased by $194.8 million and $13.7 million from December 31, 2010 and September 30, 2011, respectively.
Total loans and leases at December 31, 2011 of $2.1 billion decreased by $105.0 million from December 31, 2010 and increased by $5.0 million from September 30, 2011. The increase in total loans and leases from the third quarter of 2011 was primarily due to an increase in the residential mortgage loan portfolio of $39.1 million, partially offset by a decrease in the construction and development portfolio of $35.0 million.
Total deposits at December 31, 2011 were $3.4 billion, compared to $3.1 billion and $3.3 billion at December 31, 2010 and September 30, 2011, respectively. Core deposits, which include demand deposits, savings and money market deposits, and time deposits less than $100,000, totaled $2.8 billion at December 31, 2011. This represents a decrease of $9.9 million from a year ago and an increase of $49.3 million from September 30, 2011. Significant changes in total deposits during the quarter included an increase in non-interest bearing demand deposits, time deposits, savings and money market deposits, and interest bearing demand deposits of $47.5 million, $30.0 million, $14.2 million and $3.7 million, respectively.
Total shareholders' equity was $456.4 million at December 31, 2011, compared to $66.1 million and $440.9 million at December 31, 2010 and September 30, 2011, respectively.
Asset Quality
Nonperforming assets at December 31, 2011 totaled $195.6 million, or 4.73% of total assets, compared to $223.3 million, or 5.42% of total assets at September 30, 2011. The sequential-quarter decrease in the Company's nonperforming assets was primarily attributable to loan pay-downs and pay-offs totaling $17.3 million, sales of foreclosed properties totaling $9.0 million, charge-offs totaling $5.2 million, write-downs totaling $2.0 million and transfers of loans back to accrual status totaling $6.2 million. The sequential-quarter decrease reflects net reductions in Hawaii construction and development assets totaling $25.7 million and Hawaii residential mortgage assets totaling $9.0 million, partially offset by net increases in Hawaii commercial mortgage assets totaling $2.3 million and Mainland construction and development assets totaling $1.8 million.
Loans delinquent for 90 days or more still accruing interest totaled $28,000 at December 31, 2011, compared to $0.4 million at September 30, 2011. In addition, loans delinquent for 30 days or more still accruing interest totaled $5.4 million at December 31, 2011, compared to $4.5 million at September 30, 2011.
Net loan charge-offs in the fourth quarter of 2011 totaled $10.1 million, compared to $25.2 million in the year-ago quarter and $4.4 million in the third quarter of 2011. Net charge-offs included the following significant amounts: Mainland construction and development loans totaling $6.6 million and Hawaii construction and development loans totaling $3.4 million.
The ALLL, as a percentage of total loans and leases, was 5.91% at December 31, 2011, compared to 6.96% at September 30, 2011. The ALLL, as a percentage of nonperforming assets, was 62.42% at December 31, 2011, compared to 64.23% at September 30, 2011.
Construction and Development Loans
At December 31, 2011, the construction and development loan portfolio (excluding owner-occupied loans) totaled $148.4 million, or 7.2%, of the total loan portfolio. Of this amount, $74.8 million were located in Hawaii and $73.6 million were located on the Mainland. This portfolio decreased by $32.9 million from September 30, 2011 and by $151.5 million from December 31, 2010. The sequential quarter decrease was attributable to decreases in the Hawaii and Mainland construction and development loan portfolios (excluding owner-occupied loans) of $23.7 million and $9.2 million, respectively.
The ALLL established for these loans was $21.9 million at December 31, 2011, or 14.8%, of the total outstanding balance, compared to $27.3 million, or 15.0%, of the total outstanding balance at September 30, 2011. Of this amount, $12.3 million related to construction and development loans in Hawaii and $9.6 million related to construction and development loans on the Mainland.
Nonperforming construction and development assets in Hawaii totaled $75.1 million at December 31, 2011, or 1.8%, of total assets. At December 31, 2011, this balance was comprised of portfolio loans totaling $22.1 million, loans held for sale totaling $12.4 million and foreclosed properties totaling $40.6 million. Nonperforming assets related to this sector totaled $100.3 million at September 30, 2011.
Nonperforming construction and development assets on the Mainland totaled $48.0 million at December 31, 2011, or 1.2%, of total assets. At December 31, 2011, this balance was comprised of portfolio loans totaling $33.0 million and foreclosed properties totaling $15.0 million. Nonperforming assets related to this sector totaled $46.2 million at September 30, 2011.
Capital Levels
At December 31, 2011, the Company's Tier 1 risk-based capital, total risk-based capital, and leverage capital ratios were 22.94%, 24.24%, and 13.78%, respectively, compared to 22.63%, 23.94%, and 13.19%, respectively, at September 30, 2011. The Company's capital ratios continue to exceed the minimum levels required by both the Memorandum of Understanding between the bank and its regulators (the "MOU") and the levels required to be considered "well-capitalized" for regulatory purposes.
Reverse Split
Except as otherwise specified, the share and per share amounts for historical periods have been restated to give the effect to the Reverse Stock Split effected on February 2, 2011.
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 1-877-317-6789. A playback of the call will be available through February 27, 2012 by dialing 1-877-344-7529 (passcode: 10008748) and on the Company's website.
About Central Pacific Financial Corp.
Central Pacific Financial Corp. is a Hawaii-based bank holding company with approximately $4.1 billion in assets. Central Pacific Bank, its primary subsidiary, operates 34 branches, 120 ATMs, and a residential mortgage subsidiary in the state of Hawaii. 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, concerning plans and objectives of management for future operations, concerning future economic performance, or concerning any of the assumptions underlying or relating to any of the foregoing. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts, and may include the words "believes", "plans", "intends", "expects", "anticipates", "forecasts", "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 impact of local, national, and international economies and events, including natural disasters, on the Company's business and operations and on tourism, the military, and other major industries operating within the Hawaii market and any other markets in which the Company does business; the impact of regulatory actions on the Company and the Bank including the Memorandum of Understanding entered into with the FDIC and the DFI on May 5, 2011; the impact of legislation affecting the banking industry including the Emergency Economic Stabilization Act of 2008 and the Dodd-Frank Act Wall Street Reform and Consumer Protection Act and any regulations promulgated thereunder; the impact of competitive products, services, pricing, and other competitive forces; movements in interest rates; loan delinquency rates and changes in asset quality generally; threats to the security of our technology software and hardware; changes in our organization and management; changes in tax and accounting policies and practices; volatility in the financial markets and uncertainties concerning the availability of debt or equity financing; and the impact of regulatory supervision. For further information on factors that could cause actual results to materially differ from forward-looking statements, please see the Company's publicly available Securities and Exchange Commission filings, including the Company's 2010 Form 10-K and 2011 Form 10-Qs. The Company does not update any of its forward-looking statements except as required by law.
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Financial Highlights - December 31, 2011
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
(in thousands, except per share
data) 2011 2010 2011 2010
INCOME STATEMENT
Net income (loss) $12,095 $(2,085) $36,571 $(250,953)
Per common share data:
Basic earnings (loss) per share (after
preferred stock dividends, accretion
of discount, and conversion of
preferred stock to common stock) 0.29 (2.78) 3.36 (171.13)
Diluted earnings (loss) per share (after
preferred stock dividends, accretion
of discount, and conversion of
preferred stock to common stock) 0.29 (2.78) 3.31 (171.13)
PERFORMANCE RATIOS
Return (loss) on average assets (1) 1.19% (0.20)% 0.90% (5.74)%
Return (loss) on average
shareholders' equity (1) 10.78 (9.90) 9.83 (140.73)
Net income (loss) to average
tangible shareholders' equity (1) 11.27 (13.47) 10.41 (193.24)
Efficiency ratio (2) 91.99 79.99 92.06 82.88
Net interest margin (1) 3.25 2.76 3.09 2.91
December 31,
REGULATORY CAPITAL RATIOS 2011 2010
Central Pacific Financial Corp.
Tier 1 risk-based capital 22.94% 7.64%
Total risk-based capital 24.24 8.98
Leverage capital 13.78 4.42
Central Pacific Bank
Tier 1 risk-based capital 21.63% 8.36%
Total risk-based capital 22.93 9.70
Leverage capital 13.00 4.83
December 31, %
2011 2010 Change
BALANCE SHEET
Total assets $4,132,865 $3,938,051 4.9%
Loans and leases, net of unearned interest 2,064,447 2,169,444 (4.8)
Net loans and leases 1,942,354 1,976,590 (1.7)
Deposits 3,443,528 3,132,947 9.9
Total shareholders' equity 456,440 66,052 591.0
Book value per common share 10.93 (42.18) N/A
Tangible book value per common share 10.48 (56.55) N/A
Market value per common share 12.92 30.60 (57.8)
Tangible common equity ratio (3) 10.63% (2.20)% N/A
Three Months Ended Year Ended
December 31, % December 31, %
2011 2010 Change 2011 2010 Change
SELECTED AVERAGE BALANCES
Total assets $4,064,411 $4,109,582 (1.1)% $4,054,628 $4,368,259 (7.2)%
Interest-earning assets 3,787,703 3,909,134 (3.1) 3,822,410 4,099,755 (6.8)
Loans and leases, net of unearned
interest 2,114,686 2,359,977 (10.4) 2,121,544 2,716,090 (21.9)
Other real estate 62,685 53,549 17.1 53,033 40,499 30.9
Deposits 3,348,719 3,146,779 6.4 3,212,540 3,258,940 (1.4)
Interest-bearing liabilities 2,846,075 3,353,362 (15.1) 2,925,423 3,531,123 (17.2)
Total shareholders' equity 448,759 84,281 432.5 371,922 178,321 108.6
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Financial Highlights - December 31, 2011
(Unaudited)
(in thousands, except per share data)
December 31, %
2011 2010 Change
NONPERFORMING ASSETS
Nonaccrual loans (including loans held for sale) $133,913 $245,304 (45.4)%
Other real estate, net 61,681 57,507 7.3
------ ------
Total nonperforming assets 195,594 302,811 (35.4)
------- -------
Loans delinquent for 90 days or more (still accruing interest) 28 8,531 (99.7)
Restructured loans (still accruing interest) 8,263 13,401 (38.3)
----- ------
Total nonperforming assets, loans delinquent for 90 days or more (still
accruing interest)
and restructured loans (still accruing interest) $203,885 $324,743 (37.2)
======== ========
Three Months Ended Year Ended
December 31, % December 31, %
2011 2010 Change 2011 2010 Change
Loan charge-offs $11,275 $30,205 (62.7)% $41,543 $199,962 (79.2)%
Recoveries 1,153 5,051 (77.2) 11,472 27,989 (59.0)
----- ----- ------ ------
Net loan charge-offs $10,122 $25,154 (59.8) $30,071 $171,973 (82.5)
======= ======= ======= ========
Net loan charge-offs to average loans (1) 1.91% 4.26% 1.42% 6.33%
==== ==== ==== ====
December 31,
2011 2010
ASSET QUALITY RATIOS
Nonaccrual loans (including loans held for sale) to total loans and leases
and loans held for sale 6.33% 10.96%
Nonperforming assets to total assets 4.73 7.69
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 9.37 14.14
Allowance for loan and lease losses to total loans and leases 5.91 8.89
Allowance for loan and lease losses to nonaccrual loans (including loans
held for sale) 91.17 78.62
(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 Quarter Ended Quarter Ended
(Dollars in
thousands,
except per December 31, September 30, December 31,
share data) 2011 2011 2010
----------- ------------- -------------- -------------
Efficiency
Ratio
Total operating
expenses as a
percentage of
net operating
revenue 100.14% 117.84% 103.37%
Amortization of
other
intangible
assets (1.59) (1.74) (1.53)
Foreclosed
asset expense (6.56) (2.02) (8.65)
Write down of
assets - 0.07 (1.11)
Loss on early
extinguishment
of debt - (15.04) (12.09)
Efficiency
ratio 91.99% 99.11% 79.99%
===== ===== =====
Year Ended Year Ended
December 31, December 31,
2011 2010
------------- -------------
Total operating
expenses as a
percentage of
net operating
revenue 103.01% 152.25%
Goodwill
impairment - (58.53)
Amortization of
other
intangible
assets (1.72) (1.64)
Foreclosed
asset expense (2.73) (5.13)
Write down of
assets (2.77) (0.83)
Loss on early
extinguishment
of debt (3.73) (3.24)
Efficiency
ratio 92.06% 82.88%
===== =====
Tangible Common December 31, December 31,
Equity Ratio 2011 2010
------------- -------------
Total
shareholders'
equity $456,440 $66,052
Less: Preferred
stock - (130,458)
Less: Other
intangible
assets (19,053) (21,927)
------- -------
Tangible common
equity 437,387 (86,333)
Total assets 4,132,865 3,938,051
Less: Other
intangible
assets (19,053) (21,927)
------- -------
Tangible assets 4,113,812 3,916,124
Tangible common
equity /
Tangible
assets 10.63% (2.20)%
===== ======
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
December September
31, 30, December 31,
(in thousands) 2011 2011 2010
---- ---- ----
ASSETS
Cash and due from banks $76,233 $68,508 $61,725
Interest-bearing deposits in other
banks 180,839 231,353 729,014
Investment securities:
Available for sale 1,492,994 1,466,970 702,517
Held to maturity (fair value of $976
at December 31, 2011,
$1,287 at September 30, 2011 and $2,913 at December 31, 2010) 931 1,250 2,828
Total investment securities 1,493,925 1,468,220 705,345
--------- --------- -------
Loans held for sale 50,290 43,839 69,748
Loans and leases 2,064,447 2,059,435 2,169,444
Less allowance for loan and lease
losses 122,093 143,430 192,854
Net loans and leases 1,942,354 1,916,005 1,976,590
--------- --------- ---------
Premises and equipment, net 51,414 52,505 57,390
Accrued interest receivable 11,674 12,055 11,279
Investment in unconsolidated
subsidiaries 12,697 13,051 14,856
Other real estate 61,681 62,720 57,507
Mortgage servicing rights 22,933 22,596 22,712
Other intangible assets 19,053 19,771 21,927
Bank-owned life insurance 144,474 143,845 142,296
Federal Home Loan Bank stock 48,797 48,797 48,797
Income tax receivable 2,395 2,402 2,223
Other assets 14,106 13,491 16,642
Total assets $4,132,865 $4,119,158 $3,938,051
========== ========== ==========
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand $729,149 $681,619 $611,744
Interest-bearing demand 569,371 565,635 639,548
Savings and money market 1,136,180 1,121,969 1,089,813
Time 1,008,828 978,810 791,842
--------- ------- -------
Total deposits 3,443,528 3,348,033 3,132,947
Short-term borrowings 34 1,224 202,480
Long-tem debt 158,298 258,347 459,803
Other liabilities 64,585 60,699 66,766
Total liabilities 3,666,445 3,668,303 3,861,996
--------- --------- ---------
Equity:
Preferred stock, no par value,
authorized 1,000,000 shares;
issued and outstanding none at
December 31, 2011 and September 30,
2011,
and 135,000 at December 31, 2010 - - 130,458
Common stock, no par value,
authorized 185,000,000 shares;
issued and outstanding 41,749,116
shares at December 31, 2011,
41,749,116
shares at September 30, 2011 and
1,527,000 shares at December 31,
2010 784,539 784,172 404,167
Surplus 66,585 65,479 63,308
Accumulated deficit (396,848) (408,943) (517,316)
Accumulated other comprehensive
income (loss) 2,164 161 (14,565)
----- --- -------
Total shareholders' equity 456,440 440,869 66,052
Non-controlling interest 9,980 9,986 10,003
----- ----- ------
Total equity 466,420 450,855 76,055
------- ------- ------
Total liabilities and equity $4,132,865 $4,119,158 $3,938,051
========== ========== ==========
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Year Ended
------------------ ----------
December September December
31, 30, 31, December 31,
(In thousands, except per share
data) 2011 2011 2010 2011 2010
---- ---- ---- ---- ----
Interest income:
Interest and fees on loans and
leases 26,097 $25,962 $31,558 $107,089 $138,114
Interest and dividends on
investment
securities:
Taxable interest 7,179 7,918 4,060 27,559 19,699
Tax-exempt interest 189 186 179 738 1,068
Dividends 4 5 3 12 11
Interest on deposits in other
banks 104 259 555 1,052 1,862
--- --- --- ----- -----
Total interest income 33,573 34,330 36,355 136,450 160,754
------ ------ ------ ------- -------
Interest expense:
Interest on deposits:
Demand 94 113 196 500 885
Savings and money market 353 459 1,055 2,044 5,514
Time 1,288 1,499 2,935 7,066 14,390
Interest on short-term borrowings - - 295 204 1,177
Interest on long-term debt 1,026 2,430 4,855 8,815 20,135
----- ----- ----- ----- ------
Total interest expense 2,761 4,501 9,336 18,629 42,101
----- ----- ----- ------ ------
Net interest income 30,812 29,829 27,019 117,821 118,653
Provision (credit) for loan and
lease losses (11,215) (19,116) 406 (40,690) 159,548
------- ------- --- ------- -------
Net interest income (loss) after
provision for loan and lease
losses 42,027 48,945 26,613 158,511 (40,895)
------ ------ ------ ------- -------
Other operating income:
Service charges on deposit
accounts 2,460 2,501 2,849 10,024 11,831
Other service charges and fees 4,286 4,451 3,973 17,239 15,418
Income from fiduciary activities 658 636 831 2,794 3,204
Equity in earnings of
unconsolidated subsidiaries 157 136 140 458 468
Fees on foreign exchange 180 198 157 664 659
Investment securities gains 1,045 - - 1,306 831
Income from bank-owned life
insurance 1,103 866 673 4,139 4,809
Loan placement fees 193 164 84 541 391
Net gains on sales of residential
loans 3,670 1,177 3,155 8,050 8,468
Gain on sale of premises and
equipment - - 7,698 - 7,698
Other 1,483 1,380 325 4,966 3,259
----- ----- --- ----- -----
Total other operating income 15,235 11,509 19,885 50,181 57,036
------ ------ ------ ------ ------
Other operating expense:
Salaries and employee benefits 17,344 15,856 12,999 63,675 56,613
Net occupancy 3,559 3,466 3,847 13,793 13,650
Equipment 1,070 1,348 1,222 4,702 5,337
Amortization of other intangible
assets 2,148 1,709 1,857 7,033 7,061
Communication expense 886 828 886 3,517 3,985
Legal and professional services 3,536 3,230 3,507 13,506 17,840
Computer software expense 923 894 993 3,629 3,625
Advertising expense 453 842 354 2,961 2,531
Goodwill impairment - - - - 102,689
Foreclosed asset expense 2,959 835 4,064 4,557 8,982
Write down of assets - (31) 520 4,624 1,460
Loss on early extinguishment of
debt - 6,234 5,685 6,234 5,685
Other 12,289 13,617 12,649 43,890 37,636
------ ------ ------ ------ ------
Total other operating expense 45,167 48,828 48,583 172,121 267,094
------ ------ ------ ------- -------
Income (loss) before income taxes 12,095 11,626 (2,085) 36,571 (250,953)
Income tax expense - - - - -
--- --- --- --- ---
Net income (loss) 12,095 $11,626 $(2,085) $36,571 $(250,953)
====== ======= ======= ======= =========
Per common share data:
Basic earnings (loss) per share 0.29 $0.28 $(2.78) $3.36 $(171.13)
Diluted earnings (loss) per share 0.29 0.28 (2.78) 3.31 (171.13)
Basic weighted average shares
outstanding 41,628 41,625 1,519 35,891 1,516
Diluted weighted average shares
outstanding 41,709 41,672 1,519 36,342 1,516
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, 2011 December 31, 2010 December 31, 2011 December 31, 2010
----------------- ----------------- ----------------- -----------------
Average Average Average Average Average Average Average Average
Yield/ Yield/ Yield/ Yield/
Balance Rate Interest Balance Rate Interest Balance Rate Interest Balance Rate Interest
------- ------- -------- ------- ------- -------- ------- ------- -------- ------- ------- --------
Assets:
Interest
earning
assets:
Interest-
bearing
deposits in
other banks $162,592 0.25% $104 $865,095 0.25% $555 $412,351 0.26% $1,052 $726,346 0.26% $1,862
Taxable
investment
securities,
excluding
valuation
allowance 1,449,324 1.98 7,183 622,105 2.61 4,063 1,227,181 2.25 27,571 586,719 3.36 19,710
Tax-exempt
investment
securities,
excluding
valuation
allowance 12,304 9.47 291 13,160 8.35 275 12,537 9.05 1,135 21,803 7.54 1,643
Loans and
leases, net of
unearned
income 2,114,686 4.91 26,097 2,359,977 5.32 31,558 2,121,544 5.05 107,089 2,716,090 5.09 138,114
Federal Home
Loan Bank
stock 48,797 - - 48,797 - - 48,797 - - 48,797 - -
------ --- --- ------ --- --- ------ --- --- ------ --- ---
Total interest
earning assets 3,787,703 3.54 33,675 3,909,134 3.71 36,451 3,822,410 3.58 136,847 4,099,755 3.94 161,329
Nonearning
assets 276,708 200,448 232,218 268,504
------- ------- ------- -------
Total assets $4,064,411 $4,109,582 $4,054,628 $4,368,259
========== ========== ========== ==========
Liabilities &
Equity:
Interest-
bearing
liabilities:
Interest-
bearing demand
deposits $555,624 0.07% $94 $648,752 0.12% $196 $539,519 0.09% $500 $619,070 0.14% $885
Savings and
money market
deposits 1,130,165 0.12 353 1,085,775 0.39 1,055 1,117,183 0.18 2,044 1,092,378 0.50 5,514
Time deposits
under $100,000 359,076 0.76 688 472,111 1.41 1,674 395,500 0.99 3,900 515,264 1.57 8,077
Time deposits
$100,000 and
over 611,662 0.39 600 347,209 1.44 1,261 484,734 0.65 3,166 450,371 1.40 6,313
Short-term
borrowings 1,878 0.01 - 202,026 0.58 295 35,810 0.57 204 219,823 0.54 1,177
Long-term debt 187,670 2.17 1,026 597,489 3.22 4,855 352,677 2.50 8,815 634,217 3.17 20,135
------- ---- ----- ------- ---- ----- ------- ---- ----- ------- ---- ------
Total interest-
bearing
liabilities 2,846,075 0.38 2,761 3,353,362 1.10 9,336 2,925,423 0.64 18,629 3,531,123 1.19 42,101
----- ----- ------ ------
Noninterest-
bearing
deposits 692,192 592,932 675,604 581,857
Other
liabilities 67,402 69,001 71,687 66,943
------ ------ ------ ------
Total
liabilities 3,605,669 4,015,295 3,672,714 4,179,923
--------- --------- --------- ---------
Shareholders'
equity 448,759 84,281 371,922 178,321
Non-
controlling
interest 9,983 10,006 9,992 10,015
----- ------ ----- ------
Total equity 458,742 94,287 381,914 188,336
------- ------ ------- -------
Total
liabilities &
equity $4,064,411 $4,109,582 $4,054,628 $4,368,259
========== ========== ========== ==========
Net interest
income $30,914 $27,115 $118,218 $119,228
======= ======= ======== ========
Net interest
margin 3.25% 2.76% 3.09% 2.91%
==== ==== ==== ====
SOURCE Central Pacific Financial Corp.
