- Net income of $20.2 million, or $0.74 per diluted share for
the fourth quarter. Net income of $73.9 million, or
$2.68 per diluted share for the 2022 year.
- ROA of 1.09% and ROE of 18.30% for the fourth quarter. ROA
of 1.01% and ROE of 15.47% for the 2022 year.
- Total loans of $5.56 billion increased by $133.3 million, or
2.5% (10.0% annualized) in the fourth quarter. Total loans
increased by $453.8 million, or 8.9% for the 2022 year.
- Total deposits of $6.74 billion increased by $179.8 million,
or 2.7% (10.8% annualized) in the fourth quarter. Total deposits
increased by $97.1 million, or 1.5% for the 2022 year.
- Net interest income increased by $0.9 million, or 1.7% from
the previous quarter. Net interest margin of 3.17% was consistent
with the previous quarter. Net interest margin, excluding PPP
loans, of 3.16% increased by 3 bps from the previous
quarter.
- Board of Directors approved quarterly cash dividend of $0.26
per share and new $25 million share repurchase program.
Central Pacific Financial Corp. (NYSE: CPF) (the "Company"),
parent company of Central Pacific Bank (the "Bank" or "CPB"), today
reported net income for the fourth quarter of 2022 of $20.2
million, compared to $16.7 million in the previous quarter and
$22.3 million in the year-ago quarter. Fully diluted earnings per
share ("EPS") of $0.74 for the fourth quarter of 2022 reflected a
21% increase from $0.61 in the previous quarter and a 8% decrease
from $0.80 in the year-ago quarter. For the 2022 year, net income
was $73.9 million, or EPS of $2.68, compared to net income of $79.9
million, or EPS of $2.83 last year.
"We ended the 2022 year successfully with strong loan, deposit
and net interest income growth," said Arnold Martines, President
and Chief Executive Officer. "At the same time, we continued to
have solid asset quality, liquidity and capital positions. We
believe the Hawaii economy will be resilient and fare better than
the rest of the country because of our strong housing and tourism
markets, as well as the large military presence in our State. I
would like to thank our hard-working and committed team of
employees, as well as our customers for their ongoing support of
our bank."
Earnings Highlights
Net interest income for the fourth quarter of 2022 was $56.3
million, an increase of $0.9 million, or 1.7% from the previous
quarter, and an increase of $3.2 million, or 6.0% from the year-ago
quarter. The sequential quarter increase in net interest income is
primarily due to higher asset yields and continued strong loan
growth which outpaced the increase in rates paid on deposits. Net
interest income in the fourth quarter of 2022 included $0.1 million
in net PPP interest income and fees, compared to $0.7 million and
$4.7 million, in the previous and year-ago quarters, respectively.
Net interest income for the 2022 year included $3.6 million in net
PPP interest income and fees, compared to $26.4 million for the
2021 year.
Net interest margin ("NIM") for the fourth quarter of 2022 was
3.17%, which remained unchanged from the previous quarter and
increased by 9 basis points ("bps") from the year-ago quarter. NIM,
excluding PPP loans, of 3.16% increased by 3 bps from the previous
quarter. The increase in NIM, excluding PPP loans, was primarily
attributable to higher yields earned during the quarter on
investment securities and core loans, or total loans excluding PPP
loans, partially offset by increases in rates paid on deposits and
borrowings. Additional information on average balances, interest
income and expenses and yields and rates is presented in Tables 4,
5 and 10.
In the fourth quarter of 2022, the Company recorded a provision
for credit losses of $0.6 million, compared to a provision of $0.4
million in the previous quarter and a release of the credit loss
reserves of $7.7 million in the year-ago quarter.
Other operating income for the fourth quarter of 2022 totaled
$11.6 million, compared to $9.6 million in the previous quarter and
$11.6 million in the year-ago quarter. The increase from the
previous quarter was primarily due to higher income from bank-owned
life insurance. Additional information on other operating income is
presented in Table 3.
Other operating expense for the fourth quarter of 2022 totaled
$40.4 million, compared to $42.0 million in the previous quarter
and $42.4 million in the year-ago quarter. The decrease in other
operating expense from the previous quarter was primarily due to
lower net occupancy and advertising expenses. Additional
information on other operating expense is presented in Table 3.
The efficiency ratio for the fourth quarter of 2022 was 59.56%,
compared to 64.62% in the previous quarter and 65.61% in the
year-ago quarter.
The effective tax rate for the fourth quarter of 2022 was 24.9%,
compared to 26.2% in the previous quarter and 25.4% in the year-ago
quarter.
Balance Sheet Highlights
Total assets at December 31, 2022 of $7.43 billion increased by
$95.1 million, or 1.3% from $7.34 billion at September 30, 2022,
and increased by $13.7 million, or 0.2% from $7.42 billion at
December 31, 2021.
Total loans, net of deferred fees and costs, at December 31,
2022 of $5.56 billion increased by $133.3 million, or 2.5% from
$5.42 billion at September 30, 2022, and increased by $453.8
million, or 8.9%, from $5.10 billion at December 31, 2021. Loans by
type and geographic distribution are summarized in Table 6.
Total deposits at December 31, 2022 of $6.74 billion increased
by $179.8 million or 2.7% from $6.56 billion at September 30, 2022,
and increased by $97.1 million, or 1.5%, from $6.64 billion at
December 31, 2021. Core deposits, which include demand deposits,
savings and money market deposits and time deposits up to $250,000,
totaled $6.08 billion at December 31, 2022, and increased by $38.8
million from September 30, 2022. Core deposit and total deposit
balances are summarized in Table 7.
Asset Quality
Nonperforming assets at December 31, 2022 totaled $5.3 million,
or 0.07% of total assets, compared to $4.2 million, or 0.06% of
total assets at September 30, 2022, and $5.9 million, or 0.08% of
total assets at December 31, 2021. Additional information on
nonperforming assets, past due and restructured loans is presented
in Table 8.
Net charge-offs in the fourth quarter of 2022 totaled $1.7
million, compared to net charge-offs of $1.6 million in the
previous quarter, and net recoveries of $0.9 million in the
year-ago quarter.
The allowance for credit losses, as a percentage of total loans
at December 31, 2022 was 1.15%, compared to 1.19% at September 30,
2022, and 1.33% at December 31, 2021. Additional information on net
charge-offs and recoveries and the allowance for credit losses is
presented in Table 9.
Capital
Total shareholders' equity was $452.9 million at December 31,
2022, compared to $438.5 million and $558.2 million at September
30, 2022 and December 31, 2021, respectively. The decline in
shareholders' equity from a year ago was primarily due to an
increase in unrealized losses on our available-for-sale investment
securities portfolio which is included in accumulated other
comprehensive income, and were driven by the rising interest rate
environment.
At December 31, 2022, the Company's leverage capital, tier 1
risk-based capital, total risk-based capital, and common equity
tier 1 ratios were 8.5%, 11.3%, 13.5%, and 10.5%, respectively,
compared to 8.7%, 11.5%, 13.7%, and 10.6%, respectively, at
September 30, 2022.
On January 24, 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 March 15, 2023 to
shareholders of record at the close of business on February 28,
2023.
On January 24, 2023, the Company's Board of Directors also
authorized the repurchase of up to $25 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 "Repurchase Plan"). The Repurchase Plan replaces and
supersedes in its entirety the share repurchase program previously
approved by the Company's Board of Directors, which had $10.3
million in remaining repurchase authority as of December 31, 2022.
During the fourth quarter of 2022, the Company repurchased 241,203
shares of common stock, at a total cost of $4.9 million, or an
average cost per share of $20.41. During the year ended December
31, 2022, the Company returned $49.2 million in capital to its
shareholders through cash dividends and share repurchases.
Key Business Highlights during the fourth quarter included
the following:
- Arnold Martines, a veteran of the local banking industry and
Central Pacific Bank, was promoted to President & CEO of
Central Pacific Bank and Central Pacific Financial.
- Newsweek named Central Pacific Bank one of the Best Banks in
Hawaii.
- Jason Fujimoto, President & CEO of HPM Building Supply on
the island of Hawaii, was named to the boards of CPB and CPF.
- The Central Pacific Bank Foundation again contributed
generously to the local community with total donations in 2022 of
$1.3 million.
- In the community, the Bank launched a major small business
marketing campaign aimed at a key customer segment and area of
strategic focus for the Bank.
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.cpb.bank. Alternatively,
investors may participate in the live call by dialing
1-844-200-6205 (access code: 274117). A playback of the call will
be available through February 24, 2023 by dialing 1-866-813-9403
(access code: 649427) 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 $7.43 billion in assets as of December
31, 2022. Central Pacific Bank, its primary subsidiary, operates 27
branches and 64 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 CPF Listed NYSE
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 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 as well as the
effects of government programs and initiatives in response to
COVID-19; the impact of our participation in the Paycheck
Protection Program ("PPP") and fulfillment of government guarantees
on our PPP loans; 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 anticipated 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
Year Ended
(Dollars in thousands,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
Dec 31,
except for per share amounts)
2022
2022
2022
2022
2021
2022
2021
CONDENSED INCOME STATEMENT
Net interest income
$
56,285
$
55,365
$
52,978
$
50,935
$
53,096
$
215,563
$
211,047
Provision (credit) for credit losses
571
362
989
(3,195
)
(7,692
)
(1,273
)
(14,591
)
Total other operating income
11,601
9,629
17,138
9,551
11,566
47,919
43,060
Total other operating expense
40,434
41,998
45,349
38,205
42,422
165,986
163,046
Income tax expense
6,700
5,919
6,184
6,038
7,605
24,841
25,758
Net income
20,181
16,715
17,594
19,438
22,327
73,928
79,894
Basic earnings per common share
$
0.74
$
0.61
$
0.64
$
0.70
$
0.80
$
2.70
$
2.85
Diluted earnings per common share
0.74
0.61
0.64
0.70
0.80
2.68
2.83
Dividends declared per common share
0.26
0.26
0.26
0.26
0.25
1.04
0.96
PERFORMANCE RATIOS
Return on average assets (ROA) [1]
1.09
%
0.91
%
0.96
%
1.06
%
1.22
%
1.01
%
1.13
%
Return on average shareholders’ equity
(ROE) [1]
18.30
14.49
14.93
14.44
16.05
15.47
14.38
Average shareholders’ equity to average
assets
5.97
6.30
6.45
7.34
7.61
6.51
7.85
Efficiency ratio [2]
59.56
64.62
64.68
63.16
65.61
63.00
64.16
Net interest margin (NIM) [1]
3.17
3.17
3.05
2.97
3.08
3.09
3.18
Dividend payout ratio [3]
35.14
42.62
40.63
37.14
31.25
38.81
33.92
SELECTED AVERAGE BALANCES
Average loans, including loans held for
sale
$
5,498,800
$
5,355,088
$
5,221,300
$
5,114,260
$
5,073,069
$
5,298,573
$
5,071,516
Average interest-earning assets
7,103,841
6,991,773
6,982,556
6,932,649
6,890,829
7,003,232
6,643,193
Average assets
7,389,712
7,320,751
7,309,939
7,341,850
7,315,325
7,340,261
7,078,025
Average deposits
6,673,922
6,535,321
6,626,462
6,581,593
6,536,826
6,604,049
6,299,369
Average interest-bearing liabilities
4,708,045
4,538,893
4,442,172
4,429,114
4,407,612
4,530,347
4,288,041
Average shareholders’ equity
441,084
461,328
471,420
538,601
556,462
477,775
555,600
[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)
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
2022
2022
2022
2022
2021
REGULATORY CAPITAL RATIOS
Central Pacific Financial Corp.
(consolidated)
Leverage capital ratio
8.5
%
8.7
%
8.6
%
8.5
%
8.5
%
Tier 1 risk-based capital ratio
11.3
11.5
11.6
11.9
12.2
Total risk-based capital ratio
13.5
13.7
13.9
14.2
14.5
Common equity tier 1 capital ratio
10.5
10.6
10.7
10.9
11.2
Central Pacific Bank
Leverage capital ratio
9.0
9.1
9.0
9.0
8.9
Tier 1 risk-based capital ratio
11.9
12.2
12.2
12.6
12.8
Total risk-based capital ratio
13.1
13.4
13.5
13.8
14.0
Common equity tier 1 capital ratio
11.9
12.2
12.2
12.6
12.8
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
(dollars in thousands, except for per
share amounts)
2022
2022
2022
2022
2021
BALANCE SHEET
Total loans, net of deferred fees and
costs
$
5,555,466
$
5,422,212
$
5,301,633
$
5,174,837
$
5,101,649
Total assets
7,432,763
7,337,631
7,299,178
7,298,819
7,419,089
Total deposits
6,736,223
6,556,434
6,622,061
6,599,031
6,639,158
Long-term debt
105,859
105,799
105,738
105,677
105,616
Total shareholders’ equity
452,871
438,468
455,100
486,328
558,219
Total shareholders’ equity to total
assets
6.09
%
5.98
%
6.23
%
6.66
%
7.52
%
ASSET QUALITY
Allowance for credit losses (ACL)
$
63,738
$
64,382
$
65,211
$
64,754
$
68,097
Nonaccrual loans
5,251
4,220
4,983
5,336
5,881
Non-performing assets (NPA)
5,251
4,220
4,983
5,336
5,881
ACL to total loans
1.15
%
1.19
%
1.23
%
1.25
%
1.33
%
ACL to nonaccrual loans
1,213.83
%
1,525.64
%
1,308.67
%
1,213.53
%
1,157.92
%
NPA to total assets
0.07
%
0.06
%
0.07
%
0.07
%
0.08
%
PER SHARE OF COMMON STOCK OUTSTANDING
Book value per common share
$
16.76
$
16.08
$
16.57
$
17.63
$
20.14
Closing market price per common share
20.28
20.69
21.45
27.90
28.17
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
TABLE 2
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
(Dollars in thousands, except share
data)
2022
2022
2022
2022
2021
ASSETS
Cash and due from financial
institutions
$
97,150
$
116,365
$
108,389
$
83,947
$
81,506
Interest-bearing deposits in other
financial institutions
14,894
22,332
22,741
118,183
247,401
Investment securities:
Available-for-sale debt securities, at
fair value
671,794
686,681
787,373
1,199,482
1,631,699
Held-to-maturity debt securities, at
amortized cost; fair value of: $596,781 at December 31, 2022,
$590,880 at September 30, 2022, $635,565 at June 30, 2022, $329,503
at March 31, 2022, and none at December 31, 2021
664,883
662,827
663,365
329,507
—
Equity securities, at fair value
—
—
—
—
—
Total investment securities
1,336,677
1,349,508
1,450,738
1,528,989
1,631,699
Loans held for sale
1,105
1,701
535
4,677
3,531
Loans, net of deferred fees and costs
5,555,466
5,422,212
5,301,633
5,174,837
5,101,649
Less: allowance for credit losses
63,738
64,382
65,211
64,754
68,097
Loans, net of allowance for credit
losses
5,491,728
5,357,830
5,236,422
5,110,083
5,033,552
Premises and equipment, net
91,634
89,979
88,664
79,455
80,354
Accrued interest receivable
20,345
18,134
17,146
16,423
16,709
Investment in unconsolidated entities
46,641
36,769
37,341
31,092
29,679
Mortgage servicing rights
9,074
9,216
9,369
9,480
9,738
Bank-owned life insurance
167,967
167,761
167,202
167,407
169,148
Federal Home Loan Bank ("FHLB") stock
9,146
13,546
8,943
8,943
7,964
Right of use lease asset
34,985
35,978
36,978
38,435
39,441
Other assets
111,417
118,512
114,710
101,705
68,367
Total assets
$
7,432,763
$
7,337,631
$
7,299,178
$
7,298,819
$
7,419,089
LIABILITIES
Deposits:
Noninterest-bearing demand
$
2,092,823
$
2,138,083
$
2,282,967
$
2,269,562
$
2,291,246
Interest-bearing demand
1,453,167
1,441,302
1,444,566
1,433,284
1,415,277
Savings and money market
2,199,028
2,194,991
2,214,146
2,197,647
2,225,903
Time
991,205
782,058
680,382
698,538
706,732
Total deposits
6,736,223
6,556,434
6,622,061
6,599,031
6,639,158
FHLB advances and other short-term
borrowings
5,000
115,000
—
—
—
Long-term debt
105,859
105,799
105,738
105,677
105,616
Lease liability
35,889
36,941
38,037
39,610
40,731
Other liabilities
96,921
84,989
78,242
68,123
75,317
Total liabilities
6,979,892
6,899,163
6,844,078
6,812,441
6,860,822
EQUITY
Shareholders' equity:
Preferred stock, no par value, authorized
1,000,000 shares; issued and outstanding: none at December 31,
2022, September 30, 2022, June 30, 2022, March 31, 2022, and
December 31, 2021
—
—
—
—
—
Common stock, no par value, authorized
185,000,000 shares; issued and outstanding: 27,025,070 at December
31, 2022, 27,262,879 at September 30, 2022, 27,463,562 at June 30,
2022, 27,584,929 at March 31, 2022, and 27,714,071 at December 31,
2021
408,071
412,994
417,862
421,153
426,091
Additional paid-in capital
101,346
100,426
98,977
98,270
98,073
Retained earnings
87,438
74,301
64,693
54,252
42,015
Accumulated other comprehensive loss
(143,984
)
(149,253
)
(126,432
)
(87,347
)
(7,960
)
Total shareholders' equity
452,871
438,468
455,100
486,328
558,219
Non-controlling interest
—
—
—
50
48
Total equity
452,871
438,468
455,100
486,378
558,267
Total liabilities and equity
$
7,432,763
$
7,337,631
$
7,299,178
$
7,298,819
$
7,419,089
CENTRAL PACIFIC FINANCIAL CORP. AND
SUBSIDIARIES
Consolidated Statements of
Income
(Unaudited)
TABLE 3
Three Months Ended
Year Ended
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
December 31,
(Dollars in thousands, except per share
data)
2022
2022
2022
2022
2021
2022
2021
Interest income:
Interest and fees on loans
$
56,682
$
51,686
$
46,963
$
44,949
$
47,576
$
200,280
$
193,778
Interest and dividends on investment
securities:
Taxable investment securities
7,104
6,933
7,035
6,969
6,667
28,041
22,430
Tax-exempt investment securities
776
805
807
816
642
3,204
1,972
Dividend income on investment
securities
—
—
—
21
21
21
75
Interest on deposits in other financial
institutions
370
107
191
72
86
740
262
Dividend income on FHLB stock
105
138
68
59
61
370
245
Total interest income
65,037
59,669
55,064
52,886
55,053
232,656
218,762
Interest expense:
Interest on deposits:
Demand
333
217
144
112
104
806
384
Savings and money market
2,488
1,054
317
329
352
4,188
1,240
Time
4,063
1,092
490
469
478
6,114
1,992
Interest on short-term borrowings
393
660
2
—
—
1,055
2
Interest on long-term debt
1,475
1,281
1,133
1,041
1,023
4,930
4,097
Total interest expense
8,752
4,304
2,086
1,951
1,957
17,093
7,715
Net interest income
56,285
55,365
52,978
50,935
53,096
215,563
211,047
Provision (credit) for credit losses
571
362
989
(3,195
)
(7,692
)
(1,273
)
(14,591
)
Net interest income after provision
(credit) for credit losses
55,714
55,003
51,989
54,130
60,788
216,836
225,638
Other operating income:
Mortgage banking income
667
831
1,140
1,172
1,902
3,810
7,732
Service charges on deposit accounts
2,172
2,138
2,026
1,861
1,800
8,197
6,358
Other service charges and fees
4,972
4,955
4,610
4,488
5,016
19,025
18,367
Income from fiduciary activities
1,058
1,165
1,188
1,154
1,283
4,565
5,075
Net gain on sales of investment
securities
—
—
8,506
—
—
8,506
150
Income from bank-owned life insurance
2,187
167
(1,028
)
539
946
1,865
3,493
Other
545
373
696
337
619
1,951
1,885
Total other operating income
11,601
9,629
17,138
9,551
11,566
47,919
43,060
Other operating expense:
Salaries and employee benefits
22,692
22,778
22,369
20,942
23,030
88,781
90,213
Net occupancy
3,998
4,743
4,448
3,774
4,129
16,963
16,133
Equipment
996
1,085
1,075
1,082
1,207
4,238
4,344
Communication
696
712
744
806
922
2,958
3,271
Legal and professional services
2,677
2,573
2,916
2,626
2,928
10,792
10,452
Computer software
3,996
4,138
3,624
3,082
3,125
14,840
13,304
Advertising
701
1,150
1,150
1,150
1,179
4,151
5,495
Other
4,678
4,819
9,023
4,743
5,902
23,263
19,834
Total other operating expense
40,434
41,998
45,349
38,205
42,422
165,986
163,046
Income before income taxes
26,881
22,634
23,778
25,476
29,932
98,769
105,652
Income tax expense
6,700
5,919
6,184
6,038
7,605
24,841
25,758
Net income
$
20,181
$
16,715
$
17,594
$
19,438
$
22,327
$
73,928
$
79,894
Per common share data:
Basic earnings per share
$
0.74
$
0.61
$
0.64
$
0.70
$
0.80
$
2.70
$
2.85
Diluted earnings per share
0.74
0.61
0.64
0.70
0.80
2.68
2.83
Cash dividends declared
0.26
0.26
0.26
0.26
0.25
1.04
0.96
Basic weighted average shares
outstanding
27,134,970
27,356,614
27,516,284
27,591,390
27,769,651
27,398,445
28,003,744
Diluted weighted average shares
outstanding
27,303,249
27,501,212
27,676,619
27,874,924
28,045,826
27,567,780
28,257,323
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
December 31, 2022
September 30, 2022
December 31, 2021
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
$
38,610
3.80
%
$
370
$
19,802
2.14
%
$
107
$
225,560
0.15
%
$
86
Investment securities, excluding valuation
allowance:
Taxable
1,399,627
2.03
7,104
1,445,781
1.92
6,934
1,469,711
1.82
6,688
Tax-exempt [1]
156,079
2.52
982
158,052
2.57
1,018
114,529
2.84
813
Total investment securities
1,555,706
2.08
8,086
1,603,833
1.98
7,952
1,584,240
1.89
7,501
Loans, including loans held for sale
5,498,800
4.10
56,682
5,355,088
3.84
51,686
5,073,069
3.73
47,576
Federal Home Loan Bank stock
10,725
3.90
105
13,050
4.23
138
7,960
3.05
61
Total interest-earning assets
7,103,841
3.66
65,243
6,991,773
3.41
59,883
6,890,829
3.19
55,224
Noninterest-earning assets
285,871
328,978
424,496
Total assets
$
7,389,712
$
7,320,751
$
7,315,325
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits
$
1,441,787
0.09
%
$
333
$
1,450,434
0.06
%
$
217
$
1,383,696
0.03
%
$
104
Savings and money market deposits
2,209,166
0.45
2,488
2,208,037
0.19
1,054
2,224,592
0.06
352
Time deposits up to $250,000
311,639
1.50
1,174
228,707
0.42
245
225,451
0.31
176
Time deposits over $250,000
595,133
1.93
2,889
443,178
0.76
847
468,292
0.26
302
Total interest-bearing deposits
4,557,725
0.60
6,884
4,330,356
0.22
2,363
4,302,031
0.09
934
Federal Home Loan Bank advances and other
short-term borrowings
44,491
3.51
393
102,777
2.55
660
—
—
—
Long-term debt
105,829
5.53
1,475
105,760
4.80
1,281
105,581
3.85
1,023
Total interest-bearing liabilities
4,708,045
0.74
8,752
4,538,893
0.38
4,304
4,407,612
0.18
1,957
Noninterest-bearing deposits
2,116,197
2,204,965
2,234,795
Other liabilities
124,386
115,565
116,408
Total liabilities
6,948,628
6,859,423
6,758,815
Shareholders’ equity
441,084
461,328
556,462
Non-controlling interest
—
—
48
Total equity
441,084
461,328
556,510
Total liabilities and equity
$
7,389,712
$
7,320,751
$
7,315,325
Net interest income
$
56,491
$
55,579
$
53,267
Interest rate spread
2.92
%
3.03
%
3.01
%
Net interest margin
3.17
%
3.17
%
3.08
%
[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
Average Balances, Interest Income &
Expense, Yields and Rates (Taxable Equivalent)
(Unaudited)
TABLE 5
Year Ended
Year Ended
December 31, 2022
December 31, 2021
Average
Average
Average
Average
(Dollars in thousands)
Balance
Yield/Rate
Interest
Balance
Yield/Rate
Interest
ASSETS
Interest-earning assets:
Interest-bearing deposits in other
financial institutions
$
80,096
0.92
%
$
740
$
191,967
0.14
%
$
262
Investment securities, excluding valuation
allowance:
Taxable
1,455,246
1.93
28,062
1,269,900
1.77
22,505
Tax-exempt [1]
159,120
2.55
4,056
101,877
2.45
2,496
Total investment securities
1,614,366
1.99
32,118
1,371,777
1.82
25,001
Loans, including loans held for sale
5,298,573
3.78
200,280
5,071,516
3.82
193,778
Federal Home Loan Bank stock
10,197
3.63
370
7,933
3.09
245
Total interest-earning assets
7,003,232
3.33
233,508
6,643,193
3.30
219,286
Noninterest-earning assets
337,029
434,832
Total assets
$
7,340,261
$
7,078,025
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits
$
1,438,232
0.06
%
$
806
$
1,300,022
0.03
%
$
384
Savings and money market deposits
2,208,630
0.19
4,188
2,099,388
0.06
1,240
Time deposits up to $250,000
245,599
0.70
1,723
230,705
0.34
795
Time deposits over $250,000
494,943
0.89
4,391
551,831
0.22
1,197
Total interest-bearing deposits
4,387,404
0.25
11,108
4,181,946
0.09
3,616
Federal Home Loan Bank advances and other
short-term borrowings
37,211
2.84
1,055
607
0.30
2
Long-term debt
105,732
4.66
4,930
105,488
3.88
4,097
Total interest-bearing liabilities
4,530,347
0.38
17,093
4,288,041
0.18
7,715
Noninterest-bearing deposits
2,216,645
2,117,423
Other liabilities
115,478
116,936
Total liabilities
6,862,470
6,522,400
Shareholders’ equity
477,775
555,600
Non-controlling interest
16
25
Total equity
477,791
555,625
Total liabilities and equity
$
7,340,261
$
7,078,025
Net interest income
$
216,415
$
211,571
Interest rate spread
2.95
%
3.12
%
Net interest margin
3.09
%
3.18
%
[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 6
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
(Dollars in thousands)
2022
2022
2022
2022
2021
HAWAII:
Commercial, financial and
agricultural:
SBA Paycheck Protection Program
$
2,555
$
5,208
$
19,469
$
43,380
$
87,459
Other
383,665
358,805
367,676
407,559
422,388
Real estate:
Construction
150,208
138,724
134,103
122,329
122,867
Residential mortgage
1,940,999
1,923,068
1,890,783
1,874,048
1,875,980
Home equity
739,380
719,399
698,209
676,326
637,249
Commercial mortgage
1,029,708
1,002,874
994,405
927,241
922,146
Consumer
346,789
347,388
341,213
337,188
333,843
Total loans, net of deferred fees and
costs
4,593,304
4,495,466
4,445,858
4,388,071
4,401,932
Allowance for credit losses
(45,169
)
(47,814
)
(51,374
)
(51,521
)
(55,808
)
Loans, net of allowance for credit
losses
$
4,548,135
$
4,447,652
$
4,394,484
$
4,336,550
$
4,346,124
U.S. MAINLAND: [1]
Commercial, financial and
agricultural:
SBA Paycheck Protection Program
$
—
$
—
$
712
$
851
$
3,868
Other
160,282
158,474
156,567
136,857
107,733
Real estate:
Construction
16,515
12,872
10,935
988
—
Commercial mortgage
333,367
332,872
309,230
316,258
298,058
Consumer
451,998
422,528
378,331
331,812
290,058
Total loans, net of deferred fees and
costs
962,162
926,746
855,775
786,766
699,717
Allowance for credit losses
(18,569
)
(16,568
)
(13,837
)
(13,233
)
(12,289
)
Loans, net of allowance for credit
losses
$
943,593
$
910,178
$
841,938
$
773,533
$
687,428
TOTAL:
Commercial, financial and
agricultural:
SBA Paycheck Protection Program
$
2,555
$
5,208
$
20,181
$
44,231
$
91,327
Other
543,947
517,279
524,243
544,416
530,121
Real estate:
Construction
166,723
151,596
145,038
123,317
122,867
Residential mortgage
1,940,999
1,923,068
1,890,783
1,874,048
1,875,980
Home equity
739,380
719,399
698,209
676,326
637,249
Commercial mortgage
1,363,075
1,335,746
1,303,635
1,243,499
1,220,204
Consumer
798,787
769,916
719,544
669,000
623,901
Total loans, net of deferred fees and
costs
5,555,466
5,422,212
5,301,633
5,174,837
5,101,649
Allowance for credit losses
(63,738
)
(64,382
)
(65,211
)
(64,754
)
(68,097
)
Loans, net of allowance for credit
losses
$
5,491,728
$
5,357,830
$
5,236,422
$
5,110,083
$
5,033,552
[1] U.S. Mainland includes territories of
the United States.
CENTRAL PACIFIC FINANCIAL CORP. AND
SUBSIDIARIES
Deposits
(Unaudited)
TABLE 7
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
(Dollars in thousands)
2022
2022
2022
2022
2021
Noninterest-bearing demand
$
2,092,823
$
2,138,083
$
2,282,967
$
2,269,562
$
2,291,246
Interest-bearing demand
1,453,167
1,441,302
1,444,566
1,433,284
1,415,277
Savings and money market
2,199,028
2,194,991
2,214,146
2,197,647
2,225,903
Time deposits less than $100,000
181,547
153,238
129,103
132,712
136,584
Other time deposits $100,000 to
$250,000
148,601
108,723
84,840
87,838
88,873
Core deposits
6,075,166
6,036,337
6,155,622
6,121,043
6,157,883
Government time deposits
290,057
195,057
165,000
188,000
214,950
Other time deposits greater than
$250,000
371,000
325,040
301,439
289,988
266,325
Total time deposits greater than
$250,000
661,057
520,097
466,439
477,988
481,275
Total deposits
$
6,736,223
$
6,556,434
$
6,622,061
$
6,599,031
$
6,639,158
CENTRAL PACIFIC FINANCIAL CORP. AND
SUBSIDIARIES
Nonperforming Assets, Past Due and
Restructured Loans
(Unaudited)
TABLE 8
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
(Dollars in thousands)
2022
2022
2022
2022
2021
Nonaccrual loans: [1]
Commercial, financial and agricultural -
Other
$
297
$
277
$
333
$
293
$
183
Real estate:
Residential mortgage
3,808
2,771
3,490
3,804
4,623
Home equity
570
584
592
820
786
Consumer
576
588
568
419
289
Total nonaccrual loans
5,251
4,220
4,983
5,336
5,881
Other real estate owned ("OREO"):
Real estate:
Residential mortgage
—
—
—
—
—
Total OREO
—
—
—
—
—
Total nonperforming assets ("NPAs")
5,251
4,220
4,983
5,336
5,881
Loans delinquent for 90 days or more still
accruing interest: [1]
Commercial, financial and agricultural -
Other
39
669
309
592
945
Real estate:
Residential mortgage
559
503
—
111
—
Home equity
—
—
—
—
44
Consumer
1,240
623
842
621
374
Total loans delinquent for 90 days or more
still accruing interest
1,838
1,795
1,151
1,324
1,363
Restructured loans still accruing
interest: [1]
Real estate:
Residential mortgage
1,845
2,030
2,006
2,751
3,768
Commercial mortgage
886
925
965
1,004
1,043
Consumer
62
69
76
83
92
Total restructured loans still accruing
interest
2,793
3,024
3,047
3,838
4,903
Total NPAs and loans delinquent for 90
days or more and restructured loans still accruing interest
$
9,882
$
9,039
$
9,181
$
10,498
$
12,147
Total nonaccrual loans as a percentage of
total loans
0.09
%
0.08
%
0.09
%
0.10
%
0.12
%
Total NPAs as a percentage of total loans
and OREO
0.09
%
0.08
%
0.09
%
0.10
%
0.12
%
Total NPAs and loans delinquent for 90
days or more still accruing interest as a percentage of total loans
and OREO
0.13
%
0.11
%
0.12
%
0.13
%
0.14
%
Total NPAs, loans delinquent for 90 days
or more and restructured loans still accruing interest as a
percentage of total loans and OREO
0.18
%
0.17
%
0.17
%
0.20
%
0.24
%
Quarter-to-quarter changes in NPAs:
Balance at beginning of quarter
$
4,220
$
4,983
$
5,336
$
5,881
$
7,237
Additions
2,162
1,072
1,881
1,659
1,375
Reductions:
Payments
(198
)
(329
)
(285
)
(1,598
)
(933
)
Return to accrual status
(44
)
(616
)
(979
)
(38
)
(1,034
)
Charge-offs, valuation and other
adjustments
(889
)
(890
)
(970
)
(568
)
(764
)
Total reductions
(1,131
)
(1,835
)
(2,234
)
(2,204
)
(2,731
)
Balance at end of quarter
$
5,251
$
4,220
$
4,983
$
5,336
$
5,881
[1] Section 4013 of the CARES Act and the
revised Interagency Statement were applied to loan modifications
related to the COVID-19 pandemic as eligible and applicable. This
relief ended on January 1, 2022. These loan modifications were not
included in the delinquent or restructured loan balances presented
above.
CENTRAL PACIFIC FINANCIAL CORP. AND
SUBSIDIARIES
Allowance for Credit Losses on
Loans
(Unaudited)
TABLE 9
Three Months Ended
Year Ended
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
December 31,
(Dollars in thousands)
2022
2022
2022
2022
2021
2022
2021
Allowance for credit losses ("ACL"):
ACL at beginning of period
$
64,382
$
65,211
$
64,754
$
68,097
$
74,587
$
68,097
$
83,269
Provision (credit) for credit losses on
loans [1]
1,032
731
1,456
(2,931
)
(7,417
)
288
(14,323
)
Charge-offs:
Commercial, financial and agricultural -
Other
678
550
487
254
379
1,969
1,723
Consumer
1,881
1,912
1,390
1,216
952
6,399
4,402
Total charge-offs
2,559
2,462
1,877
1,470
1,331
8,368
6,125
Recoveries:
Commercial, financial and agricultural -
Other
210
220
215
350
358
995
1,004
Real estate:
Construction
—
14
62
—
1,159
76
1,159
Residential mortgage
133
14
36
112
13
295
358
Home equity
—
36
—
—
—
36
9
Commercial mortgage
—
—
—
—
—
—
73
Consumer
540
618
565
596
728
2,319
2,673
Total recoveries
883
902
878
1,058
2,258
3,721
5,276
Net charge-offs (recoveries)
1,676
1,560
999
412
(927
)
4,647
849
ACL at end of period
$
63,738
$
64,382
$
65,211
$
64,754
$
68,097
$
63,738
$
68,097
Average loans, net of deferred fees and
costs
$
5,498,800
$
5,355,088
$
5,221,300
$
5,114,260
$
5,073,069
$
5,298,573
$
5,071,516
Annualized ratio of net charge-offs to
average loans
0.12
%
0.12
%
0.08
%
0.03
%
(0.07
) %
0.09
%
0.02
%
[1] As of January 1, 2021, the provision
for credit losses on off-balance sheet credit exposures (previously
included in other operating expense) is included in the provision
for credit losses line on the consolidated statements of income.
The allowance for off-balance sheet credit exposures continues to
be included in other liabilities. For roll-forward purposes, in
this table we exclude the provision for credit losses on
off-balance sheet credit exposures.
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial
Measures
(Unaudited)
TABLE 10
The following table sets forth a
reconciliation of net interest income and net interest margin
("NIM"), excluding the impact of SBA Paycheck Protection Program
("PPP") loans and its related net interest income and fees, for
each of the periods indicated:
Three Months Ended
Year Ended
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
December 31,
2022
2022
2022
2022
2021
2022
2021
Net interest income, reported
$
56,285
$
55,365
$
52,978
$
50,935
$
53,096
$
215,563
$
211,047
Less: Net interest income on PPP loans
(140
)
(667
)
(890
)
(1,941
)
(4,685
)
(3,638
)
(26,352
)
Net income income, excl. PPP loans
$
56,145
$
54,698
$
52,088
$
48,994
$
48,411
$
211,925
$
184,695
Average interest-earning assets,
reported
$
7,103,841
$
6,991,773
$
6,982,556
$
6,932,649
$
6,890,829
$
7,003,232
$
6,643,193
Less: Average PPP loans
(3,615
)
(12,406
)
(33,022
)
(68,657
)
(153,792
)
(29,200
)
(389,795
)
Average interest-earning assets, excl.
PPP
$
7,100,226
$
6,979,367
$
6,949,534
$
6,863,992
$
6,737,037
$
6,974,032
$
6,253,398
Net interest margin, reported
3.17
%
3.17
%
3.05
%
2.97
%
3.08
%
3.09
%
3.18
%
Less: Impact of PPP loans on net interest
margin
(0.01
) %
(0.04
) %
(0.04
) %
(0.08
) %
(0.21
) %
(0.04
) %
(0.22
) %
Net interest margin, excl. PPP
3.16
%
3.13
%
3.01
%
2.89
%
2.87
%
3.05
%
2.96
%
The following table sets for a
reconciliation of pre-tax pre-provision ("PTPP") earnings,
excluding net interest income and fees on PPP loans, for each of
the periods indicated:
Three Months Ended
Year Ended
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
December 31,
(Dollars in thousands)
2022
2022
2022
2022
2021
2022
2021
Net income
$
20,181
$
16,715
$
17,594
$
19,438
$
22,327
$
73,928
$
79,894
Add: Income tax expense
6,700
5,919
6,184
6,038
7,605
24,841
25,758
Income before taxes
26,881
22,634
23,778
25,476
29,932
98,769
105,652
Add: (Credit) provision for credit
losses
571
362
989
(3,195
)
(7,692
)
(1,273
)
(14,591
)
PTPP earnings
27,452
22,996
24,767
22,281
22,240
97,496
91,061
Less: Net interest income on PPP loans
(140
)
(667
)
(890
)
(1,941
)
(4,685
)
(3,638
)
(26,352
)
PTPP earnings, excluding net interest
income on PPP loans
$
27,312
$
22,329
$
23,877
$
20,340
$
17,555
$
93,858
$
64,709
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230125005214/en/
Investor Contact: Ian Tanaka SVP, Treasurer (808) 544-3646
ian.tanaka@cpb.bank
Media Contact: Tim Sakahara AVP, Corporate Communications
Manager (808) 544-5125 tim.sakahara@cpb.bank
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