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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Central Pacific Financial Corp | NYSE:CPF | NYSE | Common Stock |
| Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 28.86 | 8 | 11:22:25 |
From Jan 2024 to Jan 2025
Highlights Included:
Central Pacific Financial Corp. (NYSE: CPF) (the "Company"), parent company of Central Pacific Bank (the "Bank" or "CPB"), today reported net income of $14.9 million, or fully diluted earnings per share ("EPS") of $0.55 for the fourth quarter of 2023, compared to net income of $13.1 million, or EPS of $0.49 in the previous quarter and net income of $20.2 million, or EPS of $0.74 in the year-ago quarter. For the 2023 year, net income was $58.7 million, or EPS of $2.17, compared to net income of $73.9 million, or EPS of $2.68 last year.
Pre-provision net revenue ("PPNR"), or net income excluding provision for credit losses and income taxes, totaled $23.8 million in the fourth quarter of 2023, compared to PPNR of $22.4 million in the previous quarter and $27.5 million in the year-ago quarter.
"Our solid 2023 results reflect our consistent business approach, strong credit culture and commitment to the Hawaii marketplace. We are proud to have been named to Newsweek’s 2024 list of America’s Best Regional Banks, based on our creditworthiness, profitability, net loan activity and public image. This achievement was made possible through our hardworking and committed team of employees and support of our customers and the community," said Arnold Martines, President and Chief Executive Officer. "We believe we are positioned to deliver a strong financial performance in 2024, highlighted by our strategic relationship focused approach and our solid liquidity, capital and asset quality."
Earnings Highlights
Net interest income was $51.1 million for the fourth quarter of 2023, which decreased by $0.8 million, or 1.5% from the previous quarter, and decreased by $5.1 million, or 9.1% from the year-ago quarter. Net interest margin ("NIM") was 2.84% for the fourth quarter of 2023, which decreased by 4 basis points ("bps") from the previous quarter and decreased by 33 bps from the year-ago quarter. The sequential quarter decreases in net interest income and NIM was primarily due to increases in average balances and rates paid on interest-bearing deposits, which outpaced the increases in average yields earned on investment securities and loans and the increase in average interest-earning deposits at the Federal Reserve Bank.
During the quarter, the Company completed a $30.0 million investment portfolio restructuring designed to increase prospective earnings and net interest margin. The Company sold available-for-sale debt securities with a book value of $30.0 million, weighted average yield of 3.3%, weighted average duration of 3.4 years, and recognized a loss of $1.9 million. Proceeds from the sale were used to purchase $28.3 million in debt securities with a weighted average yield of 5.7% and a weighted average duration of 2.5 years. The Company estimates the earn-back period to be approximately 2.8 years.
The Company recorded a provision for credit losses of $4.7 million in the fourth quarter of 2023, compared to a provision of $4.9 million in the previous quarter and a provision of $0.6 million in the year-ago quarter. The provision in the fourth quarter consisted of a provision for credit losses on loans of $5.0 million, offset by a credit to the provision for credit losses on off-balance sheet exposures of $0.3 million.
Other operating income totaled $15.2 million for the fourth quarter of 2023, compared to $10.0 million in the previous quarter and $11.6 million in the year-ago quarter. The increase from the previous quarter was primarily due to a non-recurring pre-tax net gain on the sale of a real estate property (included in other) of $5.1 million, combined with higher income from bank-owned life insurance ("BOLI") of $1.6 million, partially offset by the aforementioned losses on sales of investment securities totaling $1.9 million recognized in the current quarter. The Company expects future annual savings from the sale and consolidation of the real estate office space of approximately $0.6 million. The higher BOLI income was primarily attributable to equity market volatility and was offset by higher deferred compensation expense in other operating expenses.
Other operating expense totaled $42.5 million for the fourth quarter of 2023, compared to $39.6 million in the previous quarter and $40.4 million in the year-ago quarter. The increase from the previous quarter was primarily due to a non-recurring branch lease termination expense (included in other) of $2.3 million, combined with higher salaries and employee benefits of $1.1 million, partially offset by lower computer software expense of $0.4 million. The Company expects future annual savings from the branch lease termination and consolidation of approximately $0.7 million.
The efficiency ratio was 64.12% for the fourth quarter of 2023, compared to 63.91% in the previous quarter and 59.56% in the year-ago quarter.
The effective tax rate was 22.3% for the fourth quarter of 2023, compared to 24.9% in the previous quarter and 24.9% in the year-ago quarter. The lower effective tax rate was primarily attributable to higher tax-exempt BOLI income as a percentage of pre-tax income.
Balance Sheet Highlights
Total assets of $7.64 billion at December 31, 2023 remained relatively flat from $7.64 billion at September 30, 2023, and increased by $210.0 million, or 2.8% from $7.43 billion at December 31, 2022. The Company had $522.4 million in cash on its balance sheet and $2.45 billion in total other liquidity sources, including available borrowing capacity and unpledged investment securities at December 31, 2023. Total available sources of liquidity as a percentage of uninsured and uncollateralized deposits was 125% at December 31, 2023.
Total loans, net of deferred fees and costs, of $5.44 billion at December 31, 2023 decreased by $69.7 million, or 1.3% from $5.51 billion at September 30, 2023, and decreased by $116.5 million, or 2.1% from $5.56 billion at December 31, 2022. Average yields earned on loans during the fourth quarter of 2023 was 4.55%, compared to 4.49% in the previous quarter and 4.10% in the year-ago quarter.
Total deposits of $6.85 billion at December 31, 2023 decreased by $27.2 million or 0.4% from $6.87 billion at September 30, 2023, and increased by $111.4 million, or 1.7% from $6.74 billion at December 31, 2022. Core deposits, which include demand deposits, savings and money market deposits and time deposits up to $250,000, totaled $5.99 billion at December 31, 2023, and remained relatively flat from $5.99 billion at September 30, 2023. Average rates paid on total deposits during the fourth quarter of 2023 was 1.22%, compared to 1.07% in the previous quarter and 0.41% in the year-ago quarter. At December 31, 2023, approximately 65% of the Company's total deposits were FDIC-insured or fully collateralized.
Asset Quality
Nonperforming assets totaled $7.0 million, or 0.09% of total assets at December 31, 2023, compared to $6.7 million, or 0.09% of total assets at September 30, 2023 and $5.3 million, or 0.07% of total assets at December 31, 2022.
Net charge-offs totaled $5.5 million in the fourth quarter of 2023, compared to net charge-offs of $3.9 million in the previous quarter, and net charge-offs of $1.7 million in the year-ago quarter. The increase in net charge-offs was primarily attributable to the mainland consumer loan portfolio. Annualized net charge-offs as a percentage of average loans was 0.41%, 0.28% and 0.12% during the three months ended December 31, 2023, September 30, 2023 and December 31, 2022, respectively.
The allowance for credit losses, as a percentage of total loans was 1.18% at December 31, 2023, compared to 1.17% at September 30, 2023, and 1.15% at December 31, 2022.
Capital
Total shareholders' equity was $503.8 million at December 31, 2023, compared to $468.6 million and $452.9 million at September 30, 2023 and December 31, 2022, respectively. The increase from the previous and year-ago quarters is primarily due to net income, combined with the decrease in unrealized losses on investment securities, partially offset by dividends paid.
The Company's leverage, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 capital ratios were 8.8%, 12.4%, 14.6%, and 11.4%, respectively, at December 31, 2023, compared to 8.7%, 11.9%, 14.1%, and 11.0%, respectively, at September 30, 2023.
On January 30, 2024, 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, 2024 to shareholders of record at the close of business on February 29, 2024.
On January 30, 2024, the Company's Board of Directors also authorized the repurchase of up to $20 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. The Company did not repurchase any shares of common stock during the fourth quarter of 2023. During the year ended December 31, 2023, the Company repurchased 130,010 shares of common stock, at a total cost of $2.6 million, or an average cost per share of $20.24. During the year ended December 31, 2023, the Company returned $30.7 million in capital to its shareholders through cash dividends and share repurchases.
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 1-888-510-2553 (access code: 9816541). A playback of the call will be available through March 1, 2024 by dialing 1-800-770-2030 (access code: 9816541) 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 $7.64 billion in assets as of December 31, 2023. Central Pacific Bank, its primary subsidiary, operates 27 branches and 58 ATMs in the State of Hawaii. For additional information, please visit the Company's website at http://www.cpb.bank.
Equal Housing Lender Member FDIC NYSE Listed: CPF
Forward-Looking Statements ("FLS")
This document may contain FLS concerning: projections of revenues, expenses, income or loss, earnings or loss per share, capital expenditures, the payment or nonpayment of dividends, capital position, credit losses, net interest margin or other financial items; statements of plans, objectives and expectations of Central Pacific Financial Corp. (the "Company") 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 "believe," "plan," "anticipate," "expect," "intend," "forecast," "hope," "target," "continue," "remain," "estimate," "will," "should," "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 interest rate fluctuations; the adverse effects of recent bank failures and the potential impact of such developments on customer confidence, deposit behavior, liquidity and regulatory responses thereto; the adverse effects of the COVID-19 pandemic virus (and ongoing pandemic variants) on local, national and international economies, including, but not limited to, the adverse impact on tourism and construction in the State of Hawaii, our borrowers, customers, third-party contractors, vendors and employees; supply chain disruptions; the increase in inventory or adverse conditions in the real estate market and deterioration in the construction industry; adverse changes in the financial performance and/or condition of our borrowers and, as a result, increased loan delinquency rates, deterioration in asset quality, and losses in our loan portfolio; our ability to 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 and lawsuits we are or may become subject to, 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 impact resulting from the elimination of the London Interbank Offered Rate ("LIBOR") Index; 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; cybersecurity and data privacy breaches and the consequence therefrom; failure to maintain effective internal control over financial reporting or disclosure controls and procedures; 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 Forms 10-Q and 10-K for the current and 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)
2023
2023
2023
2023
2022
2023
2022
CONDENSED INCOME STATEMENT
Net interest income
$
51,142
$
51,928
$
52,734
$
54,196
$
56,285
$
210,000
$
215,563
Provision (credit) for credit losses
4,653
4,874
4,319
1,852
571
15,698
(1,273
)
Total other operating income
15,172
10,047
10,435
11,009
11,601
46,663
47,919
Total other operating expense
42,522
39,611
39,903
42,107
40,434
164,143
165,986
Income tax expense
4,273
4,349
4,472
5,059
6,700
18,153
24,841
Net income
14,866
13,141
14,475
16,187
20,181
58,669
73,928
Basic earnings per share
$
0.55
$
0.49
$
0.54
$
0.60
$
0.74
$
2.17
$
2.70
Diluted earnings per share
0.55
0.49
0.53
0.60
0.74
2.17
2.68
Dividends declared per share
0.26
0.26
0.26
0.26
0.26
1.04
1.04
PERFORMANCE RATIOS
Return on average assets (ROA) [1]
0.79
%
0.70
%
0.78
%
0.87
%
1.09
%
0.78
%
1.01
%
Return on average shareholders’ equity (ROE) [1]
12.55
10.95
12.12
13.97
18.30
12.38
15.47
Average shareholders’ equity to average assets
6.32
6.39
6.40
6.23
5.97
6.34
6.51
Efficiency ratio [2]
64.12
63.91
63.17
64.58
59.56
63.95
63.00
Net interest margin (NIM) [1]
2.84
2.88
2.96
3.08
3.17
2.94
3.09
Dividend payout ratio [3]
47.27
53.06
49.06
43.33
35.14
47.93
38.81
SELECTED AVERAGE BALANCES
Average loans, including loans held for sale
$
5,458,245
$
5,507,248
$
5,543,398
$
5,525,988
$
5,498,800
$
5,508,530
$
5,298,573
Average interest-earning assets
7,208,613
7,199,866
7,155,606
7,112,377
7,103,841
7,169,463
7,003,232
Average assets
7,498,097
7,510,537
7,463,629
7,443,767
7,389,712
7,479,243
7,340,261
Average deposits
6,730,883
6,738,071
6,674,650
6,655,660
6,673,922
6,700,127
6,604,049
Average interest-bearing liabilities
5,023,321
4,999,820
4,908,120
4,820,660
4,708,045
4,938,705
4,530,347
Average shareholders’ equity
473,708
480,118
477,711
463,556
441,084
473,819
477,775
[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 other 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,
2023
2023
2023
2023
2022
REGULATORY CAPITAL RATIOS
Central Pacific Financial Corp.
Leverage ratio
8.8
%
8.7
%
8.7
%
8.6
%
8.5
%
Tier 1 risk-based capital ratio
12.4
11.9
11.8
11.5
11.3
Total risk-based capital ratio
14.6
14.1
13.9
13.6
13.5
Common equity tier 1 capital ratio
11.4
11.0
10.9
10.6
10.5
Central Pacific Bank
Leverage ratio
9.2
9.1
9.1
9.0
9.0
Tier 1 risk-based capital ratio
12.9
12.4
12.3
12.0
11.9
Total risk-based capital ratio
14.1
13.7
13.5
13.2
13.1
Common equity tier 1 capital ratio
12.9
12.4
12.3
12.0
11.9
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
(dollars in thousands, except for per share amounts)
2023
2023
2023
2023
2022
BALANCE SHEET
Total loans, net of deferred fees and costs
$
5,438,982
$
5,508,710
$
5,520,683
$
5,557,397
$
5,555,466
Total assets
7,642,796
7,637,924
7,567,592
7,521,247
7,432,763
Total deposits
6,847,592
6,874,745
6,805,737
6,746,968
6,736,223
Long-term debt
156,102
156,041
155,981
155,920
105,859
Total shareholders’ equity
503,815
468,598
476,279
470,926
452,871
Total shareholders’ equity to total assets
6.59
%
6.14
%
6.29
%
6.26
%
6.09
%
ASSET QUALITY
Allowance for credit losses ("ACL")
$
63,934
$
64,517
$
63,849
$
63,099
$
63,738
Nonaccrual loans
7,008
6,652
11,061
5,313
5,251
Non-performing assets ("NPA")
7,008
6,652
11,061
5,313
5,251
Ratio of ACL to total loans
1.18
%
1.17
%
1.16
%
1.14
%
1.15
%
Ratio of NPA to total assets
0.09
%
0.09
%
0.15
%
0.07
%
0.07
%
PER SHARE OF COMMON STOCK OUTSTANDING
Book value per common share
$
18.63
$
17.33
$
17.61
$
17.44
$
16.76
Closing market price per common share
19.68
16.68
15.71
17.90
20.28
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)
2023
2023
2023
2023
2022
ASSETS
Cash and due from financial institutions
$
116,181
$
108,818
$
129,071
$
108,535
$
97,150
Interest-bearing deposits in other financial institutions
406,256
329,913
181,913
90,247
14,894
Investment securities:
Available-for-sale debt securities, at fair value
647,210
625,253
664,071
687,188
671,794
Held-to-maturity debt securities, at amortized cost; fair value of: $565,178 at December 31, 2023, $531,887 at September 30, 2023, $581,222 at June 30, 2023, $599,300 at March 31, 2023, and $596,780 at December 31, 2022
632,338
640,053
649,946
658,596
664,883
Total investment securities
1,279,548
1,265,306
1,314,017
1,345,784
1,336,677
Loans held for sale, at fair value
1,778
—
2,593
—
1,105
Loans, net of deferred fees and costs
5,438,982
5,508,710
5,520,683
5,557,397
5,555,466
Less: allowance for credit losses
63,934
64,517
63,849
63,099
63,738
Loans, net of allowance for credit losses
5,375,048
5,444,193
5,456,834
5,494,298
5,491,728
Premises and equipment, net
96,184
97,378
96,479
93,761
91,634
Accrued interest receivable
21,511
21,529
20,463
20,473
20,345
Investment in unconsolidated entities
41,546
42,523
45,218
45,953
46,641
Mortgage servicing rights
8,696
8,797
8,843
8,943
9,074
Bank-owned life insurance
170,706
168,543
168,136
168,244
167,967
Federal Home Loan Bank of Des Moines ("FHLB") stock
6,793
10,995
10,960
11,960
9,146
Right-of-use lease assets
29,720
32,294
33,247
34,237
34,985
Other assets
88,829
107,635
99,818
98,812
111,417
Total assets
$
7,642,796
$
7,637,924
$
7,567,592
$
7,521,247
$
7,432,763
LIABILITIES
Deposits:
Noninterest-bearing demand
$
1,913,379
$
1,969,523
$
2,009,387
$
2,028,087
$
2,092,823
Interest-bearing demand
1,329,189
1,345,843
1,359,978
1,386,913
1,453,167
Savings and money market
2,209,733
2,209,550
2,184,652
2,184,675
2,199,028
Time
1,395,291
1,349,829
1,251,720
1,147,293
991,205
Total deposits
6,847,592
6,874,745
6,805,737
6,746,968
6,736,223
FHLB advances and other short-term borrowings
—
—
—
25,000
5,000
Long-term debt, net of unamortized debt issuance costs of: $445 at December 31, 2023, $506 at September 30, 2023, $566 at June 30, 2023, $627 at March 31, 2023 and $688 at December 31, 2022
156,102
156,041
155,981
155,920
105,859
Lease liabilities
30,634
33,186
34,111
35,076
35,889
Other liabilities
104,653
105,354
95,484
87,357
96,921
Total liabilities
7,138,981
7,169,326
7,091,313
7,050,321
6,979,892
EQUITY
Shareholders' equity:
Preferred stock, no par value, authorized 1,000,000 shares; issued and outstanding: none at December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023, and December 31, 2022
—
—
—
—
—
Common stock, no par value, authorized 185,000,000 shares; issued and outstanding: 27,045,033 at December 31, 2023, 27,043,169 at September 30, 2023, 27,045,792 at June 30, 2023, 27,005,545 at March 31, 2023, and 27,025,070 at December 31, 2022
405,439
405,439
405,511
405,866
408,071
Additional paid-in capital
102,982
102,550
101,997
101,188
101,346
Retained earnings
117,990
110,156
104,046
96,600
87,438
Accumulated other comprehensive loss
(122,596
)
(149,547
)
(135,275
)
(132,728
)
(143,984
)
Total shareholders' equity
503,815
468,598
476,279
470,926
452,871
Total liabilities and equity
$
7,642,796
$
7,637,924
$
7,567,592
$
7,521,247
$
7,432,763
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,
Dec 31,
(Dollars in thousands, except per share data)
2023
2023
2023
2023
2022
2023
2022
Interest income:
Interest and fees on loans
$
62,429
$
62,162
$
60,455
$
58,269
$
56,682
$
243,315
$
200,280
Interest and dividends on investment securities:
Taxable investment securities
7,292
7,016
7,145
7,336
7,104
28,789
28,041
Tax-exempt investment securities
686
709
727
790
776
2,912
3,204
Dividends on investment securities
—
—
—
—
—
—
21
Interest on deposits in other financial institutions
3,597
2,412
877
277
370
7,163
740
Dividend income on FHLB stock
109
113
120
136
105
478
370
Total interest income
74,113
72,412
69,324
66,808
65,037
282,657
232,656
Interest expense:
Interest on deposits:
Demand
467
460
411
363
333
1,701
806
Savings and money market
7,459
6,464
4,670
3,386
2,488
21,979
4,188
Time
12,741
11,268
8,932
6,264
4,063
39,205
6,114
Interest on short-term borrowings
—
—
378
761
393
1,139
1,055
Interest on long-term debt
2,304
2,292
2,199
1,838
1,475
8,633
4,930
Total interest expense
22,971
20,484
16,590
12,612
8,752
72,657
17,093
Net interest income
51,142
51,928
52,734
54,196
56,285
210,000
215,563
Provision (credit) for credit losses
4,653
4,874
4,319
1,852
571
15,698
(1,273
)
Net interest income after provision (credit) for credit losses
46,489
47,054
48,415
52,344
55,714
194,302
216,836
Other operating income:
Mortgage banking income
611
765
690
526
667
2,592
3,810
Service charges on deposit accounts
2,312
2,193
2,137
2,111
2,172
8,753
8,197
Other service charges and fees
5,349
5,203
4,994
4,985
4,972
20,531
19,025
Income from fiduciary activities
1,272
1,234
1,068
1,321
1,058
4,895
4,565
Net (loss) gain on sales of investment securities
(1,939
)
(135
)
—
—
—
(2,074
)
8,506
Income from bank-owned life insurance
2,015
379
1,185
1,291
2,187
4,870
1,865
Other
5,552
408
361
775
545
7,096
1,951
Total other operating income
15,172
10,047
10,435
11,009
11,601
46,663
47,919
Other operating expense:
Salaries and employee benefits
20,164
19,015
20,848
22,023
22,692
82,050
88,781
Net occupancy
4,676
4,725
4,310
4,474
3,998
18,185
16,963
Equipment
968
1,112
932
946
996
3,958
4,238
Communication
632
809
791
778
696
3,010
2,958
Legal and professional services
2,245
2,359
2,469
2,886
2,677
9,959
10,792
Computer software
4,026
4,473
4,621
4,606
3,996
17,726
14,840
Advertising
1,045
968
942
933
701
3,888
4,151
Other
8,766
6,150
4,990
5,461
4,678
25,367
23,263
Total other operating expense
42,522
39,611
39,903
42,107
40,434
164,143
165,986
Income before income taxes
19,139
17,490
18,947
21,246
26,881
76,822
98,769
Income tax expense
4,273
4,349
4,472
5,059
6,700
18,153
24,841
Net income
$
14,866
$
13,141
$
14,475
$
16,187
$
20,181
$
58,669
$
73,928
Per common share data:
Basic earnings per share
$
0.55
$
0.49
$
0.54
$
0.60
$
0.74
$
2.17
$
2.70
Diluted earnings per share
0.55
0.49
0.53
0.60
0.74
2.17
2.68
Cash dividends declared
0.26
0.26
0.26
0.26
0.26
1.04
1.04
Basic weighted average shares outstanding
27,044,121
27,042,762
27,024,043
26,999,138
27,134,970
27,027,681
27,398,445
Diluted weighted average shares outstanding
27,097,285
27,079,484
27,071,478
27,122,012
27,303,249
27,080,518
27,567,780
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, 2023
September 30, 2023
December 31, 2022
Average
Average
Average
Average
Average
Average
(Dollars in thousands)
Balance
Yield/Rate
Interest
Balance
Yield/Rate
Interest
Balance
Yield/Rate
Interest
ASSETS
Interest-earning assets:
Interest-bearing deposits in other financial institutions
$
261,594
5.45
%
$
3,597
$
177,780
5.38
%
$
2,412
$
38,610
3.80
%
$
370
Investment securities:
Taxable
1,331,752
2.19
7,292
1,354,039
2.07
7,016
1,399,627
2.03
7,104
Tax-exempt [1]
146,803
2.36
868
149,824
2.40
897
156,079
2.52
982
Total investment securities
1,478,555
2.21
8,160
1,503,863
2.10
7,913
1,555,706
2.08
8,086
Loans, including loans held for sale
5,458,245
4.55
62,429
5,507,248
4.49
62,162
5,498,800
4.10
56,682
FHLB stock
10,219
4.30
109
10,975
4.09
113
10,725
3.90
105
Total interest-earning assets
7,208,613
4.10
74,295
7,199,866
4.01
72,600
7,103,841
3.66
65,243
Noninterest-earning assets
289,484
310,671
285,871
Total assets
$
7,498,097
$
7,510,537
$
7,389,712
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits
$
1,315,943
0.14
%
$
467
$
1,339,294
0.14
%
$
460
$
1,441,787
0.09
%
$
333
Savings and money market deposits
2,217,065
1.33
7,459
2,209,835
1.16
6,464
2,209,166
0.45
2,488
Time deposits up to $250,000
478,085
2.80
3,373
449,844
2.33
2,637
311,639
1.50
1,174
Time deposits over $250,000
856,159
4.34
9,368
844,842
4.05
8,631
595,133
1.93
2,889
Total interest-bearing deposits
4,867,252
1.68
20,667
4,843,815
1.49
18,192
4,557,725
0.60
6,884
FHLB advances and other short-term borrowings
—
—
—
—
—
—
44,491
3.51
393
Long-term debt
156,069
5.86
2,304
156,005
5.83
2,292
105,829
5.53
1,475
Total interest-bearing liabilities
5,023,321
1.81
22,971
4,999,820
1.63
20,484
4,708,045
0.74
8,752
Noninterest-bearing deposits
1,863,631
1,894,256
2,116,197
Other liabilities
137,437
136,343
124,386
Total liabilities
7,024,389
7,030,419
6,948,628
Total equity
473,708
480,118
441,084
Total liabilities and equity
$
7,498,097
$
7,510,537
$
7,389,712
Net interest income
$
51,324
$
52,116
$
56,491
Interest rate spread
2.29
%
2.38
%
2.92
%
Net interest margin
2.84
%
2.88
%
3.17
%
[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%.
Note: Certain prior period information has been reclassified to conform to the current period presentation.
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, 2023
December 31, 2022
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
$
134,150
5.34
%
$
7,163
$
80,096
0.92
%
$
740
Investment securities:
Taxable
1,365,067
2.11
28,789
1,455,246
1.93
28,062
Tax-exempt [1]
150,399
2.45
3,686
159,120
2.55
4,056
Total investment securities
1,515,466
2.14
32,475
1,614,366
1.99
32,118
Loans, including loans held for sale
5,508,530
4.42
243,315
5,298,573
3.78
200,280
FHLB stock
11,317
4.23
478
10,197
3.63
370
Total interest-earning assets
7,169,463
3.95
283,431
7,003,232
3.33
233,508
Noninterest-earning assets
309,780
337,029
Total assets
$
7,479,243
$
7,340,261
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits
$
1,359,240
0.13
%
$
1,701
$
1,438,232
0.06
%
$
806
Savings and money market deposits
2,195,763
1.00
21,979
2,208,630
0.19
4,188
Time deposits up to $250,000
415,541
2.15
8,917
245,599
0.70
1,723
Time deposits over $250,000
795,917
3.81
30,288
494,943
0.89
4,391
Total interest-bearing deposits
4,766,461
1.32
62,885
4,387,404
0.25
11,108
FHLB advances and other short-term borrowings
23,322
4.88
1,139
37,211
2.84
1,055
Long-term debt
148,922
5.80
8,633
105,732
4.66
4,930
Total interest-bearing liabilities
4,938,705
1.47
72,657
4,530,347
0.38
17,093
Noninterest-bearing deposits
1,933,666
2,216,645
Other liabilities
133,053
115,478
Total liabilities
7,005,424
6,862,470
Shareholders’ equity
473,819
477,775
Non-controlling interest
—
16
Total equity
473,819
477,791
Total liabilities and equity
$
7,479,243
$
7,340,261
Net interest income
$
210,774
$
216,415
Interest rate spread
2.48
%
2.95
%
Net interest margin
2.94
%
3.09
%
[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%.
Note: Certain prior period information has been reclassified to conform to the current period presentation.
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)
2023
2023
2023
2023
2022
HAWAII:
Commercial and industrial:
Small Business Administration Paycheck Protection Program ("SBA PPP")
$
1,284
$
1,410
$
1,565
$
1,821
$
2,555
Other
420,452
405,023
373,036
375,158
383,665
Real estate:
Construction
163,337
174,057
168,012
154,303
150,208
Residential mortgage
1,927,789
1,930,740
1,942,906
1,941,230
1,940,999
Home equity
736,524
753,980
750,760
743,908
739,380
Commercial mortgage
1,063,969
1,045,625
1,037,826
1,030,086
1,029,708
Consumer
322,346
338,248
327,790
342,922
346,789
Total loans, net of deferred fees and costs
4,635,701
4,649,083
4,601,895
4,589,428
4,593,304
Less: Allowance for credit losses
48,189
48,105
44,828
44,062
45,169
Loans, net of allowance for credit losses
$
4,587,512
$
4,600,978
$
4,557,067
$
4,545,366
$
4,548,135
U.S. MAINLAND: [1]
Commercial and industrial:
Other
153,971
157,373
170,557
179,906
160,282
Real estate:
Construction
22,182
37,455
32,807
27,171
16,515
Commercial mortgage
318,933
319,802
329,736
331,546
333,367
Consumer
308,195
344,997
385,688
429,346
451,998
Total loans, net of deferred fees and costs
803,281
859,627
918,788
967,969
962,162
Less: Allowance for credit losses
15,745
16,412
19,021
19,037
18,569
Loans, net of allowance for credit losses
$
787,536
$
843,215
$
899,767
$
948,932
$
943,593
TOTAL:
Commercial and industrial:
SBA PPP
$
1,284
$
1,410
$
1,565
$
1,821
$
2,555
Other
574,423
562,396
543,593
555,064
543,947
Real estate:
Construction
185,519
211,512
200,819
181,474
166,723
Residential mortgage
1,927,789
1,930,740
1,942,906
1,941,230
1,940,999
Home equity
736,524
753,980
750,760
743,908
739,380
Commercial mortgage
1,382,902
1,365,427
1,367,562
1,361,632
1,363,075
Consumer
630,541
683,245
713,478
772,268
798,787
Total loans, net of deferred fees and costs
5,438,982
5,508,710
5,520,683
5,557,397
5,555,466
Less: Allowance for credit losses
63,934
64,517
63,849
63,099
63,738
Loans, net of allowance for credit losses
$
5,375,048
$
5,444,193
$
5,456,834
$
5,494,298
$
5,491,728
[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)
2023
2023
2023
2023
2022
Noninterest-bearing demand deposits
$
1,913,379
$
1,969,523
$
2,009,387
$
2,028,087
$
2,092,823
Interest-bearing demand deposits
1,329,189
1,345,843
1,359,978
1,386,913
1,453,167
Savings and money market deposits
2,209,733
2,209,550
2,184,652
2,184,675
2,199,028
Time deposits up to $250,000
533,898
465,543
427,864
372,150
330,148
Core deposits
5,986,199
5,990,459
5,981,881
5,971,825
6,075,166
Government time deposits
374,581
400,130
383,426
360,501
290,057
Other time deposits greater than $250,000
486,812
484,156
440,430
414,642
371,000
Total time deposits greater than $250,000
861,393
884,286
823,856
775,143
661,057
Total deposits
$
6,847,592
$
6,874,745
$
6,805,737
$
6,746,968
$
6,736,223
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Nonperforming Assets and Accruing Loans 90+ Days Past Due
(Unaudited)
TABLE 8
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
(Dollars in thousands)
2023
2023
2023
2023
2022
Nonaccrual loans:
Commercial and industrial:
Other
$
432
$
352
$
319
$
264
$
297
Real estate:
Construction
—
—
4,851
—
—
Residential mortgage
4,962
4,949
4,385
3,445
3,808
Home equity
834
677
797
712
570
Commercial mortgage
77
77
77
77
—
Consumer
703
597
632
815
576
Total nonaccrual loans
7,008
6,652
11,061
5,313
5,251
Foreclosed real estate
—
—
—
—
—
Total nonperforming assets ("NPAs")
7,008
6,652
11,061
5,313
5,251
Accruing loans 90+ days past due:
Commercial and industrial:
SBA PPP
—
—
—
—
13
Other
—
—
—
—
26
Real estate:
Residential mortgage
—
794
959
—
559
Home equity
229
—
133
—
—
Consumer
1,083
2,120
2,207
1,908
1,240
Total accruing loans 90+ days past due
1,312
2,914
3,299
1,908
1,838
Total NPAs and accruing loans 90+ days past due
$
8,320
$
9,566
$
14,360
$
7,221
$
7,089
Ratio of total nonaccrual loans to total loans
0.13
%
0.12
%
0.20
%
0.10
%
0.09
%
Ratio of total NPAs to total loans and foreclosed real estate
0.13
%
0.12
%
0.20
%
0.10
%
0.09
%
Ratio of total NPAs and accruing loans 90+ days past due to total loans and foreclosed real estate
0.15
%
0.17
%
0.26
%
0.13
%
0.13
%
Quarter-to-quarter changes in NPAs:
Balance at beginning of quarter
$
6,652
$
11,061
$
5,313
$
5,251
$
4,220
Additions
1,836
2,311
7,105
1,609
2,162
Reductions:
Payments
(268
)
(5,718
)
(290
)
(505
)
(198
)
Return to accrual status
(137
)
(207
)
(212
)
(14
)
(44
)
Net charge-offs, valuation and other adjustments
(1,075
)
(795
)
(855
)
(1,028
)
(889
)
Total reductions
(1,480
)
(6,720
)
(1,357
)
(1,547
)
(1,131
)
Balance at end of quarter
$
7,008
$
6,652
$
11,061
$
5,313
$
5,251
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,
Dec 31,
(Dollars in thousands)
2023
2023
2023
2023
2022
2023
2022
Allowance for credit losses:
Balance at beginning of period
$
64,517
$
63,849
$
63,099
$
63,738
$
64,382
$
63,738
$
68,097
Provision for credit losses on loans
4,959
4,526
4,135
1,615
1,032
15,235
288
Charge-offs:
Commercial and industrial:
Other
419
402
362
779
678
1,962
1,969
Consumer
5,976
4,710
3,873
2,686
1,881
17,245
6,399
Total charge-offs
6,395
5,112
4,235
3,465
2,559
19,207
8,368
Recoveries:
Commercial and industrial:
Other
84
261
125
250
210
720
995
Real estate:
Construction
—
1
—
—
—
1
76
Residential mortgage
7
10
7
53
133
77
295
Home equity
42
—
15
—
—
57
36
Consumer
720
982
703
908
540
3,313
2,319
Total recoveries
853
1,254
850
1,211
883
4,168
3,721
Net charge-offs
5,542
3,858
3,385
2,254
1,676
15,039
4,647
Balance at end of period
$
63,934
$
64,517
$
63,849
$
63,099
$
63,738
$
63,934
$
63,738
Average loans, net of deferred fees and costs
$
5,458,245
$
5,507,248
$
5,543,398
$
5,525,988
$
5,498,800
$
5,508,530
$
5,298,573
Ratio of annualized net charge-offs to average loans
0.41
%
0.28
%
0.24
%
0.16
%
0.12
%
0.27
%
0.09
%
Ratio of ACL to total loans
1.18
%
1.17
%
1.16
%
1.14
%
1.15
%
1.18
%
1.15
%
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
TABLE 10
The Company uses certain non-GAAP financial measures in addition to our GAAP results to provide useful information for evaluating our cash operating performance, ability to service debt, compliance with debt covenants and measurement against competitors. This information should be considered as supplemental in nature and should not be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be comparable to similarly entitled measures reported by other companies.
The Company believes that pre-provision net revenue ("PPNR"), a non-GAAP financial measure, is useful as a tool to help evaluate the ability to provide for credit costs through operations. The following tables set forth a reconciliation of our PPNR and our PPNR to average assets for each of the periods indicated:
Three Months Ended
Year Ended
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
Dec 31,
(Dollars in thousands)
2023
2023
2023
2023
2022
2023
2022
Net income
$
14,866
$
13,141
$
14,475
$
16,187
$
20,181
$
58,669
$
73,928
Add: Income tax expense
4,273
4,349
4,472
5,059
6,700
18,153
24,841
Pre-tax income
19,139
17,490
18,947
21,246
26,881
76,822
98,769
Add: Provision (credit) for credit losses
4,653
4,874
4,319
1,852
571
15,698
(1,273
)
PPNR
$
23,792
$
22,364
$
23,266
$
23,098
$
27,452
$
92,520
$
97,496
Three Months Ended
Year Ended
Dec 31,
Sep 30,
Jun 30,
Mar 31,
Dec 31,
Dec 31,
(Dollars in thousands)
2023
2023
2023
2023
2022
2023
2022
Net income
$
14,866
$
13,141
$
14,475
$
16,187
$
20,181
$
58,669
$
73,928
PPNR
23,792
22,364
23,266
23,098
27,452
92,520
97,496
Average assets
7,498,097
7,510,537
7,463,629
7,443,767
7,389,712
7,479,243
7,340,261
Return on average assets ("ROA")
0.79
%
0.70
%
0.78
%
0.87
%
1.09
%
0.78
%
1.01
%
PPNR to average assets
1.27
%
1.19
%
1.25
%
1.24
%
1.49
%
1.24
%
1.33
%
View source version on businesswire.com: https://www.businesswire.com/news/home/20240131966846/en/
Investor Contact: Ian Tanaka SVP, Treasury Manager (808) 544-3646 ian.tanaka@cpb.bank
Media Contact: Tim Sakahara AVP, Corporate Communications Manager (808) 544-5125 tim.sakahara@cpb.bank
1 Year Central Pacific Financial Chart |
1 Month Central Pacific Financial Chart |
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