Central Pacific Financial Corp. Reports Fourth Quarter 2009 Results
REDUCES COMMERCIAL REAL ESTATE EXPOSURE THROUGH LOAN SALES
HONOLULU, Jan. 29 /PRNewswire-FirstCall/ -- Central Pacific Financial Corp. (NYSE: CPF), parent company of Central Pacific Bank, today reported a net loss for the fourth quarter of 2009 of $77.8 million, or $2.64 per diluted share, compared to net income of $3.1 million, or $0.11 per diluted share, in the fourth quarter of 2008 and a net loss of $183.1 million, or $6.38 per diluted share, reported in the third quarter of 2009. The fourth quarter net loss included an increase in the valuation allowance against net deferred tax assets totaling $32.0 million. The net loss for the third quarter of 2009 included an increase in the valuation allowance totaling $61.4 million and a non-cash goodwill impairment charge of $50.0 million.
Fourth Quarter Highlights
- Sold Hawaii and California commercial real estate loans totaling $204.4 million at an aggregate discount of 18.9% compared to their book values at the time of the sales.
- Improved loan-to-deposit ratio to 85.8% at December 31, 2009 from 89.6% at September 30, 2009.
- Reduced total loans and leases to $3.1 billion at December 31, 2009, down from $3.5 billion at September 30, 2009 and $4.0 billion at December 31, 2008.
- Originated $372.8 million in residential mortgage loans in Hawaii during the fourth quarter, up 25.5% over the year-ago quarter, and $1.9 billion for the full year 2009, up 24.3% from 2008. Substantially all of these loans were sold in the secondary market, primarily to Fannie Mae and Freddie Mac.
- Recognized total credit costs of $88.5 million in the fourth quarter, comprised primarily of a provision for loan and lease losses of $84.3 million and the write-down of a loan held for sale totaling $3.6 million. Credit costs in the third quarter of 2009 totaled $145.1 million.
- Increased allowance for loan and lease losses, as a percentage of total loans and leases, to 6.70% at December 31, 2009 from 5.93% at September 30, 2009.
- Maintained tier 1 risk-based capital, total risk-based capital, and leverage capital ratios as of December 31, 2009 of 10.16%, 11.47%, and 7.23%, respectively.
During the fourth quarter, the Company reduced its credit risk exposure by selling $204.4 million of commercial real estate loans, comprised of $126.7 million from its Mainland portfolio and $77.7 million from its Hawaii portfolio. These loans, of which $53.1 million were nonperforming, were sold at an aggregate discount of 18.9% compared to their book values at the time of the sales.
"While our quarterly results continue to reflect elevated credit costs, we are making progress on our near-term objectives of improving our capital position and reducing credit risk, while maintaining strong liquidity," said Ronald K. Migita, Chairman, President, and Chief Executive Officer. "In the fourth quarter, we reduced our exposure to the commercial real estate markets in Hawaii and California by selling more than $200 million of commercial real estate loans. We will continue to pursue loan sales, along with other measures, to improve our asset quality."
"Raising additional capital is also a top priority for us and we continue to make progress," Migita added. "We are exploring all capital raising options, including private equity placements and public offerings. Currently, we are in discussions with potential investors."
Earnings Highlights
Net interest income for the fourth quarter of 2009 was $38.5 million, compared to $49.1 million in the year-ago quarter and $43.5 million in the third quarter of 2009. The net interest margin for the current quarter was 3.30%, compared to 4.03% in the year-ago quarter and 3.56% in the third quarter of 2009. The sequential-quarter and year-over-year compression in the net interest margin was the result of lower loan yields. Excluding the effects of interest reversals on nonaccrual loans, the net interest margin was 3.46% for the current quarter, compared to 4.04% in the year-ago quarter and 3.72% in the third quarter of 2009.
The provision for loan and lease losses in the fourth quarter of 2009 was $84.3 million, compared to $26.7 million in the year-ago quarter and $142.5 million in the third quarter of 2009. The current quarter's provision reflects the continued weakness in the Hawaii and California commercial real estate portfolios driven by ongoing pressure experienced by certain commercial real estate borrowers.
Other operating income totaled $11.7 million for the fourth quarter of 2009, compared to $16.9 million in the year-ago quarter and $15.4 million in the third quarter of 2009. The decrease from the year-ago quarter was primarily due to: (1) lower unrealized gains on outstanding interest rate locks during the current quarter totaling $3.8 million and (2) lower non-cash gains related to the ineffective portion of a cash flow hedge totaling $2.0 million. The sequential-quarter decrease was primarily due to: (1) lower unrealized gains on outstanding interest rate locks during the current quarter totaling $1.6 million, (2) lower non-cash gains related to the ineffective portion of a cash flow hedge totaling $1.3 million and (3) lower gains on sales of residential loans totaling $1.1 million.
Other operating expense for the fourth quarter of 2009 totaled $43.9 million, compared to $43.6 million in the year-ago quarter and $89.5 million in the third quarter of 2009. The modest increase from the year-ago quarter reflects: (1) higher write-downs on loans held for sale totaling $2.4 million, (2) higher legal and professional fees totaling $1.6 million, (3) higher FDIC insurance expense totaling $1.0 million and (4) the reversal of certain incentive compensation accruals in the year-ago quarter totaling $1.8 million, offset by: (1) a non-cash mortgage servicing rights impairment charge totaling $3.4 million and the recognition of a counterparty loss on a financing transaction totaling $2.8 million in the year-ago quarter and (2) lower reserves for unfunded commitments totaling $1.4 million. The sequential-quarter decrease was primarily due to (1) the $50.0 million non-cash goodwill impairment charge recorded in the third quarter of 2009 and (2) lower foreclosed asset expense totaling $4.8 million, partially offset by: (1) higher write-downs on loans held for sale totaling $3.6 million, (2) higher reserves for unfunded commitments totaling $2.8 million and (3) higher legal and professional fees totaling $2.5 million.
The efficiency ratio for the fourth quarter of 2009 was 77.04% (excluding the write-down on loans held for sale of $3.6 million and foreclosed asset expense of $0.7 million), compared with 57.11% in the year-ago quarter (excluding the recognition of a counterparty loss on a financing transaction totaling $2.8 million, the write-down of loans held for sale totaling $1.3 million, and foreclosed asset expense of $0.7 million) and 55.82% (excluding the non-cash goodwill impairment charge of $50.0 million and foreclosed asset expense of $5.5 million) in the third quarter of 2009. The sequential quarter increase was the result of: (1) higher professional fees totaling $2.5 million primarily related to the maintenance of certain impaired assets, (2) a $2.8 million decrease in the reserves for unfunded commitments during the third quarter of 2009, and (3) lower net interest income and other operating income of $5.0 million and $3.7 million, respectively.
During the fourth quarter, the Company recognized an income tax benefit of $0.1 million. The nominal income tax benefit despite the loss before income taxes of $77.9 million was due to an increase in the valuation allowance against net deferred tax assets totaling $32.0 million.
Balance Sheet Highlights
Total assets at December 31, 2009 were $4.9 billion, compared to $5.4 billion and $5.2 billion at December 31, 2008 and September 30, 2009, respectively.
Total loans and leases at December 31, 2009 were $3.1 billion, compared to $4.0 billion and $3.5 billion at December 31, 2008 and September 30, 2009, respectively. The current quarter decrease was primarily due to a decrease in the mainland loan portfolio totaling $171.7 million and a decrease in the Hawaii construction and commercial real estate loan portfolio totaling $165.8 million. The decrease in these portfolios was attributable to the loan sales mentioned above, as well as charge-offs and paydowns.
Total deposits at December 31, 2009 were $3.6 billion, compared to $3.9 billion at both December 31, 2008 and September 30, 2009. Core deposits of $3.0 billion at December 31, 2009 increased by $145.8 million from a year ago and decreased by $192.6 million from September 30, 2009. Interest-bearing demand deposits increased during the current quarter by $41.0 million, while noninterest-bearing demand deposits, savings and money market deposits, and time deposits decreased during the fourth quarter by $9.3 million, $228.7 million, and $95.0 million, respectively.
Total shareholders' equity was $356.9 million at December 31, 2009, compared to $526.3 million and $436.6 million at December 31, 2008 and September 30, 2009, respectively.
Asset Quality
Nonperforming assets at December 31, 2009 totaled $520.8 million, or 10.65% of total assets, compared to $418.5 million, or 8.09%, of total assets at September 30, 2009. The sequential-quarter increase reflects further deterioration in the Hawaii construction portfolios, which included net additions of $57.3 million in Hawaii residential construction loans and $49.5 million in Hawaii commercial construction loans.
Loans delinquent for 90 days or more still accruing interest decreased from $27.7 million at September 30, 2009, to $3.3 million at December 31, 2009. In addition, loans delinquent for 30 days or more still accruing interest decreased from $53.7 million at September 30, 2009, to $51.5 million at December 31, 2009.
Net loan charge-offs in the fourth quarter of 2009 totaled $83.9 million, compared to $7.0 million in the year-ago quarter and $103.7 million in the third quarter of 2009.
The allowance for loan and lease losses as a percentage of total loans and leases was 6.70% at December 31, 2009, compared to 5.93% at September 30, 2009. The increase was attributable to the decrease in the loan portfolio and the $84.3 million provision for loan and lease losses, offset by net loan charge-offs totaling $83.9 million.
Hawaii Construction and Commercial Real Estate Loans
At December 31, 2009, the Hawaii construction and commercial real estate loan portfolios totaled $934.2 million, Hawaii construction and commercial real estate loans held for sale totaled $10.9 million, and Hawaii construction and commercial real estate foreclosed properties totaled $9.8 million. This portfolio decreased by $165.8 million from September 30, 2009.
Hawaii construction and commercial real estate loans represented 30.5% and 31.8% of total loans and leases at December 31, 2009, and September 30, 2009, respectively. Of the $934.2 million balance in the Hawaii construction and commercial real estate portfolios, the allowance for loan and lease losses established for these loans was $85.0 million at December 31, 2009, or 9.10%, of the total outstanding balance.
Nonperforming assets related to this sector totaled $286.2 million at December 31, 2009, or 5.9%, of total assets. This balance was comprised of 56 loans totaling $265.5 million at December 31, 2009, two loans held for sale to the same borrower totaling $10.9 million and two foreclosed properties totaling $9.8 million. Nonperforming assets related to this sector totaled $176.4 million at September 30, 2009.
Mainland Construction and Commercial Real Estate Loans
At December 31, 2009, mainland construction and commercial real estate loans totaled $694.2 million, mainland construction and commercial real estate loans held for sale totaled $7.3 million, and mainland construction and commercial real estate foreclosed properties totaled $17.1 million. The portfolio balance consisted of $493.8 million in California and $200.4 million in other Western states. This portfolio decreased by $171.7 million from September 30, 2009.
Mainland construction and commercial real estate loans represented 22.7% and 25.0% of total loans and leases at December 31, 2009, and September 30, 2009, respectively. Of the $694.2 million balance in the mainland construction and commercial real estate portfolio, the allowance for loan and lease losses established for these loans was $72.0 million at December 31, 2009, or 10.4%, of the total outstanding balance.
Nonperforming assets related to this sector totaled $194.6 million at December 31, 2009, or 4.0%, of total assets. This balance was comprised of 39 loans totaling $170.2 million, two loans held for sale totaling $7.3 million, and seven foreclosed properties totaling $17.1 million. Nonperforming assets related to this sector totaled $213.5 million at September 30, 2009.
Capital Levels
The Company's Tier 1 risk-based capital, total risk-based capital, and leverage capital ratios were 10.16%, 11.47%, and 7.23%, respectively, at December 31, 2009. At September 30, 2009, these capital ratios were 10.94%, 12.24%, and 8.11%, respectively.
Consolidation of Branches and Closure of California Loan Offices
In addition to announcing its fourth quarter 2009 results, the Company also announced its consolidation plan for two branch locations on Oahu due to the expiration of branch leases. In April 2010, the branch currently located at 1018 Bethel Street in downtown Honolulu will be consolidated into the Main branch at 220 S. King Street and the branch at 1600 Kapiolani Boulevard will be consolidated into the branch at 818 Keeaumoku Street. Both branch consolidations are subject to regulatory approval and a public comment period expiring on February 13, 2010.
"As part of our long-term plan, we want to improve upon our service delivery efficiencies by consolidating branches that are in close proximity to each other and to enhance our customer service by extending business hours at the consolidated branch locations," said Denis Isono, Vice Chair and Chief Operations Officer.
The branch consolidation will result in a branch network of 35 locations, including 28 on Oahu, four on Maui, two on Hawaii, one on Kauai and approximately 100 ATMs throughout the State of Hawaii. More information on the Company's branch locations and business hours can be found at its website at www.centralpacificbank.com.
In California, the Bank's commercial loan offices in Pasadena and Roseville will be closed at the end of March 2010. These office closures are part of the Company's previously announced plan to exit the California market.
The branch consolidations and closure of the two California loan offices are expected to result in annual savings of approximately $1.9 million.
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 and Slide Presentation
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 as well as view a slide presentation by visiting the investor relations page of the Company's website at http://investor.centralpacificbank.com. Alternatively, investors may download the slide presentation from the "Presentations" tab of the investor relations page and participate in the live call by dialing 1-800-860-2442. A playback of the call will be available through March 2, 2010 by dialing 1-877-344-7529 (passcode: 437300) and on the Company's website.
About Central Pacific Financial Corp.
Central Pacific Financial Corp. is a Hawaii-based bank holding company with $4.9 billion in assets. Central Pacific Bank, its primary subsidiary, operates 37 branches and approximately 100 ATMs throughout 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" or words of similar meaning. While we believe 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 including the Consent Order by the FDIC and the Hawaii Division of Financial Institutions; the impact of legislation affecting the banking industry including the Emergency Economic Stabilization Act of 2008; the impact of competitive products, services, pricing, and other competitive forces; movements in interest rates; loan delinquency rates and changes in asset quality generally; the price of the Company's stock; 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 projections, please see the Company's publicly available Securities and Exchange Commission filings, including the Company's Form 10-K/A for 2008 and Form 10-Q's for 2009. The Company does not update any of its forward-looking statements.
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Financial Highlights - December 31, 2009
(Unaudited)
(in thousands,
except per Three Months Ended Year Ended
share December 31, % December 31, %
data) 2009 2008 Change 2009 2008 Change
INCOME
STATEMENT
Net income
(loss) $(77,831) $3,145 (2574.8)% $(292,785) $(138,414) 111.5%
Per share
data:
Diluted
(after
dividends on
preferred
stock):
Net income
(loss) (2.64) 0.11 (2500.0) (10.31) (4.83) 113.5
Cash
dividends 0.00 0.10 (100.0) 0.00 0.70 (100.0)
PERFORMANCE RATIOS
Return (loss) on
average
assets (1) (6.18)% 0.23% (5.47)% (2.45)%
Return (loss)
on
average
shareholders'
equity (1) (77.26) 2.43 (51.32) (23.07)
Net income (loss)
to average tangible
shareholders'
equity (1) (113.17) 3.74 (72.42) (37.00)
Efficiency
ratio (2) 77.04 57.11 63.52 53.93
Net interest
margin (1) 3.30 4.03 3.62 4.02
December 31, %
2009 2008 Change
BALANCE SHEET
Total assets $4,890,484 $5,432,361 (10.0)%
Loans and leases, net of unearned
interest 3,062,942 4,030,266 (24.0)
Net loans and leases 2,857,663 3,910,388 (26.9)
Deposits 3,568,916 3,911,566 (8.8)
Total shareholders' equity 356,925 526,291 (32.2)
Book value per common share 7.52 18.32 (59.0)
Tangible book value per common share 3.31 12.04 (72.5)
Market value per common share 1.31 10.04 (87.0)
Tangible common equity ratio 2.11% 6.59%
Three Months Ended Year Ended
December 31, % December 31, %
2009 2008 Change 2009 2008 Change
SELECTED
AVERAGE
BALANCES
Total
assets $5,041,345 $5,438,885 (7.3)% $5,347,958 $5,653,409 (5.4)%
Interest-
earning
assets 4,695,506 4,925,836 (4.7) 4,881,865 5,100,472 (4.3)
Loans and
leases,
net of
unearned
interest 3,440,303 4,109,047 (16.3) 3,745,964 4,209,045 (11.0)
Other real
estate 21,722 11,753 84.8 18,464 4,843 281.3
Deposits 3,703,562 3,787,823 (2.2) 3,890,811 3,814,809 2.0
Interest-
bearing
liabilities 3,947,931 4,288,187 (7.9) 4,100,406 4,380,295 (6.4)
Total
shareholders'
equity 402,968 517,256 (22.1) 570,544 599,861 (4.9)
December 31, %
2009 2008 Change
NONPERFORMING ASSETS
Nonaccrual loans
(including loans
held for sale) $493,812 $132,563 272.5%
Other real estate, net 26,954 11,220 140.2
------ ------
Total nonperforming assets 520,766 143,783 262.2
======= =======
Loans delinquent for 90 days or more
(still accruing interest) 3,292 1,070 207.7
Restructured loans (still accruing interest) 6,310 - 0.0
----- -
Total nonperforming assets and loans
delinquent for 90 days or more (still
accruing interest) and restructured loans
(still accruing interest) $530,368 $144,853 266.1
Three Months Ended Year Ended
December 31, December 31,
2009 2008 2009 2008
Loan charge-
offs $84,835 $7,478 1034.5% $244,746 $145,686 68.0%
Recoveries 931 433 115.0 2,308 1,847 25.0
Net loan charge-
offs
(recoveries) $83,904 $7,045 1091.0 $242,438 $143,839 68.5
Net loan charge-
offs to average
loans (1) 9.76% 0.69% 6.47% 3.42%
December 31,
2009 2008
ASSET QUALITY RATIOS
Nonaccrual loans (including loans held for
sale) to total loans and leases and loans
held for sale 15.69% 3.26%
Nonperforming assets to total assets 10.65 2.65
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 16.71 3.55
Allowance for loan and lease losses
to total loans and leases 6.70 2.97
Allowance for loan and lease losses
to nonaccrual loans (including loans
held for sale) 41.57 90.43
(1) Annualized
(2) 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 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).
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
Quarter Ended Quarter Ended Quarter Ended
(Dollars in thousands, December 31, September 30, December 31,
except per share data) 2009 2009 2008
----------------------- ------------- -------------- -------------
Net Interest Margin
Annualized net interest
income for the quarter
as a percentage of
quarter-to-date average
interest earning
assets 3.30% 3.56% 4.03%
Reversal of interest on
nonaccrual loans 0.16 0.16 0.01
---- ---- ----
Net interest margin,
excluding reversal of
interest on nonaccrual
loans 3.46% 3.72% 4.04%
==== ==== ====
Efficiency Ratio
Total operating
expenses as a
percentage of net
operating revenue 87.05% 150.24% 65.41%
Goodwill impairment - (83.94) -
Amortization and
impairment of other
intangible assets (1.43) (1.21) (1.08)
Foreclosed asset expense (1.39) (9.27) (1.05)
Write down of assets (7.19) - (1.91)
Counterparty loss on a
financing transaction - - (4.26)
--- --- -----
Efficiency ratio 77.04% 55.82% 57.11%
===== ===== =====
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except per December September December
share data) 31, 2009 30, 2009 31, 2008
-------- -------- --------
ASSETS
Cash and due from banks $87,897 $112,828 $107,270
Interest-bearing deposits in
other banks 400,470 204,338 475
Investment securities:
Available for sale 919,655 973,364 742,600
Held to maturity (fair value
of $4,804 at December 31, 2009,
$5,461 at September 30, 2009
and $8,759 at December 31,
2008) 4,704 5,332 8,697
----- ----- -----
Total investment
securities 924,359 978,696 751,297
------- ------- -------
Loans held for sale 83,830 60,027 40,108
Loans and leases 3,062,942 3,457,682 4,030,266
Less allowance for loan and
lease losses 205,279 204,914 119,878
------- ------- -------
Net loans and leases 2,857,663 3,252,768 3,910,388
--------- --------- ---------
Premises and equipment 75,189 76,511 81,059
Accrued interest receivable 14,588 16,590 20,079
Investment in unconsolidated
subsidiaries 17,395 17,794 15,465
Other real estate 26,954 21,093 11,220
Goodwill 102,689 102,689 152,689
Other intangible assets 24,801 25,520 27,676
Mortgage servicing rights 20,589 19,406 12,107
Bank-owned life insurance 139,811 138,757 135,371
Federal Home Loan Bank stock 48,797 48,797 48,797
Other assets 65,452 95,696 118,360
------ ------ -------
Total assets $4,890,484 $5,171,510 $5,432,361
========== ========== ==========
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand $638,328 $647,672 $627,094
Interest-bearing demand 588,396 547,414 472,269
Savings and money market 1,195,815 1,424,518 1,057,881
Time 1,146,377 1,241,327 1,754,322
--------- --------- ---------
Total deposits 3,568,916 3,860,931 3,911,566
Short-term borrowings 242,429 252,807 279,450
Long-tem debt 657,874 558,212 649,257
Other liabilities 54,314 52,889 55,748
------ ------ ------
Total liabilities 4,523,533 4,724,839 4,896,021
--------- --------- ---------
Equity:
Preferred stock, no par
value, authorized 1,000,000
shares; issued and outstanding
135,000 shares at
December 31, 2009
and September 30, 2009, none
at December 31, 2008 128,975 128,606 -
Common stock, no par value,
authorized 185,000,000 shares;
issued and outstanding
30,328,764 shares at
December 31, 2009,
30,329,123 shares at
September 30, 2009
and 28,732,259 at
December 31, 2008 405,355 406,312 403,176
Surplus 63,075 62,837 55,963
Retained earnings (accumulated
deficit) (236,969) (157,088) 63,762
Accumulated other
comprehensive gain (loss) (3,511) (4,028) 3,390
------ ------ -----
Total shareholders'
equity 356,925 436,639 526,291
Non-controlling interest 10,026 10,032 10,049
------ ------ ------
Total equity 366,951 446,671 536,340
------- ------- -------
Total liabilities and
equity $4,890,484 $5,171,510 $5,432,361
========== ========== ==========
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Year Ended
(In thousands, ------------------ ----------
except per share December 31, September 30, December 31, December 31,
data) 2009 2009 2008 2009 2008
---- ---- ---- ---- ----
Interest income:
Interest and
fees on loans
and leases $42,256 $48,594 $62,988 $201,573 $263,183
Interest and
dividends on
investment
securities:
Taxable
interest 8,837 9,768 7,518 36,392 34,793
Tax-exempt
interest 766 937 1,217 4,020 5,373
Dividends 3 2 2 10 44
Interest on
deposits in
other banks 116 106 1 233 12
Interest on federal
funds sold and
securities
purchased under
agreements to
resell - 3 7 9 83
Dividends on
Federal Home
Loan Bank
stock - - - - 464
--- --- --- --- ---
Total interest
income 51,978 59,410 71,733 242,237 303,952
------ ------ ------ ------- -------
Interest expense:
Demand 311 364 293 1,351 860
Savings and
money market 2,401 3,250 2,592 11,928 12,528
Time 4,936 6,218 11,550 29,267 48,917
Interest on
short-term
borrowings 132 144 700 548 6,563
Interest on long-
term debt 5,661 5,982 7,468 24,621 33,129
----- ----- ----- ------ ------
Total interest
expense 13,441 15,958 22,603 67,715 101,997
------ ------ ------ ------ -------
Net interest
income 38,537 43,452 49,130 174,522 201,955
Provision for
loan and lease
losses 84,269 142,496 26,696 327,839 171,668
------ ------- ------ ------- -------
Net interest
income (loss)
after provision
for loan and
lease
losses (45,732) (99,044) 22,434 (153,317) 30,287
------- ------- ------ -------- ------
Other operating income:
Service charges
on deposit
accounts 3,921 4,052 3,982 15,458 14,738
Other service
charges and
fees 3,734 3,549 3,436 14,187 14,062
Income from
fiduciary
activities 916 874 981 3,759 3,921
Equity in
earnings of
unconsolidated
subsidiaries 146 134 44 759 561
Fees on foreign
exchange 153 170 217 584 665
Investment
securities gains
(losses) 244 (169) - (2,639) 265
Income from bank-
owned life
insurance 1,066 1,599 1,273 5,249 4,876
Loan placement
fees 234 188 247 982 814
Net gains
(losses) on
sales of
residential
loans 1,974 3,060 1,871 13,582 7,717
Other (697) 1,982 4,837 5,492 7,189
---- ----- ----- ----- -----
Total other
operating
income 11,691 15,439 16,888 57,413 54,808
------ ------ ------ ------ ------
Other operating expense:
Salaries and
employee
benefits 15,820 16,582 13,449 66,346 67,019
Net occupancy 3,775 3,260 3,384 13,415 12,764
Equipment 1,510 1,497 1,474 6,081 5,722
Amortization and
impairment of
intangible
assets 1,570 1,582 4,725 6,123 8,412
Communication
expense 1,116 1,087 1,119 4,317 4,484
Legal and
professional
services 5,470 2,957 3,901 13,989 12,138
Computer
software
expense 858 818 909 3,428 3,446
Advertising
expense 850 948 960 3,266 3,358
Goodwill
impairment - 50,000 - 50,000 94,279
Foreclosed asset
expense 699 5,523 703 8,651 7,360
Loss on sale of
commercial real
estate loans - - - - 1,874
Write down of
assets 3,624 - 1,272 4,963 23,796
Other 8,575 5,239 11,718 36,297 28,170
----- ----- ------ ------ ------
Total other
operating
expense 43,867 89,493 43,614 216,876 272,822
------ ------ ------ ------- -------
Loss before
income taxes (77,908) (173,098) (4,292) (312,780) (187,727)
Income tax
expense
(benefit) (77) 10,043 (7,437) (19,995) (49,313)
--- ------ ------ ------- -------
Net income
(loss) (77,831) (183,141) 3,145 (292,785) (138,414)
======= ======== ===== ======== ========
Per common share data:
Basic earnings
(loss) per
share $(2.64) $(6.38) $0.11 $(10.31) $(4.83)
Diluted earnings
(loss) per share
(after dividends
and accretion on
preferred
stock) (2.64) (6.38) 0.11 (10.31) (4.83)
Cash dividends
declared - - 0.10 - 0.70
Basic weighted
average shares
outstanding 30,267 29,030 28,673 29,170 28,669
Diluted weighted
average shares
outstanding 30,267 29,030 28,703 29,170 28,669
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Average Balances, Interest Income & Expense, Yields
and Rates (Taxable Equivalent)
Three Months Ended Three Months Ended
(Dollars in thousands) December 31, 2009 December 31, 2008
----------------- -----------------
Average Average
Average Yield/ Average Yield/
Balance Rate Interest Balance Rate Interest
------- ------ -------- ------- ------ --------
Assets:
Interest earning assets:
Interest-bearing
deposits in other
banks $264,874 0.17% $116 $3,839 0.10% $1
Federal funds sold
& securities
purchased
under agreements
to resell 0 0.00% 0 4,279 0.59% 7
Taxable investment
securities,
excluding
valuation
allowance 866,792 4.08% 8,840 630,811 4.77% 7,520
Tax-exempt investment
securities,
excluding valuation
allowance 74,740 6.31% 1,179 129,063 5.80% 1,872
Loans and leases, net
of unearned
income 3,440,303 4.88% 42,256 4,109,047 6.11% 62,988
Federal Home Loan
Bank stock 48,797 0.00% 0 48,797 0.00% 0
------ ---- --- ------ ---- ---
Total interest
earning assets 4,695,506 4.44% 52,391 4,925,836 5.86% 72,388
Nonearning assets 345,839 513,049
------- -------
Total assets $5,041,345 $5,438,885
========== ==========
Liabilities & Equity:
Interest-bearing liabilities:
Interest-bearing
demand deposits $586,401 0.21% $311 $461,994 0.25% $293
Savings and money
market deposits 1,299,120 0.73% 2,401 1,041,151 0.99% 2,592
Time deposits under
$100,000 553,230 1.92% 2,674 764,295 2.85% 5,467
Time deposits
$100,000 and over 641,583 1.40% 2,262 948,495 2.55% 6,083
Short-term
borrowings 241,119 0.22% 132 308,208 0.91% 700
Long-term debt 626,478 3.58% 5,661 764,044 3.89% 7,468
------- ---- ----- ------- ---- -----
Total interest-
bearing
liabilities 3,947,931 1.35% 13,441 4,288,187 2.10% 22,603
------ ------
Noninterest-bearing
deposits 623,228 571,888
Other liabilities 57,189 51,502
------ ------
Total liabilities 4,628,348 4,911,577
--------- ---------
Shareholders' equity 402,968 517,256
Non-controlling
interest 10,029 10,052
------ ------
Total equity 412,997 527,308
------- -------
Total liabilities &
equity $5,041,345 $5,438,885
========== ==========
Net interest income $38,950 $49,785
======= =======
Net interest margin 3.30% 4.03%
==== ====
Year Ended Year Ended
(Dollars in thousands) December 31, 2009 December 31, 2008
----------------- -----------------
Average Average
Average Yield/ Average Yield/
Balance Rate Interest Balance Rate Interest
------- ------ -------- ------- ------ --------
Assets:
Interest earning assets:
Interest-bearing
deposits in other
banks $126,200 0.18% $233 $1,500 0.78% $12
Federal funds sold
& securities
purchased
under
agreements to
resell 7,144 0.13% 9 4,532 1.83% 83
Taxable investment
securities,
excluding
valuation
allowance 851,298 4.28% 36,402 692,610 5.03% 34,837
Tax-exempt
investment
securities,
excluding
valuation
allowance 102,462 6.04% 6,185 143,988 5.74% 8,266
Loans and leases, net
of unearned
income 3,745,964 5.38% 201,573 4,209,045 6.25% 263,183
Federal Home Loan
Bank stock 48,797 0.00% 0 48,797 0.95% 464
------ ---- --- ------ ---- ---
Total interest
earning assets 4,881,865 5.01% 244,402 5,100,472 6.02% 306,845
Nonearning assets 466,093 552,937
------- -------
Total assets $5,347,958 $5,653,409
========== ==========
Liabilities & Equity:
Interest-bearing liabilities:
Interest-bearing
demand deposits $544,910 0.25% $1,351 $463,776 0.19% $860
Savings and money
market deposits 1,319,228 0.90% 11,928 1,094,690 1.14% 12,528
Time deposits under
$100,000 631,482 2.45% 15,446 639,794 2.91% 18,618
Time deposits
$100,000 and over 800,303 1.73% 13,821 1,023,852 2.96% 30,299
Short-term
borrowings 187,720 0.29% 548 292,466 2.24% 6,563
Long-term debt 616,763 3.99% 24,621 865,717 3.83% 33,129
------- ---- ------ ------- ---- ------
Total interest-
bearing
liabilities 4,100,406 1.65% 67,715 4,380,295 2.33% 101,997
------ -------
Noninterest-bearing
deposits 594,888 592,697
Other liabilities 72,083 70,496
------ ------
Total liabilities 4,767,377 5,043,488
--------- ---------
Shareholders' equity 570,544 599,861
Non-controlling
interest 10,037 10,060
------ ------
Total equity 580,581 609,921
------- -------
Total liabilities &
equity $5,347,958 $5,653,409
========== ==========
Net interest income $176,687 $204,848
======== ========
Net interest margin 3.62% 4.02%
==== ====
SOURCE Central Pacific Financial Corp.
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