Published: July 30, 2010
Central Pacific Financial Corp. Reports Second Quarter 2010 Results
HONOLULU, July 30 /PRNewswire-FirstCall/ -- Central Pacific Financial Corp. (NYSE: CPF), parent company of Central Pacific Bank, today reported a net loss for the second quarter of 2010 of $16.1 million, or $0.60 per diluted share, compared to a net loss of $34.4 million, or $1.27 per diluted share in the second quarter of 2009 and a net loss of $160.2 million, or $5.36 per diluted share in the first quarter of 2010. The net loss in the first quarter of 2010 included a non-cash goodwill impairment charge of $102.7 million.
Second Quarter Highlights
-- Significantly reduced the Company's net loss to $16.1 million, compared
to a net loss of $160.2 million in the first quarter of 2010 and a net
loss of $34.4 million in the second quarter of 2009.
-- Credit costs decreased to $21.8 million, from $66.5 million in the first
quarter of 2010 and from $79.9 million in the second quarter of 2009.
Total credit costs include the provision for loan and lease losses,
foreclosed asset expense, write-downs of loans held for sale, and
changes to the reserve for unfunded commitments.
-- Reduced nonperforming assets to $467.2 million at June 30, 2010 from
$493.8 million at March 31, 2010.
-- Increased the Company's allowance for loan and lease losses, as a
percentage of total loans and leases, to 7.69% at June 30, 2010 from
7.44% at March 31, 2010.
-- Recognized net charge-offs of $30.1 million, compared to net charge-offs
of $52.5 million in the first quarter of 2010 and $30.5 million in the
second quarter of 2009.
-- Loans and leases totaled $2.6 billion at June 30, 2010, down $218.8
million from March 31, 2010.
-- Continued to improve the Company's liquidity position with cash and cash
equivalents totaling $916.7 million at June 30, 2010, compared to $865.4
million at March 31, 2010. The Company lowered its loan to deposit
ratio to 81.8% at June 30, 2010, from 85.3% at March 31, 2010.
-- Improved tier 1 risk-based capital, total risk-based capital, and
leverage capital ratios as of June 30, 2010 to 9.08%, 10.41%, and 6.07%,
respectively, compared to 8.99%, 10.32%, and 5.78%, respectively, as of
March 31, 2010.
-- Received regulatory approvals for the appointment of John C. Dean as
Executive Chairman of the Board of Central Pacific Financial Corp. and
Central Pacific Bank from the Federal Deposit Insurance Corporation
(FDIC), Federal Reserve Board (FRB), and Hawaii State Division of
Financial Institutions (DFI).
"We are on track with our recovery plan targets and are encouraged by the progressive improvements in our overall financial results during the past few quarters," said Mr. Dean. "While economic conditions remain challenging, we are confident that the steps we are taking to improve our asset quality will well position us as we continue implementing our recovery plan. Strengthening our capital base remains a top priority for us and we continue to explore all alternatives to achieve this objective."
Earnings Highlights
Net interest income was $29.2 million, compared to $46.1 million in the year-ago quarter and $35.1 million in the first quarter of 2010. Net interest income was negatively impacted by the reversal of interest on certain nonaccrual loans totaling $0.5 million during the second quarter of 2010, compared to $1.4 million in the year-ago quarter and $1.6 million in the first quarter of 2010. The net interest margin was 2.90%, compared to 3.77% in the year-ago quarter and 3.20% in the first quarter of 2010. The sequential-quarter and year-over-year margin compression was the result of lower yields on interest earning assets attributable to the continued reduction in the Company's commercial real estate loan portfolio and its ongoing efforts to maximize balance sheet liquidity by maintaining elevated levels of cash and cash equivalents. Excluding the effects of interest reversals on nonaccrual loans, the net interest margin was 2.95% for the current quarter, compared to 3.89% in the year-ago quarter and 3.34% in the first quarter of 2010. As previously announced, the Company sold investment securities totaling $439.4 million during the latter part of March 2010. The sale of these securities contributed to the current quarter decrease in net interest income and the net interest margin.
The provision for loan and lease losses was $20.4 million, compared to $74.3 million in the year-ago quarter and $58.8 million in the first quarter of 2010. The decrease was primarily attributable to slower negative credit migration, reduced exposure to the construction and development sectors in Hawaii and California, and minimal changes experienced during the quarter in recognized property values securing many of the Company's real estate loans.
Other operating income totaled $12.7 million, compared to $14.6 million in the year-ago quarter and $12.8 million in the first quarter of 2010. The decrease from the year-ago quarter was primarily due to: (1) lower gains on sales of residential mortgage loans of $3.2 million, (2) a non-cash gain related to the ineffective portion of a cash flow hedge of $2.3 million recorded in the second quarter of 2009, and (3) lower service charges on deposit accounts of $1.0 million, partially offset by: (1) an other-than-temporary impairment charge of $2.6 million recorded in the second quarter of 2009, and (2) higher unrealized gains on outstanding interest rate locks of $1.7 million. The sequential-quarter decrease was primarily due to: (1) gains on sales of investment securities of $0.8 million recorded in the first quarter of 2010 and (2) lower gains on sales of residential loans of $0.6 million, partially offset by (1) higher income from bank-owned life insurance of $0.7 million primarily due to the receipt of death benefit proceeds and (2) higher unrealized gains on outstanding interest rate locks of $0.7 million.
Other operating expense totaled $37.6 million, compared to $45.8 million in the year-ago quarter and $149.2 million in the first quarter of 2010. The decrease from the year-ago quarter reflects: (1) lower credit related charges (which includes write-downs of loans held for sale, foreclosed asset expense, and changes in the reserve for unfunded commitments) totaling $4.3 million, (2) lower salaries and employee benefits of $3.3 million, and (3) lower FDIC insurance expense of $1.8 million. These decreases were partially offset by higher legal and professional services of $2.6 million. The decrease in FDIC insurance expense was due to a special assessment charge imposed on all FDIC-insured institutions during the second quarter of 2009 totaling $2.5 million. The sequential-quarter decrease was primarily due to: (1) the $102.7 million non-cash goodwill impairment charge recorded in the first quarter of 2010 and (2) lower credit related charges of $6.4 million.
The efficiency ratio was 86.5% (excluding foreclosed asset expense of $0.4 million and the write-down of loans held for sale of $0.2 million), compared with 65.6% in the year-ago quarter (excluding foreclosed asset expense of $2.3 million and the write-down of loans held for sale totaling $0.9 million) and 83.6% (excluding the $102.7 million non-cash goodwill impairment charge, foreclosed asset expense of $5.5 million, and the write-down of loans held for sale of $0.8 million) in the first quarter of 2010. Despite the current quarter decrease in operating expense described above, the efficiency ratio remains at elevated levels due to lower net interest income of $16.9 million and $5.9 million, compared to the year-ago and sequential quarters, respectively.
The Company continues to recognize a full valuation allowance against its net deferred tax assets, which resulted in no income tax benefit being recognized during the second quarter of 2010.
Balance Sheet Highlights
Total assets at June 30, 2010 were $4.3 billion, compared to $5.5 billion and $4.4 billion at June 30, 2009 and March 31, 2010, respectively.
Total loans and leases at June 30, 2010 were $2.6 billion, compared to $3.7 billion and $2.8 billion at June 30, 2009 and March 31, 2010, respectively. The current quarter decrease was primarily due to a decrease in the mainland loan portfolio totaling $53.7 million and a decrease in the Hawaii construction and commercial mortgage loan portfolio totaling $106.6 million. The decreases in these portfolios reflect $11.4 million in loan sales, transfers to loans held for sale totaling $8.7 million, transfers to other real estate owned totaling $5.4 million, as well as paydowns and net charge-offs totaling $134.8 million.
Total deposits at June 30, 2010 were $3.2 billion, compared to $4.0 billion at June 30, 2009 and $3.3 billion at March 31, 2010. Core deposits, which include demand deposits, savings and money market deposits, and time deposits less than $100,000, totaled $2.8 billion at June 30, 2010 and decreased by $388.8 million from a year ago and $82.2 million from March 31, 2010. Noninterest-bearing demand deposits, interest-bearing demand deposits, savings and money market deposits, and time deposits decreased during the second quarter by $5.9 million, $39.7 million, $26.5 million, and $54.3 million, respectively.
Total shareholders' equity was $156.5 million at June 30, 2010, compared to $615.0 million and $172.1 million at June 30, 2009 and March 31, 2010, respectively.
Asset Quality
Nonperforming assets at June 30, 2010 totaled $467.2 million, or 10.92% of total assets, compared to $493.8 million, or 11.14%, of total assets at March 31, 2010. The sequential-quarter decrease reflects paydowns, net charge-offs and write-downs, and sales of nonperforming assets totaling $23.7 million, $16.9 million, and $14.6 million, respectively. Partially offsetting these reductions were additions of $14.4 million in Hawaii residential mortgage loans, $10.0 million in Hawaii construction loans, $3.2 million in Hawaii commercial mortgage loans, and $1.0 million in Hawaii commercial loans and leases.
Loans delinquent for 90 days or more still accruing interest decreased from $7.0 million at March 31, 2010, to $1.9 million at June 30, 2010. In addition, loans delinquent for 30 days or more still accruing interest decreased from $29.7 million at March 31, 2010 to $12.9 million at June 30, 2010.
Net loan charge-offs in the second quarter of 2010 totaled $30.1 million, compared to $30.5 million in the year-ago quarter and $52.5 million in the first quarter of 2010.
The allowance for loan and lease losses as a percentage of total loans and leases increased to 7.69% at June 30, 2010 from 7.44% at March 31, 2010. The increase was attributable to the $218.8 million decrease in the loan portfolio and the $20.4 million provision for loan and lease losses, offset by net loan charge-offs totaling $30.1 million as described above. Despite the sequential-quarter decreases in nonperforming assets, provision for loan and lease losses, delinquencies, and net loan charge-offs, the Company increased its allowance for loan and lease losses as a percentage of total loans and leases to appropriately reserve for the credit risk associated with its remaining exposure to the commercial real estate markets in Hawaii and California.
Construction and Development Loans
At June 30, 2010, the construction and development loan portfolio (excluding owner-occupied loans) totaled $589.9 million, or 22.5%, of the total loan portfolio. Of this amount, $386.5 million were located in Hawaii and $203.4 million were located on the Mainland. This portfolio decreased by $148.5 million from March 31, 2010 and by $482.7 million from June 30, 2009.
The allowance for loan and lease losses established for these loans was $90.4 million at June 30, 2010, or 15.3%, of the total outstanding balance. Of this amount, $59.0 million related to construction and development loans in Hawaii and $31.4 million related to construction and development loans on the Mainland.
Nonperforming construction and development assets in Hawaii totaled $254.5 million at June 30, 2010, or 5.9%, of total assets. At June 30, 2010, this balance was comprised of portfolio loans totaling $227.9 million, loans held for sale totaling $23.4 million and foreclosed properties totaling $3.2 million. Nonperforming assets related to this sector totaled $278.5 million at March 31, 2010.
Nonperforming construction and development assets on the Mainland totaled $117.3 million at June 30, 2010, or 2.7%, of total assets. At June 30, 2010, this balance was comprised of portfolio loans totaling $87.1 million and foreclosed properties totaling $30.2 million. Nonperforming assets related to this sector totaled $123.9 million at March 31, 2010.
Capital Levels
At June 30, 2010, the Company's Tier 1 risk-based capital, total risk-based capital, and leverage capital ratios were 9.08%, 10.41%, and 6.07%, respectively, compared to 8.99%, 10.32%, and 5.78%, respectively, at March 31, 2010.
Non-GAAP Financial Measures
This press release contains certain references to financial measures that have been adjusted to exclude certain expenses and other specified items. These financial measures differ from comparable measures calculated and presented in accordance with accounting principles generally accepted in the United States of America ("GAAP") in that they exclude unusual or non-recurring charges, losses, credits or gains. This press release identifies the specific items excluded from the comparable GAAP financial measure in the calculation of each non-GAAP financial measure. Management believes that financial presentations excluding the impact of these items provide useful supplemental information that is important to a proper understanding of the Company's core business results by investors. These presentations should not be viewed as a substitute for results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP financial measures presented by other companies.
Conference Call
The Company's management will host a conference call today at 1:00 p.m. Eastern Time (7:00 a.m. Hawaii Time) to discuss the quarterly results. Individuals are encouraged to listen to the live webcast of the presentation by visiting the investor relations page of the Company's website at http://investor.centralpacificbank.com. Alternatively, investors may participate in the live call by dialing 1-877-317-6789. A playback of the call will be available through August 31, 2010 by dialing 1-877-344-7529 (passcode: 442515) and on the Company's website.
About Central Pacific Financial Corp.
Central Pacific Financial Corp. is a Hawaii-based bank holding company with $4.3 billion in assets. Central Pacific Bank, its primary subsidiary, operates 35 branches, over 120 ATMs, and a residential mortgage subsidiary in the state of Hawaii. For additional information, please visit the Company's website at http://www.centralpacificbank.com.
Forward-Looking Statements
This document may contain forward-looking statements concerning projections of revenues, income/loss, earnings/loss per share, capital expenditures, dividends, capital structure, or other financial items, concerning plans and objectives of management for future operations, concerning future economic performance, or concerning any of the assumptions underlying or relating to any of the foregoing. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts, and may include the words "believes", "plans", "intends", "expects", "anticipates", "forecasts" 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 2009 Form 10-K and Form 10-Qs. The Company does not update any of its forward-looking statements.
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Financial Highlights - June 30, 2010
(Unaudited)
Three Months Ended
June 30, %
(in thousands, except per share
data) 2010 2009 Change
INCOME STATEMENT
Net loss $(16,105) $(34,442) (53.2)%
Per share data:
Diluted (after dividends on
preferred stock):
Net loss (0.60) (1.27) (52.8)
Cash dividends - - -
PERFORMANCE RATIOS
Loss on average assets (1) (1.50)% (2.51)%
Loss on average shareholders'
equity (1) (41.67) (20.88)
Net loss to average tangible
shareholders' equity (1) (49.25) (28.67)
Efficiency ratio (2) 86.45 65.64
Net interest margin (1) 2.90 3.77
REGULATORY CAPITAL RATIOS
Central Pacific Financial Corp.
Tier 1 risk-based capital
Total risk-based capital
Leverage capital
Central Pacific Bank
Tier 1 risk-based capital
Total risk-based capital
Leverage capital
BALANCE SHEET
Total assets
Loans and leases, net of
unearned interest
Net loans and leases
Deposits
Total shareholders' equity
Book value per common share
Tangible book value per common
share
Market value per common share
Tangible common equity ratio
Three Months Ended
June 30, %
2010 2009 Change
SELECTED AVERAGE BALANCES
Total assets $4,292,334 $5,487,486 (21.8)%
Interest-earning assets 4,044,816 4,953,798 (18.3)
Loans and leases, net of
unearned interest 2,822,967 3,862,201 (26.9)
Other real estate 31,312 19,061 64.3
Deposits 3,209,316 4,079,127 (21.3)
Interest-bearing liabilities 3,493,277 4,164,701 (16.1)
Total shareholders' equity 154,592 659,954 (76.6)
Six Months Ended
June 30, %
(in thousands, except per share
data) 2010 2009 Change
INCOME STATEMENT
Net loss $(176,324) $(31,813) 454.3%
Per share data:
Diluted (after dividends on
preferred stock):
Net loss (5.96) (1.24) 380.6
Cash dividends - - -
PERFORMANCE RATIOS
Loss on average assets (1) (7.73)% (1.16)%
Loss on average shareholders'
equity (1) (146.95) (9.96)
Net loss to average tangible
shareholders' equity (1) (213.29) (13.85)
Efficiency ratio (2) 84.91 61.77
Net interest margin (1) 3.06 3.80
June 30,
REGULATORY CAPITAL RATIOS 2010 2009
Central Pacific Financial Corp.
Tier 1 risk-based capital 9.08% 13.28%
Total risk-based capital 10.41 14.57
Leverage capital 6.07 10.61
Central Pacific Bank
Tier 1 risk-based capital 9.38% 13.06%
Total risk-based capital 10.71 14.35
Leverage capital 6.27 10.45
June 30, %
2010 2009 Change
BALANCE SHEET
Total assets $4,279,343 $5,525,287 (22.5)%
Loans and leases, net of
unearned interest 2,625,432 3,688,519 (28.8)
Net loans and leases 2,423,473 3,522,448 (31.2)
Deposits 3,208,574 3,966,524 (19.1)
Total shareholders' equity 156,528 615,047 (74.6)
Book value per common share 0.88 16.94 (94.8)
Tangible book value per common
share 0.11 10.71 (99.0)
Market value per common share 1.50 3.75 (60.0)
Tangible common equity ratio 0.08% 5.76%
Six Months Ended
June 30, %
2010 2009 Change
SELECTED AVERAGE BALANCES
Total assets $4,563,663 $5,482,984 (16.8)%
Interest-earning assets 4,248,350 4,958,641 (14.3)
Loans and leases, net of
unearned interest 2,934,483 3,938,559 (25.5)
Other real estate 31,995 15,872 101.6
Deposits 3,357,952 3,999,846 (16.0)
Interest-bearing liabilities 3,669,631 4,165,070 (11.9)
Total shareholders' equity 239,973 639,087 (62.5)
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Financial Highlights - June 30, 2010
(Unaudited)
(in thousands, except per share data)
NONPERFORMING ASSETS
Nonaccrual loans (including loans
held for sale)
Other real estate, net
Total nonperforming assets
Loans delinquent for 90 days or more
(still accruing interest)
Restructured loans (still accruing
interest)
Total nonperforming assets, loans
delinquent for 90 days or more
(still accruing interest)
and restructured loans (still
accruing interest)
Three Months
Ended %
June 30, Change
2010 2009
Loan charge-offs $30,742 $30,943 (0.6)%
Recoveries 643 404 59.2
--- ---
Net loan charge-offs $30,099 $30,539 (1.4)
======= =======
Net loan charge-offs to average
loans (1) 4.26% 3.16%
==== ====
ASSET QUALITY RATIOS
Nonaccrual loans (including loans
held for sale) to total loans and
leases and loans held for sale
Nonperforming assets to total assets
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
Allowance for loan and lease losses
to total loans and leases
Allowance for loan and lease losses
to nonaccrual loans (including loans
held for sale)
June 30, %
(in thousands, except per share
data) 2010 2009 Change
NONPERFORMING ASSETS
Nonaccrual loans (including loans
held for sale) $429,163 $243,303 76.4%
Other real estate, net 38,042 17,862 113.0
------ ------
Total nonperforming assets 467,205 261,165 78.9
------- -------
Loans delinquent for 90 days or
more (still accruing interest) 1,902 4,447 (57.2)
Restructured loans (still accruing
interest) 9,632 - -
Total nonperforming assets, loans
delinquent for 90 days or more
(still accruing interest)
and restructured loans (still
accruing interest) $478,739 $265,612 80.2
======== ========
Six Months Ended %
June 30, Change
2010 2009
Loan charge-offs $90,710 $55,758 62.7%
Recoveries 8,141 877 828.3
----- ---
Net loan charge-offs $82,569 $54,881 50.5
======= =======
Net loan charge-offs to average
loans (1) 5.63% 2.79%
==== ====
June 30,
2010 2009
ASSET QUALITY RATIOS
Nonaccrual loans (including loans
held for sale) to total loans and
leases and loans held for sale 15.91% 6.45%
Nonperforming assets to total
assets 10.92 4.73
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 17.50 7.01
Allowance for loan and lease losses
to total loans and leases 7.69 4.50
Allowance for loan and lease losses
to nonaccrual loans (including
loans held for sale) 47.06 68.26
(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 Quarter
Ended Ended
(Dollars in thousands, except per share June 30, March 31,
data) 2010 2010
--------------------------------------- --------- ----------
Net Interest Margin
Annualized net interest income for the
quarter as a percentage of
quarter-to-date average interest earning
assets 2.90% 3.20%
Reversal of interest on nonaccrual loans 0.05 0.14
---- ----
Net interest margin, excluding reversal of
interest on nonaccrual loans 2.95% 3.34%
==== ====
Efficiency Ratio
Total operating expenses as a percentage of
net operating revenue 89.51% 315.60%
Goodwill impairment - (217.19)
Amortization of other intangible assets (1.71) (1.52)
Foreclosed asset expense (0.96) (11.70)
Write down of assets (0.39) (1.64)
Efficiency ratio 86.45% 83.55%
===== =====
Quarter
Ended
June 30,
(Dollars in thousands, except per share data) 2009
--------------------------------------------- ---------
Net Interest Margin
Annualized net interest income for the quarter as a
percentage of
quarter-to-date average interest earning assets 3.77%
Reversal of interest on nonaccrual loans 0.12
----
Net interest margin, excluding reversal of interest
on nonaccrual loans 3.89%
====
Efficiency Ratio
Total operating expenses as a percentage of net
operating revenue 71.77%
Goodwill impairment -
Amortization of other intangible assets (1.12)
Foreclosed asset expense (3.59)
Write down of assets (1.42)
Efficiency ratio 65.64%
=====
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March
June 30, 31,
(in thousands, except per share data) 2010 2010
---- ----
ASSETS
Cash and due from banks $107,314 $207,015
Interest-bearing deposits in other
banks 809,359 658,337
Federal funds sold - -
Investment securities:
Trading 23,909 49,491
Available for sale 403,141 395,073
Held to maturity (fair value of
$3,868 at June 30, 2010, $4,355 at 3,731 4,234
March 31, 2010 and $6,907 at June 30,
2009)
Total investment securities 430,781 448,798
------- -------
Loans held for sale 72,726 57,659
Loans and leases 2,625,432 2,844,189
Less allowance for loan and lease
losses 201,959 211,646
Net loans and leases 2,423,473 2,632,543
--------- ---------
Premises and equipment 72,112 73,349
Accrued interest receivable 11,416 12,063
Investment in unconsolidated
subsidiaries 15,830 16,450
Other real estate 38,042 31,571
Goodwill - -
Other intangible assets 23,364 24,083
Mortgage servicing rights 21,998 21,527
Bank-owned life insurance 140,526 140,841
Federal Home Loan Bank stock 48,797 48,797
Other assets 63,605 61,144
Total assets $4,279,343 $4,434,177
========== ==========
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand $605,927 $611,840
Interest-bearing demand 591,258 630,942
Savings and money market 1,063,638 1,090,159
Time 947,751 1,002,097
------- ---------
Total deposits 3,208,574 3,335,038
Short-term borrowings 201,708 202,074
Long-tem debt 642,202 657,537
Other liabilities 60,316 57,403
Total liabilities 4,112,800 4,252,052
--------- ---------
Equity:
Preferred stock, no par value,
authorized 1,000,000 shares;
issued and outstanding 135,000 shares
at June 30, 2010,
March 31, 2010, and at June 30, 2009 129,714 129,344
Common stock, no par value,
authorized 185,000,000 shares;
issued and outstanding 30,370,553
shares at June 30, 2010, 30,370,421
shares at March 31, 2010 and
28,745,214 at June 30, 2009 406,580 406,580
Surplus 62,843 63,359
Retained earnings (accumulated
deficit) (438,425) (420,224)
Accumulated other comprehensive loss (4,184) (6,954)
------ ------
Total shareholders' equity 156,528 172,105
Non-controlling interest 10,015 10,020
------ ------
Total equity 166,543 182,125
------- -------
Total liabilities and equity $4,279,343 $4,434,177
========== ==========
June 30,
(in thousands, except per share data) 2009
----
ASSETS
Cash and due from banks $161,985
Interest-bearing deposits in other banks 23,071
Federal funds sold 19,000
Investment securities:
Trading -
Available for sale 1,049,949
Held to maturity (fair value of $3,868 at
June 30, 2010, $4,355 at 6,830
March 31, 2010 and $6,907 at June 30, 2009)
Total investment securities 1,056,779
---------
Loans held for sale 84,748
Loans and leases 3,688,519
Less allowance for loan and lease losses 166,071
Net loans and leases 3,522,448
---------
Premises and equipment 77,142
Accrued interest receivable 18,724
Investment in unconsolidated subsidiaries 17,534
Other real estate 17,862
Goodwill 152,689
Other intangible assets 26,239
Mortgage servicing rights 18,474
Bank-owned life insurance 137,946
Federal Home Loan Bank stock 48,797
Other assets 141,849
Total assets $5,525,287
==========
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand $623,698
Interest-bearing demand 548,166
Savings and money market 1,428,881
Time 1,365,779
---------
Total deposits 3,966,524
Short-term borrowings 267,155
Long-tem debt 608,554
Other liabilities 57,970
Total liabilities 4,900,203
---------
Equity:
Preferred stock, no par value, authorized
1,000,000 shares;
issued and outstanding 135,000 shares at
June 30, 2010,
March 31, 2010, and at June 30, 2009 128,239
Common stock, no par value, authorized
185,000,000 shares;
issued and outstanding 30,370,553 shares at
June 30, 2010, 30,370,421
shares at March 31, 2010 and 28,745,214 at
June 30, 2009 403,219
Surplus 62,549
Retained earnings (accumulated deficit) 28,083
Accumulated other comprehensive loss (7,043)
------
Total shareholders' equity 615,047
Non-controlling interest 10,037
------
Total equity 625,084
-------
Total liabilities and equity $5,525,287
==========
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
------------------
June March June
30, 31, 30,
(In thousands, except per share
data) 2010 2010 2009
---- ---- ----
Interest income:
Interest and fees on loans and
leases $35,788 $37,312 $54,218
Interest and dividends on
investment
securities:
Taxable interest 3,653 8,101 9,058
Tax-exempt interest 190 515 1,146
Dividends 2 3 2
Interest on deposits in other
banks 467 330 11
Interest on federal funds sold and
securities
purchased under agreements to
resell - - 6
--- --- ---
Total interest income 40,100 46,261 64,441
------ ------ ------
Interest expense:
Demand 250 258 355
Savings and money market 1,487 1,649 3,414
Time 3,808 3,981 8,219
Interest on short-term borrowings 306 189 34
Interest on long-term debt 5,053 5,115 6,359
----- ----- -----
Total interest expense 10,904 11,192 18,381
------ ------ ------
Net interest income 29,196 35,069 46,060
Provision for loan and lease
losses 20,412 58,837 74,324
------ ------ ------
Net interest income (loss) after
provision for loan and lease
losses 8,784 (23,768) (28,264)
----- ------- -------
Other operating income:
Service charges on deposit
accounts 2,982 3,207 3,948
Other service charges and fees 3,850 3,485 3,584
Income from fiduciary activities 811 811 999
Equity in earnings of
unconsolidated subsidiaries 102 29 205
Fees on foreign exchange 175 156 145
Investment securities gains
(losses) - 831 (2,564)
Income from bank-owned life
insurance 1,890 1,184 1,514
Loan placement fees 92 85 312
Net gains on sales of residential
loans 1,332 1,945 4,539
Other 1,503 1,031 1,917
----- ----- -----
Total other operating income 12,737 12,764 14,599
------ ------ ------
Other operating expense:
Salaries and employee benefits 14,408 14,836 17,684
Net occupancy 3,310 3,297 3,101
Equipment 1,305 1,477 1,562
Amortization of intangible assets 1,581 1,408 1,550
Communication expense 846 1,212 975
Legal and professional services 5,416 5,650 2,846
Computer software expense 873 903 840
Advertising expense 764 839 713
Goodwill impairment - 102,689 -
Foreclosed asset expense 403 5,532 2,294
Write down of assets 166 774 904
Other 8,554 10,598 13,349
----- ------ ------
Total other operating expense 37,626 149,215 45,818
------ ------- ------
Loss before income taxes (16,105) (160,219) (59,483)
Income tax benefit - - (25,041)
--- --- -------
Net loss $(16,105) $(160,219) $(34,442)
======== ========= ========
Per common share data:
Basic and diluted loss per share $(0.60) $(5.36) $(1.27)
Basic and diluted weighted average
shares outstanding 30,307 30,270 28,687
Year Ended
-----------
June 30,
(In thousands, except per share data) 2010 2009
---- ----
Interest income:
Interest and fees on loans and leases $73,100 $110,723
Interest and dividends on investment
securities:
Taxable interest 11,754 17,787
Tax-exempt interest 705 2,317
Dividends 5 5
Interest on deposits in other banks 797 11
Interest on federal funds sold and
securities
purchased under agreements to resell - 6
--- ---
Total interest income 86,361 130,849
------ -------
Interest expense:
Demand 508 676
Savings and money market 3,136 6,277
Time 7,789 18,113
Interest on short-term borrowings 495 272
Interest on long-term debt 10,168 12,978
------ ------
Total interest expense 22,096 38,316
------ ------
Net interest income 64,265 92,533
Provision for loan and lease losses 79,249 101,074
------ -------
Net interest income (loss) after
provision for loan and lease losses (14,984) (8,541)
------- ------
Other operating income:
Service charges on deposit accounts 6,189 7,485
Other service charges and fees 7,335 6,904
Income from fiduciary activities 1,622 1,969
Equity in earnings of unconsolidated
subsidiaries 131 479
Fees on foreign exchange 331 261
Investment securities gains (losses) 831 (2,714)
Income from bank-owned life insurance 3,074 2,584
Loan placement fees 177 560
Net gains on sales of residential loans 3,277 8,548
Other 2,534 4,207
----- -----
Total other operating income 25,501 30,283
------ ------
Other operating expense:
Salaries and employee benefits 29,244 33,944
Net occupancy 6,607 6,380
Equipment 2,782 3,074
Amortization of intangible assets 2,989 2,971
Communication expense 2,058 2,114
Legal and professional services 11,066 5,562
Computer software expense 1,776 1,752
Advertising expense 1,603 1,468
Goodwill impairment 102,689 -
Foreclosed asset expense 5,935 2,429
Write down of assets 940 1,339
Other 19,152 22,483
------ ------
Total other operating expense 186,841 83,516
------- ------
Loss before income taxes (176,324) (61,774)
Income tax benefit - (29,961)
--- -------
Net loss $(176,324) $(31,813)
========= ========
Per common share data:
Basic and diluted loss per share $(5.96) $(1.24)
Basic and diluted weighted average
shares outstanding 30,288 28,684
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Average Balances, Interest Income & Expense, Yields and Rates
(Taxable Equivalent)
Three Months Ended
(Dollars in thousands) June 30, 2010
-------------
Average Average
Yield/
Balance Rate Interest
------- ------- --------
Assets:
Interest earning assets:
Interest-bearing deposits in
other banks $738,766 0.25% $467
Federal funds sold &
securities purchased
under agreements to resell 0 0.00% 0
Taxable investment
securities, excluding
valuation allowance 419,827 3.48% 3,655
Tax-exempt investment
securities,
excluding valuation allowance 14,459 8.05% 292
Loans and leases, net of
unearned income 2,822,967 5.08% 35,788
Federal Home Loan Bank stock 48,797 0.00% 0
------ ---- ---
Total interest earning assets 4,044,816 3.98% 40,202
Nonearning assets 247,518
-------
Total assets $4,292,334
==========
Liabilities & Equity:
Interest-bearing liabilities:
Interest-bearing demand
deposits $604,983 0.17% $250
Savings and money market
deposits 1,075,028 0.55% 1,487
Time deposits under $100,000 535,227 1.61% 2,149
Time deposits $100,000 and
over 425,938 1.56% 1,659
Short-term borrowings 202,191 0.61% 306
Long-term debt 649,910 3.12% 5,053
------- ---- -----
Total interest-bearing
liabilities 3,493,277 1.25% 10,904
------
Noninterest-bearing deposits 568,140
Other liabilities 66,308
------
Total liabilities 4,127,725
---------
Shareholders' equity 154,592
Non-controlling interest 10,017
------
Total equity 164,609
-------
Total liabilities & equity $4,292,334
==========
Net interest income $29,298
=======
Net interest margin 2.90%
====
Three Months Ended
(Dollars in thousands) June 30, 2009
-------------
Average Average
Yield/
Balance Rate Interest
------- ------- --------
Assets:
Interest earning assets:
Interest-bearing deposits in
other banks $66,158 0.07% $11
Federal funds sold &
securities purchased
under agreements to resell 17,181 0.13% 6
Taxable investment
securities, excluding
valuation allowance 840,598 4.31% 9,060
Tax-exempt investment
securities,
excluding valuation allowance 118,863 5.94% 1,764
Loans and leases, net of
unearned income 3,862,201 5.63% 54,218
Federal Home Loan Bank stock 48,797 0.00% 0
------ ---- ---
Total interest earning assets 4,953,798 5.26% 65,059
Nonearning assets 533,688
-------
Total assets $5,487,486
==========
Liabilities & Equity:
Interest-bearing liabilities:
Interest-bearing demand
deposits $540,416 0.26% $355
Savings and money market
deposits 1,345,028 1.02% 3,414
Time deposits under $100,000 668,096 2.62% 4,364
Time deposits $100,000 and
over 942,322 1.64% 3,855
Short-term borrowings 52,895 0.25% 34
Long-term debt 615,944 4.14% 6,359
------- ---- -----
Total interest-bearing
liabilities 4,164,701 1.77% 18,381
------
Noninterest-bearing deposits 583,265
Other liabilities 69,526
------
Total liabilities 4,817,492
---------
Shareholders' equity 659,954
Non-controlling interest 10,040
------
Total equity 669,994
-------
Total liabilities & equity $5,487,486
==========
Net interest income $46,678
=======
Net interest margin 3.77%
====
Six Months Ended
(Dollars in thousands) June 30, 2010
-------------
Average Average
Yield/
Balance Rate Interest
------- ------- --------
Assets:
Interest earning assets:
Interest-bearing deposits in
other banks $621,935 0.26% $797
Federal funds sold &
securities purchased
under agreements to resell 0 0.00% 0
Taxable investment
securities, excluding
valuation allowance 612,880 3.84% 11,759
Tax-exempt investment
securities,
excluding valuation allowance 30,255 7.17% 1,085
Loans and leases, net of
unearned income 2,934,483 5.01% 73,100
Federal Home Loan Bank stock 48,797 0.00% 0
------ ---- ---
Total interest earning assets 4,248,350 4.11% 86,741
Nonearning assets 315,313
-------
Total assets $4,563,663
==========
Liabilities & Equity:
Interest-bearing liabilities:
Interest-bearing demand
deposits $608,072 0.17% $508
Savings and money market
deposits 1,110,717 0.57% 3,136
Time deposits under $100,000 533,425 1.64% 4,334
Time deposits $100,000 and
over 525,676 1.33% 3,455
Short-term borrowings 237,974 0.42% 495
Long-term debt 653,767 3.14% 10,168
------- ---- ------
Total interest-bearing
liabilities 3,669,631 1.21% 22,096
------
Noninterest-bearing deposits 580,062
Other liabilities 63,976
------
Total liabilities 4,313,669
---------
Shareholders' equity 239,973
Non-controlling interest 10,021
------
Total equity 249,994
-------
Total liabilities & equity $4,563,663
==========
Net interest income $64,645
=======
Net interest margin 3.06%
====
Six Months Ended
(Dollars in thousands) June 30, 2009
-------------
Average Average
Yield/
Balance Rate Interest
------- ------- --------
Assets:
Interest earning assets:
Interest-bearing deposits in
other banks $35,299 0.06% $11
Federal funds sold &
securities purchased
under agreements to resell 8,827 0.13% 6
Taxable investment
securities, excluding
valuation allowance 806,133 4.41% 17,792
Tax-exempt investment
securities,
excluding valuation allowance 121,026 5.89% 3,565
Loans and leases, net of
unearned income 3,938,559 5.66% 110,723
Federal Home Loan Bank stock 48,797 0.00% 0
------ ---- ---
Total interest earning assets 4,958,641 5.36% 132,097
Nonearning assets 524,343
-------
Total assets $5,482,984
==========
Liabilities & Equity:
Interest-bearing liabilities:
Interest-bearing demand
deposits $519,598 0.26% $676
Savings and money market
deposits 1,266,405 1.00% 6,277
Time deposits under $100,000 689,396 2.73% 9,344
Time deposits $100,000 and
over 939,956 1.88% 8,769
Short-term borrowings 125,324 0.44% 272
Long-term debt 624,391 4.19% 12,978
------- ---- ------
Total interest-bearing
liabilities 4,165,070 1.86% 38,316
------
Noninterest-bearing deposits 584,491
Other liabilities 84,293
------
Total liabilities 4,833,854
---------
Shareholders' equity 639,087
Non-controlling interest 10,043
------
Total equity 649,130
-------
Total liabilities & equity $5,482,984
==========
Net interest income $93,781
=======
Net interest margin 3.80%
====
SOURCE Central Pacific Financial Corp.
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