| Investor Contact: | David Morimoto | Media Contact: | Cedric Yamanaka |
| | SVP & Treasurer | | Public Relations /Communications Manager |
| | (808) 544-0627 | | (808) 544-6898 |
| | david.morimoto@centralpacificbank.com | cedric.yamanaka@centralpacificbank.com |
NEWS RELEASE
CENTRAL PACIFIC FINANCIAL CORP. REPORTS FIRST QUARTER RESULTS
HONOLULU, April 30, 2008 – Central Pacific Financial Corp. (NYSE: CPF), parent company of Central Pacific Bank, today reported net income for the first quarter of 2008 of $1.7 million, or $0.06 per diluted share, compared to $20.1 million, or $0.65 per diluted share, reported in the first quarter of 2007 and a net loss of $44.5 million, or ($1.51) per diluted share, reported in the fourth quarter of 2007. The net loss for the fourth quarter of 2007 included a non-cash goodwill impairment charge totaling $48.0 million.
“While our capital position and the operating fundamentals of our core Hawaii franchise, including asset quality, remain strong, we continue to experience the same challenging credit markets in California that are affecting the entire financial sector,” said Clint Arnoldus, President and Chief Executive Officer. “The California residential construction market has been particularly weak and our exposure to this market is reflected in higher provision for loan loss expense in this quarter’s results. We continue to rigorously analyze our loan portfolio, have reserved for the current, reduced value of certain assets, and are aggressively pursuing opportunities to reduce our exposure to the California residential construction market. More importantly, we expect our capital position to remain strong and reaffirm our intention to maintain our dividend at the current level.”
First Quarter Highlights
| § | Net growth in loans and leases of $149.8 million, or 3.6%, from December 31, 2007, excluding the effects of loans transferred to held for sale and loan charge-offs. |
| § | Net credit costs of $29.7 million comprised of a provision for loan and lease losses, partially offset by a decrease to the reserve for unfunded commitments. |
| § | Capital base remained strong with Tier 1 risk-based capital, total risk-based capital, and leverage capital ratios of 10.9%, 12.2%, and 9.6%, respectively. |
| § | Maintained our quarterly cash dividend at $0.25 per common share. |
| § | Opened new branches in Lahaina, Maui and Kapahulu, Oahu. |
| § | Received cash proceeds totaling $0.9 million for partial redemption of the Company’s equity interest in Visa, Inc. |
Earnings Highlights
Net interest income for the first quarter of 2008 was $50.9 million, compared to $53.7 million in the year-ago quarter and $52.5 million in the fourth quarter of 2007. The net interest margin for the current quarter was 3.99%, compared to 4.52% in the year-ago quarter and 4.15% in the fourth quarter of 2007. The year-over-year and sequential-quarter compression was primarily attributable to the reversal of interest related to certain nonaccrual loans totaling $1.5 million and lower interest income due to a decrease in loan yields. Excluding the effects of the $1.5 million reversal of interest on nonaccrual loans, net interest income was $52.4 million and the net interest margin was 4.10% for the current quarter.
The provision for loan and lease losses in the first quarter of 2008 was $34.3 million, compared to $2.6 million in the year-ago quarter and $28.2 million in the fourth quarter of 2007. As previously mentioned, the current quarter increase was directly attributable to continued weakness in California’s housing and residential construction market and the resultant decline in collateral values for many loans with exposure to this sector.
Other operating income totaled $14.3 million for the first quarter of 2008, compared to $11.2 million in the year-ago quarter and $11.4 million in the fourth quarter of 2007. The increase from the year-ago quarter was primarily due to increased income from bank-owned life insurance totaling $0.8 million, higher gains on sales of loans of $0.4 million, and the receipt of cash proceeds from the partial redemption of our equity interest in Visa totaling $0.9 million. The sequential-quarter increase was primarily due to the receipt of cash proceeds from the partial redemption of the Company’s equity interest in Visa totaling $0.9 million, higher gains on sales of loans totaling $0.3 million, and a $1.7 million loss recognized in the fourth quarter of 2007 in connection with an investment portfolio repositioning.
Other operating expense for the first quarter of 2008 was $31.5 million, compared to $30.5 million in the year-ago quarter and $35.2 million in the fourth quarter of 2007 (excluding the aforementioned $48.0 million non-cash goodwill impairment charge). The increase from the year-ago quarter was primarily due to the write-down of foreclosed property totaling $2.6 million and higher salaries and employee benefits totaling $1.0 million due to the reversal of certain incentive compensation accruals in the year-ago quarter, offset by a decrease in reserves of $4.6 million for unfunded commitments. The decrease in reserves for unfunded commitments was primarily attributable to the termination by the Company of several outstanding commitments to certain borrowers with exposure to the California residential construction market. The sequential-quarter decrease in other operating expense was primarily due to the aforementioned decrease in the reserve for unfunded commitments, partially offset by higher salaries and employee benefits and the aforementioned write-down of foreclosed property.
The Company’s efficiency ratio for the first quarter of 2008 was 46.74%, compared with 45.43% in the year-ago quarter and 51.44% in the fourth quarter of 2007 (excluding the non-cash goodwill impairment charge of $48.0 million). The current quarter variance from the year-ago and sequential quarters was primarily attributable to the fluctuations in operating expenses described above.
The Company’s effective tax rate for the current quarter was impacted by the disproportionate recognition of federal and state tax credits and the generation of tax-exempt income, compared to 36.61% in the year-ago quarter and 6.49% in the fourth quarter of 2007.
Balance Sheet Highlights
Total assets of $5.8 billion at March 31, 2008 increased by $291.2 million, or 5.3%, from a year ago and by $119.7 million, or 2.1%, from December 31, 2007.
Total loans and leases of $4.2 billion at March 31, 2008 increased by $272.1 million, or 7.0%, from a year ago and by $34.9 million, or 0.8%, from December 31, 2007. The current quarter increase was primarily attributable to net loan growth of $149.8 million, partially offset by the transfer of California residential construction loans totaling $42.5 million to the held for sale category and charge-offs totaling $54.8 million. Overall, the Hawaii loan portfolio grew by $104.7 million during the current quarter, while the mainland loan portfolio decreased by $69.8 million.
Total deposits of $3.8 billion at March 31, 2008 decreased by $65.6 million, or 1.7%, from a year ago and by $222.7 million, or 5.6%, from December 31, 2007. Noninterest bearing demand, interest bearing demand, savings and money market and time deposits decreased in the current quarter by $32.9 million, $3.4 million, $66.5 million and $119.8 million, respectively.
Shareholders’ equity of $674.7 million at March 31, 2008 decreased by $78.9 million from a year ago and increased by $0.3 million from December 31, 2007.
Asset Quality
At March 31, 2008, nonperforming assets totaled $118.8 million, or 2.05%, of total assets, compared to $1.6 million, or 0.03%, of total assets at March 31, 2007 and $61.5 million, or 1.08%, of total assets at December 31, 2007. Nonperforming assets as of March 31, 2008 was comprised of nonaccrual loans totaling $68.9 million, nonperforming loans classified as held for sale totaling $47.9 million, and other real estate owned totaling $2.0 million. The sequential-quarter increase was primarily attributable to the addition of 13 California residential construction loans totaling $76.5 million, partially offset by partial charge-offs of six California residential constructions loans totaling $16.4 million.
Net loan charge-offs in the first quarter of 2008 totaled $54.2 million, compared to net loan charge-offs of $4.3 million in the year-ago quarter and $8.7 million in the fourth quarter of 2007. Loan charge-offs in the first quarter of 2008 included partial charge-offs of 16 California residential construction loans totaling $53.7 million.
Loans delinquent for 90 days or more still accruing interest of $0.5 million at March 31, 2008 declined by 10.3%, from a year ago and by 41.1% from December 31, 2007.
The allowance for loan and lease losses as a percentage of total loans and leases was 1.73% at March 31, 2008, compared to 1.30% a year ago and 2.22% at December 31, 2007. The current quarter decrease was attributable to the aforementioned net loan charge-offs totaling $54.2 million, partially offset by the $34.3 million provision for loan and lease losses recorded during the current quarter.
California Residential Construction Exposure
Total loans outstanding in the California residential construction market was $245.8 million at March 31, 2008, which consisted of $197.9 million in the loan portfolio and $47.9 million classified as held for sale. At December 31, 2007, total loans outstanding in this sector was $310.6 million, which consisted of $305.2 million in the loan portfolio and $5.4 million classified as held for sale.
California residential construction loans held in the portfolio represented 4.7% and 7.4% of total loans and leases at March 31, 2008 and December 31, 2007, respectively.
Nonperforming assets related to this sector was $113.4 million at March 31, 2008, or 1.96% of total assets. This balance was comprised of nonaccrual loans totaling $63.5 million, nonaccrual loans held for sale totaling $47.9 million, and other real estate owned totaling $2.0 million.
For California residential construction loans classified as held for sale, partial charge-offs totaling $28.5 million were recorded to reduce the carrying value of these loans to the estimated fair value of their collateral as of March 31, 2008.
Of the remaining $197.9 million balance in the California residential construction portfolio, the allowance for loan and lease losses established for these loans was $24.0 million at March 31, 2008, or 12.1%, of the total outstanding balance.
“Although our short-term outlook for the California residential construction market remains uncertain, we have focused our management team and engaged the services of seasoned real estate professionals in an effort to identify, assess and stay ahead of the situation,” stated Arnoldus. “We have initiated loan sale proceedings on several California residential construction loans and are pursuing a wide range of opportunities to aggressively reduce our credit risk exposure to this sector.”
Community-Based Banking
The Company continues to implement its community-based banking strategy, which is designed to increase Central Pacific Bank’s ability to grow deposits, particularly in the small business sector. In essence, Central Pacific Bank has decentralized its banking expertise and empowered its frontline to become fully integrated within Hawaii’s marketplace.
“In contrast to the challenging market conditions in California’s residential construction sector, the Hawaii market continues to provide us with attractive opportunities for growth and market share expansion,” said Arnoldus. “We will continue to offer our customers the best in financial products and services. One example of this is the notable improvements we are making to our 39 branch network, including the opening of a new branch in Kapahulu earlier this month and the previously announced opening of a new branch in Lahaina, Maui.”
Stock Repurchase Plan
In January 2008, the Company’s Board of Directors authorized the repurchase of up to 1,200,000 shares of the Company’s common stock. During the first quarter of 2008, the Company repurchased 100,000 shares under this plan.
Conference Call Information
Central Pacific Financial Corp. will conduct a conference call today at 1:00 p.m. Eastern Time (7:00 a.m. Hawaii Time) to discuss the quarterly results. To participate in the conference call, please dial 1-888-686-9683 or visit the investor relations page of the Company’s website at http://investor.centralpacificbank.com. A playback of the call will be available through May 7, 2008 by dialing 1-888-203-1112 (passcode: 3498214) and on the Company’s website.
About Central Pacific Financial Corp.
Central Pacific Financial Corp. is the fourth largest financial institution in Hawaii with more than $5.8 billion in assets. Central Pacific Bank, its primary subsidiary, operates 39 branches and 98 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, earnings 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 legislation affecting the banking industry; the impact of competitive products, services, pricing, and other competitive forces; movements in interest rates; loan delinquency rates and changes in asset quality generally; and the price of the Company’s stock. 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 for the last fiscal year. The Company does not update any of its forward-looking statements.
#####
| CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES | |
| Financial Highlights - March 31, 2008 | |
| (Unaudited) | |
| | | | | | | | | | | |
| | | | Three Months Ended | | | | |
| | | | March 31, | | | % | |
| (in thousands, except per share data) | | 2008 | | | 2007 | | | Change | |
| | | | | | | | | | | |
| INCOME STATEMENT | | | | | | | | | |
| Net income | | $ | 1,658 | | | $ | 20,135 | | | | -91.8 | % |
| Per share data: | | | | | | | | | | | | |
| | Diluted earnings per share | | | 0.06 | | | | 0.65 | | | | -90.8 | % |
| | Cash dividends | | | 0.25 | | | | 0.24 | | | | 4.2 | % |
| | | | | | | | | | | | | | |
| PERFORMANCE RATIOS | | | | | | | | | | | | |
| Return on average assets (1) | | | 0.12 | % | | | 1.48 | % | | | | |
| Return on average shareholders' equity (1) | | | 0.96 | % | | | 10.73 | % | | | | |
| Net income to average tangible shareholders' equity (1) | | | 1.59 | % | | | 19.11 | % | | | | |
| Efficiency ratio (2) | | | 46.74 | % | | | 45.43 | % | | | | |
| Net interest margin (1) | | | 3.99 | % | | | 4.52 | % | | | | |
| Dividend payout ratio | | | 416.67 | % | | | 36.36 | % | | | | |
| | | | | | | | | | | | | | |
| | | | March 31, | | | % | |
| | | | 2008 | | | 2007 | | | Change | |
| BALANCE SHEET | | | | | | | | | | | | |
| Total assets | | $ | 5,800,037 | | | $ | 5,508,840 | | | | 5.3 | % |
| Loans and leases, net of unearned interest | | | 4,176,596 | | | | 3,904,542 | | | | 7.0 | % |
| Net loans and leases | | | 4,104,488 | | | | 3,853,928 | | | | 6.5 | % |
| Deposits | | | 3,780,021 | | | | 3,845,621 | | | | -1.7 | % |
| Shareholders' equity | | | 674,663 | | | | 753,536 | | | | -10.5 | % |
| Book value per share | | | 23.50 | | | | 24.51 | | | | -4.1 | % |
| Market value per share | | | 18.85 | | | | 36.57 | | | | -48.5 | % |
| Tangible equity ratio | | | 7.27 | % | | | 8.28 | % | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | Three Months Ended | | | | | |
| | | | March 31, | | | % | |
| | | | 2008 | | | 2007 | | | Change | |
| SELECTED AVERAGE BALANCES | | | | | | | | | | | | |
| Total assets | | $ | 5,748,453 | | | $ | 5,437,973 | | | | 5.7 | % |
| Interest-earning assets | | | 5,190,651 | | | | 4,849,704 | | | | 7.0 | % |
| Loans and leases, net of unearned interest | | | 4,247,369 | | | | 3,899,826 | | | | 8.9 | % |
| Other real estate | | | 1,586 | | | | - | | | | 0.0 | % |
| Deposits | | | 3,829,061 | | | | 3,787,092 | | | | 1.1 | % |
| Interest-bearing liabilities | | | 4,379,475 | | | | 4,003,417 | | | | 9.4 | % |
| Shareholders' equity | | | 690,175 | | | | 750,278 | | | | -8.0 | % |
| | | | | | | | | | | | | | |
| | | | March 31, | | | % | |
| | | | 2008 | | | 2007 | | | Change | |
| NONPERFORMING ASSETS | | | | | | | | | | | | |
| Nonaccrual loans (including loans held for sale) | | $ | 116,755 | | | $ | 1,589 | | | | 7247.7 | % |
| Other real estate | | | 2,000 | | | | - | | | | - | |
| | Total nonperforming assets | | | 118,755 | | | | 1,589 | | | | 7373.6 | % |
| Loans delinquent for 90 days or more (still accruing interest) | | | 532 | | | | 593 | | | | -10.3 | % |
| Restructured loans (still accruing interest) | | | - | | | | - | | | | 0.0 | % |
| | Total nonperforming assets, loans delinquent for 90 days or more (still | | | | | | | | | | | | |
| | accruing interest) and restructured loans (still accruing interest) | | $ | 119,287 | | | $ | 2,182 | | | | 5366.9 | % |
| | | | | | | | | | | | | | |
| | | | Three Months Ended | | | | | |
| | | | March 31, | | | | | |
| | | | 2008 | | | 2007 | | | | | |
| Loan charge-offs | | $ | 54,810 | | | $ | 4,835 | | | | 1033.6 | % |
| Recoveries | | | 597 | | | | 569 | | | | 4.9 | % |
| | Net loan charge-offs (recoveries) | | $ | 54,213 | | | $ | 4,266 | | | | 1170.8 | % |
| Net loan charge-offs to average loans (1) | | | 5.11 | % | | | 0.44 | % | | | | |
| | | | | | | | | | | | | | |
| | | | March 31, | | | | | |
| | | | 2008 | | | 2007 | | | | | |
| ASSET QUALITY RATIOS | | | | | | | | | | | | |
| Nonaccrual loans (including loans held for sale) to total loans and leases | | | 2.76 | % | | | 0.04 | % | | | | |
| Nonperforming assets to total assets | | | 2.05 | % | | | 0.03 | % | | | | |
| Nonperforming assets, loans delinquent for 90 days or more (still accruing | | | | | | | | | | | | |
| | interest) and restructured loans (still accruing interest) to total loans | | | | | | | | | | | | |
| | and leases & other real estate | | | 2.82 | % | | | 0.06 | % | | | | |
| Allowance for loan and lease losses to total loans and leases | | | 1.73 | % | | | 1.30 | % | | | | |
| Allowance for loan and lease losses to nonaccrual loans (including loans held for sale) | | | 61.76 | % | | | 3185.27 | % | | | | |
| | | | | | | | | | | | | | |
| (1) | Annualized | | | | | | | | | | | | |
| (2) | Efficiency ratio is derived by dividing other operating expense excluding amortization and impairment of intangible | |
| | assets and goodwill by operating revenue (net interest income on a taxable equivalent basis plus other operating | |
| | income before securities transactions). | | | | | | | | | | | | |
| CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES | |
| CONSOLIDATED BALANCE SHEETS | |
| (Unaudited) | |
| | | | | | | | | | |
| CONSOLIDATED BALANCE SHEETS | | March 31, | | | December 31, | | | March 31, | |
| (in thousands, except per share data) | | 2008 | | | 2007 | | | 2007 | |
| | | | | | | | | | |
| ASSETS | | | | | | | | | |
| Cash and due from banks | | $ | 84,462 | | | $ | 79,088 | | | $ | 112,799 | |
| Interest-bearing deposits in other banks | | | 106 | | | | 241 | | | | 5,318 | |
| Federal funds sold | | | - | | | | 2,800 | | | | - | |
| Investment securities: | | | | | | | | | | | | |
| Held to maturity, at cost (fair value of $27,098 at March 31, 2008, | | | | | | | | | | | | |
| $46,077 at December 31, 2007 and $52,027 at March 31, 2007) | | | 26,915 | | | | 46,124 | | | | 52,780 | |
| Available for sale, at fair value | | | 852,655 | | | | 835,130 | | | | 814,691 | |
| Total investment securities | | | 879,570 | | | | 881,254 | | | | 867,471 | |
| | | | | | | | | | | | | |
| Loans held for sale | | | 97,743 | | | | 37,572 | | | | 41,608 | |
| Loans and leases | | | 4,176,596 | | | | 4,141,705 | | | | 3,904,542 | |
| Less allowance for loan and lease losses | | | 72,108 | | | | 92,049 | | | | 50,614 | |
| Net loans and leases | | | 4,104,488 | | | | 4,049,656 | | | | 3,853,928 | |
| | | | | | | | | | | | | |
| Premises and equipment | | | 83,504 | | | | 82,841 | | | | 77,016 | |
| Accrued interest receivable | | | 25,541 | | | | 26,041 | | | | 26,783 | |
| Investment in unconsolidated subsidiaries | | | 16,471 | | | | 17,404 | | | | 12,318 | |
| Other real estate | | | 2,000 | | | | - | | | | - | |
| Goodwill | | | 244,702 | | | | 244,702 | | | | 293,098 | |
| Core deposit premium | | | 28,082 | | | | 28,750 | | | | 31,213 | |
| Mortgage servicing rights | | | 11,536 | | | | 11,222 | | | | 11,404 | |
| Bank-owned life insurance | | | 132,477 | | | | 131,454 | | | | 103,420 | |
| Federal Home Loan Bank stock | | | 48,797 | | | | 48,797 | | | | 48,797 | |
| Other assets | | | 40,558 | | | | 38,564 | | | | 23,667 | |
| Total assets | | $ | 5,800,037 | | | $ | 5,680,386 | | | $ | 5,508,840 | |
| | | | | | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | |
| Noninterest-bearing demand | | $ | 632,157 | | | $ | 665,034 | | | $ | 616,222 | |
| Interest-bearing demand | | | 457,742 | | | | 461,175 | | | | 439,996 | |
| Savings and money market | | | 1,112,312 | | | | 1,178,855 | | | | 1,228,754 | |
| Time | | | 1,577,810 | | | | 1,697,655 | | | | 1,560,649 | |
| Total deposits | | | 3,780,021 | | | | 4,002,719 | | | | 3,845,621 | |
| | | | | | | | | | | | | |
| Short-term borrowings | | | 368,375 | | | | 16,000 | | | | 25,039 | |
| Long-tem debt | | | 915,514 | | | | 916,019 | | | | 804,618 | |
| Minority interest | | | 13,098 | | | | 13,104 | | | | 13,502 | |
| Other liabilities | | | 48,366 | | | | 58,141 | | | | 66,524 | |
| Total liabilities | | | 5,125,374 | | | | 5,005,983 | | | | 4,755,304 | |
| | | | | | | | | | | | | |
| Shareholders' equity: | | | | | | | | | | | | |
| Preferred stock, no par value, authorized 1,000,000 shares, none issued | | | - | | | | - | | | | - | |
| Common stock, no par value, authorized 100,000,000 shares; issued and | | | | | | | | | | | | |
| outstanding 28,707,985 shares at March 31, 2008, 28,756,647 shares at | | | | | | | | | |
| December 31, 2007, and 30,740,014 shares at March 31, 2007 | | | 402,844 | | | | 403,304 | | | | 431,185 | |
| Surplus | | | 54,487 | | | | 54,669 | | | | 53,018 | |
| Retained earnings | | | 216,755 | | | | 222,644 | | | | 282,673 | |
| Accumulated other comprehensive income (loss) | | | 577 | | | | (6,214 | ) | | | (13,340 | ) |
| Total shareholders' equity | | | 674,663 | | | | 674,403 | | | | 753,536 | |
| | | | | | | | | | | | | |
| Total liabilities and shareholders' equity | | $ | 5,800,037 | | | $ | 5,680,386 | | | $ | 5,508,840 | |
| CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES | |
| CONSOLIDATED STATEMENTS OF INCOME | |
| (Unaudited) | |
| | | | | | | | | | |
| | | Three Months Ended | |
| | | March 31, | | | December 31, | | | March 31, | |
| (In thousands, except per share data) | | 2008 | | | 2007 | | | 2007 | |
| Interest income: | | | | | | | | | |
| Interest and fees on loans and leases | | $ | 70,294 | | | $ | 77,159 | | | $ | 76,166 | |
| Interest and dividends on investment securities: | | | | | | | | | | | | |
| Taxable interest | | | 9,271 | | | | 8,757 | | | | 8,712 | |
| Tax-exempt interest | | | 1,389 | | | | 1,349 | | | | 1,363 | |
| Dividends | | | 24 | | | | 71 | | | | 33 | |
| Interest on deposits in other banks | | | 4 | | | | 14 | | | | 35 | |
| Interest on federal funds sold and securities purchased | | | | | | | | | | | | |
| under agreements to resell | | | 21 | | | | 62 | | | | 10 | |
| Dividends on Federal Home Loan Bank stock | | | 122 | | | | 98 | | | | 98 | |
| | | | | | | | | | | | | |
| Total interest income | | | 81,125 | | | | 87,510 | | | | 86,417 | |
| | | | | | | | | | | | | |
| Interest expense: | | | | | | | | | | | | |
| Demand | | | 137 | | | | 138 | | | | 138 | |
| Savings and money market | | | 3,785 | | | | 5,177 | | | | 6,285 | |
| Time | | | 14,729 | | | | 18,285 | | | | 15,834 | |
| Interest on short-term borrowings | | | 1,923 | | | | 506 | | | | 505 | |
| Interest on long-term debt | | | 9,694 | | | | 10,906 | | | | 9,968 | |
| | | | | | | | | | | | | |
| Total interest expense | | | 30,268 | | | | 35,012 | | | | 32,730 | |
| | | | | | | | | | | | | |
| Net interest income | | | 50,857 | | | | 52,498 | | | | 53,687 | |
| Provision for loan and lease losses | | | 34,272 | | | | 28,201 | | | | 2,600 | |
| Net interest income after provision for loan and lease losses | | | 16,585 | | | | 24,297 | | | | 51,087 | |
| | | | | | | | | | | | | |
| Other operating income: | | | | | | | | | | | | |
| Service charges on deposit accounts | | | 3,543 | | | | 3,679 | | | | 3,444 | |
| Other service charges and fees | | | 3,415 | | | | 3,126 | | | | 3,357 | |
| Income from fiduciary activities | | | 1,005 | | | | 983 | | | | 761 | |
| Equity in earnings of unconsolidated subsidiaries | | | 283 | | | | 110 | | | | 257 | |
| Fees on foreign exchange | | | 194 | | | | 180 | | | | 221 | |
| Investment securities gains (losses) | | | - | | | | (1,715 | ) | | | - | |
| Income from bank-owned life insurance | | | 1,870 | | | | 1,746 | | | | 1,031 | |
| Loan placement fees | | | 153 | | | | 289 | | | | 259 | |
| Gains on sales of loans | | | 1,798 | | | | 1,503 | | | | 1,367 | |
| Other | | | 2,018 | | | | 1,461 | | | | 455 | |
| | | | | | | | | | | | | |
| Total other operating income | | | 14,279 | | | | 11,362 | | | | 11,152 | |
| | | | | | | | | | | | | |
| Other operating expense: | | | | | | | | | | | | |
| Salaries and employee benefits | | | 17,364 | | | | 13,028 | | | | 16,406 | |
| Net occupancy | | | 2,853 | | | | 2,687 | | | | 2,504 | |
| Equipment | | | 1,395 | | | | 1,418 | | | | 1,230 | |
| Amortization of core deposit premium | | | 668 | | | | 1,094 | | | | 685 | |
| Amortization of mortgage servicing rights | | | 501 | | | | 356 | | | | 510 | |
| Communication expense | | | 1,085 | | | | 1,148 | | | | 1,148 | |
| Legal and professional services | | | 2,413 | | | | 2,477 | | | | 2,327 | |
| Computer software expense | | | 863 | | | | 799 | | | | 799 | |
| Advertising expense | | | 682 | | | | 663 | | | | 623 | |
| Goodwill impairment | | | - | | | | 48,000 | | | | - | |
| Foreclosed asset expense | | | 2,590 | | | | - | | | | - | |
| Other | | | 1,046 | | | | 11,526 | | | | 4,244 | |
| | | | | | | | | | | | | |
| Total other operating expense | | | 31,460 | | | | 83,196 | | | | 30,476 | |
| | | | | | | | | | | | | |
| Income (loss) before income taxes | | | (596 | ) | | | (47,537 | ) | | | 31,763 | |
| Income taxes | | | (2,254 | ) | | | (3,085 | ) | | | 11,628 | |
| | | | | | | | | | | | | |
| Net income (loss) | | $ | 1,658 | | | $ | (44,452 | ) | | $ | 20,135 | |
| | | | | | | | | | | | | |
| Per share data: | | | | | | | | | | | | |
| Basic earnings (loss) per share | | $ | 0.06 | | | $ | (1.51 | ) | | $ | 0.66 | |
| Diluted earnings (loss) per share | | | 0.06 | | | | (1.51 | ) | | | 0.65 | |
| Cash dividends declared | | | 0.25 | | | | 0.25 | | | | 0.24 | |
| | | | | | | | | | | | | |
| Basic weighted average shares outstanding | | | 28,686 | | | | 29,355 | | | | 30,699 | |
| Diluted weighted average shares outstanding | | | 28,801 | | | | 29,355 | | | | 30,988 | |
| CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES |
| Average Balances, Interest Income & Expense, Yields and Rates (Taxable Equivalent) |
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | | Three Months Ended | | | Three Months Ended |
| (Dollars in thousands) | March 31, 2008 | | | December 31, 2007 | | | March 31, 2007 |
| | Average | | Average | | | | | Average | | Average | | | | | Average | | Average | | |
| | Balance | | Yield/Rate | | Interest | | | Balance | | Yield/Rate | | Interest | | | Balance | | Yield/Rate | | Interest |
| Assets: | | | | | | | | | | | | | | | | | | | | | | |
| Interest earning assets: | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing deposits in other banks | $ | 495 | | 3.17 | % | | $ | 4 | | | $ | 1,268 | | 4.51 | % | | $ | 14 | | | $ | 2,776 | | 5.11 | % | | $ | 35 |
| Federal funds sold & securities purchased | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| under agreements to resell | | 2,641 | | 3.20 | % | | | 21 | | | | 5,354 | | 4.56 | % | | | 62 | | | | 778 | | 5.20 | % | | | 10 |
| Taxable investment securities, excluding | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| valuation allowance | | 739,033 | | 5.03 | % | | | 9,295 | | | | 729,677 | | 4.84 | % | | | 8,828 | | | | 743,018 | | 4.71 | % | | | 8,745 |
| Tax-exempt investment securities, | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| excluding valuation allowance | | 152,316 | | 5.61 | % | | | 2,137 | | | | 151,935 | | 5.47 | % | | | 2,076 | | | | 154,509 | | 5.43 | % | | | 2,097 |
| Loans and leases, net of unearned income | | 4,247,369 | | 6.65 | % | | | 70,294 | | | | 4,171,889 | | 7.35 | % | | | 77,159 | | | | 3,899,826 | | 7.90 | % | | | 76,166 |
| Federal Home Loan Bank stock | | 48,797 | | 1.00 | % | | | 122 | | | | 48,797 | | 0.80 | % | | | 98 | | | | 48,797 | | 0.80 | % | | | 98 |
| Total interest earning assets | | 5,190,651 | | 6.33 | % | | | 81,873 | | | | 5,108,920 | | 6.87 | % | | | 88,237 | | | | 4,849,704 | | 7.26 | % | | | 87,151 |
| Nonearning assets | | 557,802 | | | | | | | | | | 609,271 | | | | | | | | | | 588,269 | | | | | | |
| Total assets | $ | 5,748,453 | | | | | | | | | $ | 5,718,191 | | | | | | | | | $ | 5,437,973 | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Liabilities & Stockholders' Equity: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing demand deposits | $ | 451,058 | | 0.12 | % | | $ | 137 | | | $ | 450,008 | | 0.12 | % | | $ | 138 | | | $ | 433,167 | | 0.13 | % | | $ | 138 |
| Savings and money market deposits | | 1,141,285 | | 1.33 | % | | | 3,785 | | | | 1,170,325 | | 1.76 | % | | | 5,177 | | | | 1,236,806 | | 2.06 | % | | | 6,285 |
| Time deposits under $100,000 | | 532,517 | | 3.38 | % | | | 4,481 | | | | 564,265 | | 3.75 | % | | | 5,337 | | | | 627,268 | | 3.74 | % | | | 5,784 |
| Time deposits $100,000 and over | | 1,105,154 | | 3.73 | % | | | 10,248 | | | | 1,171,825 | | 4.38 | % | | | 12,948 | | | | 900,843 | | 4.52 | % | | | 10,050 |
| Short-term borrowings | | 229,455 | | 3.37 | % | | | 1,923 | | | | 41,334 | | 4.86 | % | | | 506 | | | | 37,021 | | 5.55 | % | | | 505 |
| Long-term debt | | 920,006 | | 4.24 | % | | | 9,694 | | | | 872,753 | | 4.96 | % | | | 10,906 | | | | 768,312 | | 5.26 | % | | | 9,968 |
| Total interest-bearing liabilities | | 4,379,475 | | 2.78 | % | | | 30,268 | | | | 4,270,510 | | 3.25 | % | | | 35,012 | | | | 4,003,417 | | 3.32 | % | | | 32,730 |
| Noninterest-bearing deposits | | 599,047 | | | | | | | | | | 608,734 | | | | | | | | | | 589,009 | | | | | | |
| Other liabilities | | 79,756 | | | | | | | | | | 91,895 | | | | | | | | | | 95,269 | | | | | | |
| Stockholders' equity | | 690,175 | | | | | | | | | | 747,052 | | | | | | | | | | 750,278 | | | | | | |
| Total liabilities & stockholders' equity | $ | 5,748,453 | | | | | | | | | $ | 5,718,191 | | | | | | | | | $ | 5,437,973 | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income | | | | | | | $ | 51,605 | | | | | | | | | $ | 53,225 | | | | | | | | | $ | 54,421 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest margin | | | | 3.99 | % | | | | | | | | | 4.15 | % | | | | | | | | | 4.52 | % | | | |
