Exhibit 99
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Investor Contact: | David Morimoto | Media Contact: | Ann Takiguchi Marcos |
| SVP & Treasurer | | VP & PR/Communications Manager |
| (808) 544-0627 | | (808) 544-0685 |
| david.morimoto@centralpacificbank.com | ann.takiguchi@centralpacificbank.com |
NEWS RELEASE
CENTRAL PACIFIC FINANCIAL CORP. REPORTS 14% INCREASE IN NET INCOME
HONOLULU, October 24, 2006 – Central Pacific Financial Corp. (NYSE: CPF), parent company of Central Pacific Bank, today reported net income for the third quarter of 2006 of $20.6 million, or $0.67 per diluted share, compared to $18.0 million, or $0.58 per diluted share reported in the third quarter of 2005 and $20.4 million or $0.66 per diluted share reported in the second quarter of 2006. For the first nine months of 2006, CPF reported net income of $60.4 million, or $1.96 per diluted share, compared to $53.1 million, or $1.75 per diluted share, in the same period in 2005.
Operating earnings, defined as the Company’s net income excluding nonrecurring merger-related expenses, net of tax, for the third quarter of 2006 was $20.6 million, or $0.67 per diluted share, as compared to the $20.1 million, or $0.65 per diluted share, recorded during the same period in 2005. There were no nonrecurring merger-related expenses in the third quarter or first nine months of 2006, compared to $2.1 million, net of tax, in the third quarter of 2005 and $3.3 million, net of tax, in the first nine months of 2005. Year-to-date net income for 2006 included an after-tax charge of $1.3 million, or $0.04 per diluted share, in retirement expenses for a former senior executive recorded in the first quarter of 2006.
Third Quarter Highlights
· Record quarterly net income of $20.6 million.
· Loans and leases increased by $398.5 million or 11.8% from a year ago.
· Nonperforming assets to total assets improved to 0.15%, compared to 0.28% a year ago.
· Deposits, excluding brokered deposits, increased by $271.7 million or 7.9% from a year ago.
· Net interest margin held steady at 4.56% compared to the second quarter of 2006.
“Central Pacific posted another quarter of record earnings in the third quarter of 2006, with net income of $20.6 million and diluted earnings per share of $0.67,” commented Clint Arnoldus, President and Chief Executive Officer. “We are pleased that we have achieved solid growth in loans and deposits over the past year, while at the same time maintaining a strong credit discipline and a stable net interest margin.”
Financial Highlights
Net interest income for the third quarter of 2006 was $53.1 million, an increase of 7.1% over the third quarter of last year and 1.8% over the second quarter of 2006. The year-over-year growth in net interest income was attributable to a 7.9% increase in average interest earning assets, with the increase in interest and fees on loans outpacing the increase in funding costs. The net interest margin was 4.56% for the third quarter of 2006, which was in line with the second quarter of 2006. When compared to the third quarter of 2005, the net interest margin declined by four basis points as a result of the higher proportion of balances in relatively higher-rate time deposits and borrowings.
Asset quality remains strong, with nonperforming assets of $8.0 million reflecting a 42.9% decrease from year-ago levels, and loans delinquent for 90 days or more of $2.8 million declining by 72.5% from a year ago. Provision for loan and lease losses in the third quarter of 2006 was $0.3 million, compared to $1.0 million in the third quarter of 2005 and 0.5 million in the second quarter of 2006, reflecting the improvement in asset quality.
Other operating income totaled $10.5 million for the third quarter of 2006, compared to $11.5 million in the year-ago quarter and $11.0 million in the second quarter of 2006. The decrease from the prior periods was primarily due to declines in residential loan sale activity. Mortgage origination activity for the third quarter of 2006 declined by approximately 20% compared to the previous quarter and is expected to remain at the current level for the remainder of 2006.
Other operating expense for the third quarter of 2006 was $31.2 million, compared to $32.3 million in the same quarter last year and $31.5 million in the second quarter of 2006. Excluding the impact of nonrecurring merger-related expenses incurred in the third quarter of 2005, other operating expense for the third quarter of 2006 increased by 8.3%, reflecting the impact of the Central Pacific HomeLoans acquisition and the expensing of stock options, partially offset by a decrease in core deposit premium amortization. The merger-related expenses reflected in the third quarter of 2005 included $2.7 million in severance and retention expenses, reported in salaries and employee benefits, and $0.8 million for an additional FDIC deposit insurance assessment, reported in other expense.
The Company’s efficiency ratio for the third quarter of 2006 was 47.03%, compared with 49.68% for the year-ago quarter and 47.76% for the second quarter of 2006.
The effective tax rate was 35.86% for the current quarter, compared to 35.05% in the year-ago quarter and 34.38% in the second quarter of 2006. In the second quarter of 2006, the Company recognized $0.5 million in income tax benefit in connection with the resolution of an Internal Revenue Service audit. The Company expects its effective tax rate to approximate 36% in the fourth quarter.
Asset Quality
Net loan charge-offs in the third quarter of 2006 totaled $0.6 million, compared to net loan recoveries of $0.1 million in the year-ago period and net loan charge-offs of $0.7 million in the second quarter of 2006.
At September 30, 2006, nonperforming assets totaled $8.0 million, or 0.15% of total assets, compared to $14.0 million or 0.28% of total assets at September 30, 2005 and $10.0 million or 0.19% of total assets at June 30, 2006. The decrease in nonperforming assets during the third quarter of 2006 reflects the payoff of a $1.9 million commercial mortgage loan.
The allowance for loan and lease losses as a percentage of total loans and leases was 1.40% at September 30, 2006, compared to 1.57% a year ago and 1.43% at June 30, 2006. “Our allowance for loan and lease losses reflects our solid asset quality and the continued economic strength in our markets,” commented Arnoldus. “While we are still in the process of assessing the full impact of the October 15th earthquake in Hawaii, there are no indications at this time of any significant damage or losses sustained by our customers or collateral properties.”
Balance Sheet Analysis
Total assets increased to $5.4 billion at September 30, 2006, compared to $5.0 billion at September 30, 2005 and $5.3 billion at June 30, 2006.
Total loans and leases of $3.8 billion at September 30, 2006 increased by $398.5 million, or 11.8%, from a year ago and by $75.8 million, or 2.1%, from June 30, 2006. Our mainland loan production offices contributed approximately three-fourths of our loan growth during the third quarter of 2006, while one-fourth of our growth came from our Hawaii lending operations.
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Total deposits of $3.8 billion at September 30, 2006 increased by $311.1 million, or 9.0%, from a year ago and by $117.8 million, or 3.2%, from June 30, 2006. The increase during the third quarter of 2006 was primarily due to organic growth in all deposit categories, except noninterest-bearing demand deposits, and brokered deposits of $43.4 million.
Shareholders’ equity of $722.9 million at September 30, 2006, increased from $665.0 million a year ago and from $698.8 million at June 30, 2006.
Business and Earnings Outlook
Based on current economic and business conditions, management is forecasting diluted earnings per share for 2006 in the range of $2.62 to $2.67.
Non-GAAP Financial Measures
This press release contains certain references to financial measures identified as being stated on an operating basis or which adjust for or exclude nonrecurring merger-related expenses, which are adjustments from comparable measures calculated and presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These financial measures, as used herein, differ from financial measures reported under 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 Information
Central Pacific Financial Corp. will conduct a conference call today at 4:00 p.m. Eastern Time (10:00 a.m. Hawaii Time) to discuss the quarterly results. To participate in the conference call, please dial 1-888-802-2268 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 October 31, 2006 by dialing 1-888-203-1112 (passcode: 6228144) 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 $5.0 billion in assets. Central Pacific Bank, its primary subsidiary, operates 38 branches and more than 90 ATMs throughout Hawaii. For additional information, please visit our website at http://www.centralpacificbank.com.
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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
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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; 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.
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CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Financial Highlights - September 30, 2006
(Unaudited)
| | Three months ended | | | | Nine Months Ended | | | |
| | September 30, | | % | | September 30, | | % | |
(in thousands, except per share data) | | 2006 | | 2005 | | Change | | 2006 | | 2005 | | Change | |
| | | | | | | | | | | | | |
INCOME STATEMENT | | | | | | | | | | | | | |
Net income | | $ | 20,603 | | $ | 17,997 | | 14.5 | % | $ | 60,380 | | $ | 53,104 | | 13.7 | % |
Operating earnings (1) | | 20,603 | | 20,116 | | 2.4 | % | 60,380 | | 56,434 | | 7.0 | % |
Per share data: | | | | | | | | | | | | | |
Diluted: | | | | | | | | | | | | | |
Net income | | 0.67 | | 0.58 | | 15.5 | % | 1.96 | | 1.75 | | 12.0 | % |
Operating earnings (1) | | 0.67 | | 0.65 | | 3.1 | % | 1.96 | | 1.86 | | 5.4 | % |
Cash dividends | | 0.23 | | 0.19 | | 21.1 | % | 0.65 | | 0.54 | | 20.4 | % |
| | | | | | | | | | | | | |
PERFORMANCE RATIOS | | | | | | | | | | | | | |
Return on average assets (2) | | 1.56 | % | 1.46 | % | 1.54 | % | 1.47 | % | | | | |
Return on average assets - adjusted (1), (2) | | 1.56 | % | 1.63 | % | 1.54 | % | 1.56 | % | | | | |
Return on average shareholders’ equity (2) | | 11.52 | % | 10.79 | % | 11.50 | % | 11.06 | % | | | | |
Return on average shareholders’ equity - adjusted (1), (2) | | 11.52 | % | 12.06 | % | 11.50 | % | 11.75 | % | | | | |
Net income to average tangible shareholders’ equity (2) | | 21.44 | % | 21.34 | % | 21.92 | % | 22.90 | % | | | | |
Operating earnings to average tangible shareholders’ equity (1), (2) | | 21.44 | % | 23.85 | % | 21.92 | % | 24.34 | % | | | | |
Efficiency ratio (3) | | 47.03 | % | 49.68 | % | 48.41 | % | 50.02 | % | | | | |
Efficiency ratio - adjusted (1), (3) | | 47.03 | % | 43.96 | % | 48.41 | % | 46.85 | % | | | | |
Net interest margin (2) | | 4.56 | % | 4.60 | % | 4.58 | % | 4.61 | % | | | | |
Dividend payout ratio | | 34.33 | % | 32.20 | % | 32.83 | % | 30.34 | % | | | | |
| | | | | | | | | | | | | | | | | |
| | September 30, | | % | |
| | 2006 | | 2005 | | Change | |
BALANCE SHEET | | | | | | | |
Total assets | | $ | 5,378,890 | | $ | 5,041,562 | | 6.7 | % |
Loans | | 3,765,081 | | 3,366,620 | | 11.8 | % |
Loans, net | | 3,712,470 | | 3,313,875 | | 12.0 | % |
Deposits | | 3,781,923 | | 3,470,797 | | 9.0 | % |
Shareholders’ equity | | 722,938 | | 665,008 | | 8.7 | % |
Book value per share | | 23.58 | | 21.87 | | 7.8 | % |
Market value per share | | 36.58 | | 35.18 | | 4.0 | % |
Tangible equity ratio | | 7.76 | % | 6.97 | % | | |
| | | | | | | | | |
| | Three Months Ended | | | | Nine Months Ended | | | |
| | September 30, | | % | | September 30, | | % | |
| | 2006 | | 2005 | | Change | | 2006 | | 2005 | | Change | |
SELECTED AVERAGE BALANCES | | | | | | | | | | | | | |
Total assets | | $ | 5,287,570 | | $ | 4,933,351 | | 7.2 | % | $ | 5,229,202 | | $ | 4,814,843 | | 8.6 | % |
Interest-earning assets | | 4,713,773 | | 4,367,604 | | 7.9 | % | 4,648,673 | | 4,236,272 | | 9.7 | % |
Loans, net of unearned interest | | 3,722,846 | | 3,301,377 | | 12.8 | % | 3,651,835 | | 3,237,027 | | 12.8 | % |
Other real estate | | — | | — | | — | | — | | 57 | | -100.0 | % |
Deposits | | 3,666,316 | | 3,468,275 | | 5.7 | % | 3,637,433 | | 3,398,566 | | 7.0 | % |
Interest-bearing liabilities | | 3,874,087 | | 3,538,449 | | 9.5 | % | 3,800,528 | | 3,460,028 | | 9.8 | % |
Shareholders’ equity | | 715,312 | | 667,087 | | 7.2 | % | 700,202 | | 640,191 | | 9.4 | % |
| | | | | | | | | | | | | | | | | |
| | September 30, | | % | |
| | 2006 | | 2005 | | Change | |
NONPERFORMING ASSETS | | | | | | | |
Nonaccrual loans | | $ | 8,024 | | $ | 14,044 | | -42.9 | % |
Other real estate | | — | | — | | — | |
Total nonperforming assets | | 8,024 | | 14,044 | | -42.9 | % |
Loans delinquent for 90 days or more (still accruing interest) | | 2,809 | | 10,199 | | -72.5 | % |
Restructured loans (still accruing interest) | | — | | 705 | | -100.0 | % |
Total nonperforming assets, loans delinquent for 90 days or more (still accruing interest) and restructured loans (still accruing interest) | | $ | 10,833 | | $ | 24,948 | | -56.6 | % |
| | Three Months Ended | | | | Nine Months Ended | | | |
| | September 30, | | % | | September 30, | | % | |
| | 2006 | | 2005 | | Change | | 2006 | | 2005 | | Change | |
Loan charge-offs | | $ | 1,266 | | $ | 1,341 | | -5.6 | % | $ | 3,599 | | $ | 4,751 | | -24.2 | % |
Recoveries | | 663 | | 1,429 | | -53.6 | % | 1,924 | | 3,876 | | -50.4 | % |
Net loan charge-offs (recoveries) | | $ | 603 | | $ | (88 | ) | -785.2 | % | $ | 1,675 | | $ | 875 | | 91.4 | % |
Net loan charge-offs to average loans (2) | | 0.06 | % | -0.01 | % | | | 0.06 | % | 0.04 | % | | |
| | September 30, | |
| | 2006 | | 2005 | |
ASSET QUALITY RATIOS | | | | | |
Nonaccrual loans to total loans | | 0.21 | % | 0.42 | % |
Nonperforming assets to total assets | | 0.15 | % | 0.28 | % |
Nonperforming assets, loans delinquent for 90 days or more(still accruing interest) and restructured loans (stillaccruing interest) to total loans & other real estate | | 0.29 | % | 0.74 | % |
Allowance for loan and lease losses to total loans and leases | | 1.40 | % | 1.57 | % |
Allowance for loan and lease losses to nonaccrual loans | | 655.67 | % | 375.57 | % |
(1) Excludes nonrecurring merger-related expenses, net of tax (see Reconciliation of Non-GAAP Financial Measures)
(2) Annualized
(3) Efficiency ratio is derived by dividing other operating expense before amortization of intangible assets by net operating income (net interest income on a fully taxable equivalent basis plus other operating income before securities transactions).
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CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
| | Three Months | | Nine Months | |
| | Ended | | Ended | |
(Dollars in thousands, except per share data) | | September 30, 2005 | | September 30, 2005 | |
| | | | | |
Net income (a) | | $ | 17,997 | | $ | 53,104 | |
Nonrecurring merger-related expenses, net of tax | | 2,119 | | 3,330 | |
Net income, excluding nonrecurring merger-related expenses (b) | | $ | 20,116 | | $ | 56,434 | |
| | | | | |
Basic earnings per share | | $ | 0.59 | | $ | 1.78 | |
Nonrecurring merger-related expenses, net of tax | | 0.07 | | 0.11 | |
Basic earnings per share, excluding nonrecurring merger-related expenses | | $ | 0.66 | | $ | 1.89 | |
| | | | | |
Diluted earnings per share | | $ | 0.58 | | $ | 1.75 | |
Nonrecurring merger-related expenses, net of tax | | 0.07 | | 0.11 | |
Diluted earnings per share, excluding nonrecurring merger-related expenses | | $ | 0.65 | | $ | 1.86 | |
| | | | | |
Return on average assets | | 1.46 | % | 1.47 | % |
Nonrecurring merger-related expenses, net of tax | | 0.17 | | 0.09 | |
Return on average assets, excluding nonrecurring merger-related expenses | | 1.63 | % | 1.56 | % |
| | | | | |
Return on average equity | | 10.79 | % | 11.06 | % |
Nonrecurring merger-related expenses, net of tax | | 1.27 | | 0.69 | |
| | | | | |
Return on average equity, excluding nonrecurring merger-related expenses | | 12.06 | % | 11.75 | % |
| | | | | |
Net income to average tangible equity: | | | | | |
| | | | | |
Average shareholders’ equity | | $ | 667,087 | | $ | 640,191 | |
Average intangible assets | | (329,728 | ) | (331,017 | ) |
Total tangible equity (c) | | $ | 337,359 | | $ | 309,174 | |
| | | | | |
Net income to average tangible equity [ (a) annualized / (c) ] | | 21.34 | % | 22.90 | % |
Net income, excluding nonrecurring merger-related expenses, to average tangible equity [ (b) annualized / (c) ] | | 23.85 | % | 24.34 | % |
| | | | | |
Efficiency ratio: | | | | | |
| | | | | |
Net interest income on a fully taxable equivalent basis | | $ | 50,272 | | $ | 146,521 | |
Other operating income (excluding investment securities gains (losses)) | | 11,497 | | 28,106 | |
| | | | | |
Total operating revenue (d) | | $ | 61,769 | | $ | 174,627 | |
| | | | | |
Other operating expense before amortization of core deposit premium (e) | | $ | 30,685 | | $ | 87,353 | |
Nonrecurring merger-related expenses | | (3,529 | ) | (5,545 | ) |
| | | | | |
Total other operating expense, excluding nonrecurring merger-related expenses (f) | | $ | 27,156 | | $ | 81,808 | |
| | | | | |
Efficiency ratio [ (e) / (d) ] | | 49.68 | % | 50.02 | % |
Efficiency ratio, excluding nonrecurring merger-related expenses [ (f) / (d) ] | | 43.96 | % | 46.85 | % |
| | | | | |
Effective tax rate: | | | | | |
| | | | | |
Net income before taxes (g) | | $ | 27,707 | | $ | 79,052 | |
Nonrecurring merger-related expenses | | 3,529 | | 5,545 | |
Net income before taxes, excluding nonrecurring merger-related expenses (h) | | $ | 31,236 | | $ | 84,597 | |
| | | | | |
Income taxes (i) | | $ | 9,710 | | $ | 25,948 | |
Tax impact of nonrecurring merger-related expenses | | 1,410 | | 2,215 | |
Income taxes, excluding tax impact of nonrecurring merger-related expenses (j) | | $ | 11,120 | | $ | 28,163 | |
| | | | | |
Effective tax rate [ (i) / (g) ] | | 35.05 | % | 32.82 | % |
| | | | | |
Effective tax rate, excluding impact of merger-related expenses [ (j) / (h) ] | | 35.60 | % | 33.29 | % |
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CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
CONSOLIDATED BALANCE SHEETS | | September 30, | | June 30, | | September 30, | |
(in thousands, except per share data) | | 2006 | | 2006 | | 2005 | |
| | | | | | | |
ASSETS | | | | | | | |
Cash and due from banks | | $ | 110,554 | | $ | 101,569 | | $ | 111,223 | |
Interest-bearing deposits in other banks | | 9,472 | | 1,177 | | 15,971 | |
Federal funds sold | | — | | — | | — | |
Investment securities: | | | | | | | |
Held to maturity, at cost (fair value of $65,821 at September 30, 2006, $66,903 at June 30, 2006, and $76,515 at September 30, 2005) | | 66,918 | | 68,641 | | 77,418 | |
Available for sale, at fair value | | 832,255 | | 825,682 | | 871,942 | |
Total investment securities | | 899,173 | | 894,323 | | 949,360 | |
| | | | | | | |
Loans held for sale | | 21,742 | | 24,763 | | 53,970 | |
Loans and leases | | 3,765,081 | | 3,689,287 | | 3,366,620 | |
Less allowance for loan and lease losses | | 52,611 | | 52,914 | | 52,745 | |
Net loans and leases | | 3,712,470 | | 3,636,373 | | 3,313,875 | |
| | | | | | | |
Premises and equipment | | 76,909 | | 76,368 | | 72,982 | |
Accrued interest receivable | | 25,631 | | 23,474 | | 20,787 | |
Investment in unconsolidated subsidiaries | | 11,160 | | 11,362 | | 12,298 | |
Due from customers on acceptances | | 271 | | 383 | | 202 | |
Other real estate | | — | | — | | — | |
Goodwill | | 298,121 | | 297,251 | | 299,232 | |
Core deposit premium | | 32,872 | | 33,846 | | 37,450 | |
Mortgage servicing rights | | 11,794 | | 11,873 | | 11,848 | |
Bank-owned life insurance | | 101,101 | | 100,021 | | 67,799 | |
Federal Home Loan Bank stock | | 48,797 | | 48,797 | | 48,797 | |
Other assets | | 18,823 | | 29,232 | | 25,768 | |
Total assets | | $ | 5,378,890 | | $ | 5,290,812 | | $ | 5,041,562 | |
| | | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | |
Deposits: | | | | | | | |
Noninterest-bearing demand | | $ | 608,229 | | $ | 673,784 | | $ | 659,699 | |
Interest-bearing demand | | 433,437 | | 410,296 | | 432,530 | |
Savings and money market | | 1,204,488 | | 1,169,874 | | 1,136,418 | |
Time | | 1,535,769 | | 1,410,206 | | 1,242,150 | |
Total deposits | | 3,781,923 | | 3,664,160 | | 3,470,797 | |
| | | | | | | |
Short-term borrowings | | 58,773 | | 104,897 | | 114,448 | |
Long-tem debt | | 730,784 | | 742,907 | | 709,685 | |
Bank acceptances outstanding | | 271 | | 383 | | 202 | |
Minority interest | | 13,515 | | 13,143 | | 13,541 | |
Other liabilities | | 70,686 | | 66,504 | | 67,881 | |
Total liabilities | | 4,655,952 | | 4,591,994 | | 4,376,554 | |
| | | | | | | |
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 30,659,972 shares at September 30, 2006, 30,480,230 shares at June 30, 2006, and 30,412,482 shares at September 30, 2005 | | 430,204 | | 427,747 | | 427,458 | |
Surplus | | 50,612 | | 49,723 | | 46,362 | |
Retained earnings | | 258,880 | | 245,322 | | 204,765 | |
Deferred stock awards | | — | | — | | (280 | ) |
Accumulated other comprehensive loss | | (16,758 | ) | (23,974 | ) | (13,297 | ) |
Total shareholders’ equity | | 722,938 | | 698,818 | | 665,008 | |
| | | | | | | |
Total liabilities and shareholders’ equity | | $ | 5,378,890 | | $ | 5,290,812 | | $ | 5,041,562 | |
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CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| | Quarter to Date | | Nine Months Ended | |
| | September 30, | | June 30, | | September 30, | | September 30, | |
(In thousands, except per share data) | | 2006 | | 2006 | | 2005 | | 2006 | | 2005 | |
| | | | | | | | | | | |
Interest income: | | | | | | | | | | | |
Interest and fees on loans and leases | | $ | 72,444 | | $ | 67,606 | | $ | 56,366 | | $ | 204,603 | | $ | 161,338 | |
Interest and dividends on investment securities: | | | | | | | | | | | |
Taxable interest | | 8,486 | | 8,947 | | 8,980 | | 25,996 | | 24,377 | |
Tax-exempt interest | | 1,227 | | 1,277 | | 1,297 | | 3,822 | | 3,932 | |
Dividends | | 153 | | 8 | | 93 | | 264 | | 228 | |
Interest on deposits in other banks | | 79 | | 54 | | 37 | | 306 | | 242 | |
Interest on federal funds sold and securities purchased under agreements to resell | | 31 | | 2 | | 87 | | 85 | | 166 | |
Dividends on Federal Home Loan Bank stock | | — | | — | | — | | — | | 272 | |
| | | | | | | | | | | |
Total interest income | | 82,420 | | 77,894 | | 66,860 | | 235,076 | | 190,555 | |
| | | | | | | | | | | |
Interest expense: | | | | | | | | | | | |
Interest on deposits | | 19,155 | | 16,464 | | 9,969 | | 49,424 | | 26,491 | |
Interest on short-term borrowings | | 1,221 | | 583 | | 319 | | 2,035 | | 1,159 | |
Interest on long-term debt | | 8,949 | | 8,680 | | 6,998 | | 26,163 | | 18,501 | |
| | | | | | | | | | | |
Total interest expense | | 29,325 | | 25,727 | | 17,286 | | 77,622 | | 46,151 | |
| | | | | | | | | | | |
Net interest income | | 53,095 | | 52,167 | | 49,574 | | 157,454 | | 144,404 | |
Provision for loan and lease losses | | 300 | | 525 | | 1,000 | | 1,350 | | 2,917 | |
Net interest income after provision for loan and lease losses | | 52,795 | | 51,642 | | 48,574 | | 156,104 | | 141,487 | |
| | | | | | | | | | | |
Other operating income: | | | | | | | | | | | |
Income from fiduciary activities | | 740 | | 740 | | 649 | | 2,157 | | 1,763 | |
Service charges on deposit accounts | | 3,570 | | 3,457 | | 3,383 | | 10,563 | | 8,281 | |
Other service charges and fees | | 2,994 | | 2,995 | | 2,915 | | 8,993 | | 8,288 | |
Equity in earnings of unconsolidated subsidiaries | | 90 | | 147 | | 251 | | 421 | | 541 | |
Fees on foreign exchange | | 207 | | 212 | | 188 | | 601 | | 594 | |
Investment securities gains (losses) | | — | | (19 | ) | (23 | ) | (19 | ) | 1,423 | |
Income from bank-owned life insurance | | 1,085 | | 785 | | 522 | | 2,794 | | 1,670 | |
Loan placement fees | | 464 | | 494 | | 738 | | 1,256 | | 1,169 | |
Gains on sales of loans | | 680 | | 1,115 | | 1,617 | | 4,133 | | 3,039 | |
Other | | 715 | | 1,034 | | 1,234 | | 2,770 | | 2,761 | |
| | | | | | | | | | | |
Total other operating income | | 10,545 | | 10,960 | | 11,474 | | 33,669 | | 29,529 | |
| | | | | | | | | | | |
Other operating expense: | | | | | | | | | | | |
Salaries and employee benefits | | 17,451 | | 17,615 | | 17,594 | | 54,128 | | 48,046 | |
Net occupancy | | 2,399 | | 2,301 | | 2,516 | | 6,974 | | 7,560 | |
Equipment | | 1,171 | | 1,280 | | 1,196 | | 3,624 | | 3,721 | |
Amortization of core deposit premium | | 974 | | 974 | | 1,656 | | 2,922 | | 4,611 | |
Communication expense | | 1,186 | | 1,208 | | 947 | | 3,562 | | 3,100 | |
Legal and professional services | | 1,985 | | 2,323 | | 1,600 | | 6,174 | | 5,960 | |
Computer software expense | | 716 | | 647 | | 553 | | 1,956 | | 2,221 | |
Advertising expense | | 515 | | 528 | | 662 | | 1,789 | | 1,920 | |
Other | | 4,819 | | 4,582 | | 5,617 | | 15,324 | | 14,825 | |
| | | | | | | | | | | |
Total other operating expense | | 31,216 | | 31,458 | | 32,341 | | 96,453 | | 91,964 | |
| | | | | | | | | | | |
Income before income taxes | | 32,124 | | 31,144 | | 27,707 | | 93,320 | | 79,052 | |
Income taxes | | 11,521 | | 10,706 | | 9,710 | | 32,940 | | 25,948 | |
| | | | | | | | | | | |
Net income | | $ | 20,603 | | $ | 20,438 | | $ | 17,997 | | $ | 60,380 | | $ | 53,104 | |
| | | | | | | | | | | |
Per share data: | | | | | | | | | | | |
Basic earnings per share | | $ | 0.67 | | $ | 0.67 | | $ | 0.59 | | $ | 1.98 | | $ | 1.78 | |
Diluted earnings per share | | 0.67 | | 0.66 | | 0.58 | | 1.96 | | 1.75 | |
Cash dividends declared | | 0.23 | | 0.21 | | 0.19 | | 0.65 | | 0.54 | |
| | | | | | | | | | | |
Basic weighted average shares outstanding (000’s) | | 30,532 | | 30,466 | | 30,401 | | 30,465 | | 29,804 | |
Diluted weighted average shares outstanding (000’s) | | 30,838 | | 30,783 | | 30,836 | | 30,790 | | 30,266 | |
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CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Average Balances, Interest Income & Expense, Yields and Rates (Taxable Equivalent)
| | Three Months Ended | | Three Months Ended | | Nine Months Ended | | Nine Months Ended | |
| | September 30, 2006 | | September 30, 2005 | | September 30, 2006 | | September 30, 2005 | |
| | Average | | Average | | | | Average | | Average | | | | Average | | Average | | | | Average | | Average | | | |
(in thousands) | | Balance | | Yield/Rate | | Interest | | Balance | | Yield/Rate | | Interest | | Balance | | Yield/Rate | | Interest | | Balance | | Yield/Rate | | Interest | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest earning assets: | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-bearing deposits in other banks | | $ | 6,537 | | 4.83 | % | $ | 79 | | $ | 5,176 | | 2.86 | % | $ | 37 | | $ | 9,595 | | 4.25 | % | $ | 306 | | $ | 13,677 | | 2.36 | % | $ | 242 | |
Federal funds sold & securities purchased under agreements to resell | | 2,332 | | 5.32 | % | 31 | | 10,255 | | 3.39 | % | 87 | | 2,384 | | 4.75 | % | 85 | | 7,795 | | 2.84 | % | 166 | |
Investment securities (1) (2) | | 933,261 | | 4.51 | % | 10,527 | | 1,001,998 | | 4.42 | % | 11,068 | | 936,062 | | 4.58 | % | 32,140 | | 929,040 | | 4.40 | % | 30,654 | |
Loans, net of unearned income (3) | | 3,722,846 | | 7.78 | % | 72,444 | | 3,301,377 | | 6.83 | % | 56,366 | | 3,651,835 | | 7.47 | % | 204,603 | | 3,237,027 | | 6.65 | % | 161,338 | |
Federal Home Loan Bank stock | | 48,797 | | — | | — | | 48,797 | | — | | — | | 48,797 | | — | | — | | 48,733 | | 0.74 | % | 272 | |
Total interest earning assets | | 4,713,773 | | 7.05 | % | 83,081 | | 4,367,603 | | 6.19 | % | 67,558 | | 4,648,673 | | 6.80 | % | 237,134 | | 4,236,272 | | 6.06 | % | 192,672 | |
Nonearning assets | | 573,797 | | | | | | 565,748 | | | | | | 580,529 | | | | | | 578,571 | | | | | |
Total assets | | $ | 5,287,570 | | | | | | $ | 4,933,351 | | | | | | $ | 5,229,202 | | | | | | $ | 4,814,843 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Liabilities & Stockholders’ Equity: | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-bearing demand deposits | | $ | 424,611 | | 0.13 | % | $ | 136 | | $ | 430,737 | | 0.14 | % | $ | 156 | | $ | 426,299 | | 0.13 | % | $ | 428 | | $ | 429,238 | | 0.18 | % | $ | 578 | |
Savings and money market deposits | | 1,170,817 | | 1.70 | % | 4,969 | | 1,166,751 | | 0.75 | % | 2,196 | | 1,129,638 | | 1.38 | % | 11,667 | | 1,140,420 | | 0.63 | % | 5,353 | |
Time deposits under $100,000 | | 578,530 | | 3.04 | % | 4,392 | | 534,561 | | 2.00 | % | 2,670 | | 580,574 | | 2.75 | % | 11,956 | | 545,445 | | 1.92 | % | 7,840 | |
Time deposits $100,000 and over | | 878,472 | | 4.40 | % | 9,658 | | 687,811 | | 2.88 | % | 4,947 | | 858,420 | | 3.94 | % | 25,373 | | 658,858 | | 2.57 | % | 12,720 | |
Short-term borrowings | | 85,843 | | 5.69 | % | 1,221 | | 29,804 | | 4.28 | % | 319 | | 51,302 | | 5.29 | % | 2,035 | | 52,550 | | 2.94 | % | 1,159 | |
Long-term debt | | 735,814 | | 4.86 | % | 8,949 | | 688,784 | | 4.06 | % | 6,998 | | 754,295 | | 4.62 | % | 26,163 | | 633,517 | | 3.89 | % | 18,501 | |
Total interest-bearing liabilities | | 3,874,087 | | 3.03 | % | 29,325 | | 3,538,448 | | 1.95 | % | 17,286 | | 3,800,528 | | 2.72 | % | 77,622 | | 3,460,028 | | 1.78 | % | 46,151 | |
Noninterest-bearing deposits | | 613,886 | | | | | | 648,414 | | | | | | 642,502 | | | | | | 624,605 | | | | | |
Other liabilities | | 84,285 | | | | | | 79,402 | | | | | | 85,970 | | | | | | 90,019 | | | | | |
Stockholders’ equity | | 715,312 | | | | | | 667,087 | | | | | | 700,202 | | | | | | 640,191 | | | | | |
Total liabilities & stockholders’ equity | | $ | 5,287,570 | | | | | | $ | 4,933,351 | | | | | | $ | 5,229,202 | | | | | | $ | 4,814,843 | | | | | |
Net interest income | | | | $ | 53,756 | | | | | | $ | 50,272 | | | | | | | | $ | 159,512 | | | | | | $ | 146,521 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Net interest margin | | | | 4.56 | % | | | | | 4.60 | % | | | | | 4.58 | % | | | | | 4.61 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) At amortized cost.
(2) Includes taxable equivalent basis adjustment based upon a statutory rate of 35%.
(3) Includes nonaccrual loans.
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