CENTRAL PACIFIC FINANCIAL CORP. 
By "As we previously announced, our fourth quarter results were negatively impacted by increased credit costs due to continued deterioration in California's housing market," said Clint Arnoldus, President and Chief Executive Officer. "In spite of the increased credit costs, we continue to be profitable and our capital base remains strong. Although we cannot predict when California's housing market will stabilize, we are working to further reduce our credit risk exposure in this sector."
Fourth Quarter Highlights
-- Loans and leases increased by $69.2 million, or 1.7%, from September
30, 2007.
-- Deposits increased by $60.5 million, or 1.5%, from September 30, 2007.
-- Total credit costs of $32.9 million comprised of a provision for loan
and lease losses of $28.2 million and an increase to the reserve for
unfunded commitments of $4.7 million.
-- Sold $119 million in available-for-sale investment securities with an
average yield of 3.98% and reinvested the proceeds into a similar
amount of new investment securities with an average yield of 5.43%.
Earnings Highlights
Net interest income for the fourth quarter of 2007 was
Earlier this month, CPF announced the completion of an investment
portfolio repositioning in
The provision for loan and lease losses in the fourth quarter of 2007 was
Other operating income totaled
Other operating expense for the fourth quarter of 2007 was
The Company's efficiency ratio for the fourth quarter of 2007 was 51.44%, compared with 53.40% in the year-ago quarter and 47.27% in the third quarter of 2007. The current quarter increase was primarily attributable to the aforementioned increase in the reserve for unfunded commitments.
The Company's effective tax rate for the full year ended
Balance Sheet Highlights
Total assets of
Total loans and leases of
Total deposits of
Shareholders' equity of
Stock Repurchase Plan and Dividend
In 2007, the Company's Board of Directors authorized the repurchase of up
to 2,100,000 shares of the Company's common stock. The Company completed the
repurchase of these shares in
"Despite the challenging market conditions in California, we intend to maintain our quarterly dividend at the current level," added Arnoldus.
Asset Quality
Net loan charge-offs in the fourth quarter of 2007 totaled
At
Loans delinquent for 90 days or more still accruing interest of
The allowance for loan and lease losses as a percentage of total loans and
leases was 2.22% at
Total exposure in the California residential construction market was
Bank Opens 39th Branch in Lahaina, Maui
Earlier this month, the Company announced the opening of a new branch in Lahaina. Located in West Maui's newest retail destination, the Lahaina Gateway Center, the branch will cover 3,540 square feet and will offer the latest in banking technology.
"In an effort to better serve our customers, we have made notable improvements to our branch network," commented Arnoldus. "We just opened our 39th branch in Lahaina. We also completed the renovation of our Kalihi branch in December and expect to open a new and improved branch in Kapahulu in the coming months. We believe these improvements will provide our customers with increased convenience and will allow us to become a more visible part of the communities we serve."
Conference Call Information
Central Pacific Financial Corp. will conduct a conference call today at
About Central Pacific Financial Corp.
Central Pacific Financial Corp. is the fourth largest financial
institution in Hawaii with more than
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 - December 31, 2007
(Unaudited)
Three Months Ended Year Ended
December 31, % December 31, %
(in thousands, except 2007 2006 Change 2007 2006 Change
per share data)
INCOME STATEMENT
Net income $3,548 $18,800 -81.1% $53,806 $79,180 -32.0%
Per share data:
Diluted earnings per
share 0.12 0.61 -80.3% 1.77 2.57 -31.1%
Cash dividends 0.25 0.23 8.7% 0.98 0.88 11.4%
PERFORMANCE RATIOS
Return on average
assets (1) 0.25% 1.39% 0.97% 1.50%
Return on average
shareholders' equity
(1) 1.90% 10.22% 7.12% 11.16%
Net income to average
tangible shareholders'
equity (1) 3.34% 18.55% 12.50% 21.01%
Efficiency ratio (2) 51.44% 53.40% 47.80% 49.67%
Net interest margin (1) 4.15% 4.47% 4.33% 4.55%
Dividend payout ratio 208.33% 37.70% 55.06% 33.85%
December 31, %
2007 2006 Change
BALANCE SHEET
Total assets $5,728,386 $5,487,192 4.4%
Loans and leases 4,141,705 3,846,004 7.7%
Loans and leases, net of unearned
interest 4,049,656 3,793,724 6.7%
Deposits 4,002,719 3,844,483 4.1%
Shareholders' equity 722,403 738,139 -2.1%
Book value per share 25.12 24.04 4.5%
Market value per share 18.46 38.76 -52.4%
Tangible equity ratio 7.42% 7.90%
Three Months Ended Year Ended
December 31, % December 31, %
2007 2006 Change 2007 2006 Change
SELECTED AVERAGE
BALANCES
Total assets $5,718,712 $5,397,587 5.9% $5,563,115 $5,271,644 5.5%
Interest-earning
assets 5,108,920 4,812,504 6.2% 4,965,878 4,689,967 5.9%
Loans and leases,
net of unearned
interest 4,171,889 3,803,169 9.7% 4,021,094 3,689,979 9.0%
Other real estate - - - 97,129 - -
Deposits 3,965,157 3,790,692 4.6% 3,872,206 3,676,063 5.3%
Interest-bearing
liabilities 4,270,510 3,973,418 7.5% 4,125,076 3,844,106 7.3%
Shareholders'
equity 747,574 736,075 1.6% 755,310 709,244 6.5%
December 31, %
2007 2006 Change
NONPERFORMING ASSETS
Nonaccrual loans (including loans
held for sale) $61,541 $8,958 587.0%
Other real estate - - -
Total nonperforming assets 61,541 8,958 587.0%
Loans delinquent for 90 days or more
(still accruing interest) 903 909 -0.7%
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) $62,444 $9,867 532.9%
Three Months Ended Year Ended
December 31, December 31,
2007 2006 2007 2006
Loan charge-offs $9,679 $2,671 262.4% $16,192 $6,270 158.2%
Recoveries 1,010 2,340 -56.8% 2,960 4,264 -30.6%
Net loan charge-offs
(recoveries) $8,669 $331 2519.0% $13,232 $2,006 559.6%
Net loan charge-offs to
average loans (1) 0.83% 0.03% 0.33% 0.05%
December 31,
2007 2006
ASSET QUALITY RATIOS
Nonaccrual loans to total loans 1.49% 0.23%
Nonperforming assets to total assets 1.07% 0.16%
Nonperforming assets, loans
delinquent for 90 days or more
(still accruing interest) and
restructured loans (still
accruing interest) to total loans &
other real estate 1.51% 0.26%
Allowance for loan and lease losses
to total loans and leases 2.22% 1.36%
Allowance for loan and lease losses
to nonaccrual loans 149.57% 583.61%
(1) Annualized
(2) 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).
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
CONSOLIDATED BALANCE SHEETS December 31, September 30, December 31,
(in thousands, except per share data) 2007 2007 2006
ASSETS
Cash and due from banks $79,088 $90,161 $129,715
Interest-bearing deposits in other
banks 241 439 5,933
Federal funds sold 2,800 14,900 -
Investment securities:
Held to maturity, at cost (fair
value of $46,077 December 31, 2007,
$46,977 at September 30, 2007 and
$64,249 at December 31, 2006) 46,124 47,465 65,204
Available for sale, at fair value 835,130 801,640 833,154
Total investment securities 881,254 849,105 898,358
Loans held for sale 37,572 31,388 26,669
Loans and leases 4,141,705 4,072,536 3,846,004
Less allowance for loan and lease
losses 92,049 72,517 52,280
Net loans and leases 4,049,656 4,000,019 3,793,724
Premises and equipment 82,841 80,173 77,341
Accrued interest receivable 26,041 27,580 26,269
Investment in unconsolidated
subsidiaries 17,404 16,333 12,957
Goodwill 292,702 293,566 298,996
Core deposit premium 28,750 29,844 31,898
Mortgage servicing rights 11,222 11,111 11,640
Bank-owned life insurance 131,454 130,089 102,394
Federal Home Loan Bank stock 48,797 48,797 48,797
Other assets 38,564 24,119 22,501
Total assets $5,728,386 $5,647,624 $5,487,192
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand $665,034 $630,586 $661,027
Interest-bearing demand 461,175 441,884 438,943
Savings and money market 1,178,855 1,216,991 1,205,271
Time 1,697,655 1,652,798 1,539,242
Total deposits 4,002,719 3,942,259 3,844,483
Short-term borrowings 16,000 72,245 79,308
Long-tem debt 916,019 816,535 740,189
Minority interest 13,104 13,110 13,130
Other liabilities 58,141 59,503 71,943
Total liabilities 5,005,983 4,903,652 4,749,053
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
28,756,647 shares at December 31,
2007, 29,914,586 shares at September
30, 2007, and 30,709,389 shares at
December 31, 2006 403,304 419,463 430,904
Surplus 54,669 54,686 51,756
Retained earnings 270,644 281,682 270,624
Accumulated other comprehensive loss (6,214) (11,859) (15,145)
Total shareholders' equity 722,403 743,972 738,139
Total liabilities and
shareholders' equity $5,728,386 $5,647,624 $5,487,192
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, September 30, December 31, December 31,
2007 2007 2006 2007 2006
(In thousands,
except per share data)
Interest income:
Interest and fees on
loans and leases $77,159 $78,325 $74,643 $308,720 $279,246
Interest and
dividends
on investment
securities:
Taxable interest 8,757 8,386 8,779 34,721 34,775
Tax-exempt
interest 1,349 1,343 1,258 5,420 5,080
Dividends 71 83 274 247 538
Interest on deposits in
other banks 14 82 244 170 550
Interest on federal funds
sold and securities
purchased under
agreements
to resell 62 125 58 306 143
Dividends on Federal
Home Loan Bank stock 98 73 49 293 49
Total interest
income 87,510 88,417 85,305 349,877 320,381
Interest expense:
Demand 138 139 138 556 566
Savings and money
market 5,177 6,321 6,017 23,950 17,684
Time 18,285 17,925 16,090 69,467 53,419
Interest on short-term
borrowings 506 302 162 1,616 2,197
Interest on long-term
debt 10,906 10,900 9,503 42,390 35,666
Total interest
expense 35,012 35,587 31,910 137,979 109,532
Net interest
income 52,498 52,830 53,395 211,898 210,849
Provision for loan
and lease losses 28,201 21,200 - 53,001 1,350
Net interest income
after provision for
loan and lease
losses 24,297 31,630 53,395 158,897 209,499
Other operating income:
Service charges on
deposit accounts 3,679 3,581 3,845 14,167 14,408
Other service charges
and fees 3,126 3,281 3,195 13,178 12,188
Income from fiduciary
activities 983 968 758 3,566 2,915
Equity in earnings of
unconsolidated
subsidiaries 110 169 155 703 576
Fees on foreign
exchange 180 149 164 721 765
Investment securities
losses (1,715) - (1,491) (1,715) (1,510)
Income from bank-
owned life
insurance 1,746 1,861 1,195 5,821 3,989
Loan placement fees 289 248 511 1,079 1,767
Gains on sales of
loans 1,503 1,116 730 5,389 4,863
Other 1,461 379 425 2,895 3,195
Total other operating
income 11,362 11,752 9,487 45,804 43,156
Other operating expense:
Salaries and employee
benefits 13,028 16,240 19,083 62,562 73,211
Net occupancy 2,687 2,624 2,244 10,408 9,218
Equipment 1,418 1,255 1,240 5,228 4,864
Amortization of core
deposit premium 1,094 684 975 3,148 3,897
Amortization of
mortgage servicing
rights 356 478 526 1,844 2,223
Communication
expense 1,148 1,032 1,080 4,266 4,642
Legal and professional
services 2,477 2,223 2,401 9,137 8,575
Computer software
expense 799 869 862 3,360 2,818
Advertising expense 663 661 780 2,582 2,569
Other 11,526 5,487 6,519 26,021 20,146
Total other
operating
expense 35,196 31,553 35,710 128,556 132,163
Income before
income taxes 463 11,829 27,172 76,145 120,492
Income taxes (3,085) 2,722 8,372 22,339 41,312
Net income $3,548 $9,107 $18,800 $53,806 $79,180
Per share data:
Basic earnings
per share $0.12 $0.30 $0.61 $1.78 $2.60
Diluted earnings
per share 0.12 0.30 0.61 1.77 2.57
Cash dividends
declared 0.25 0.25 0.23 0.98 0.88
Basic weighted
average shares
outstanding 29,355 30,192 30,645 30,197 30,511
Diluted weighted
average shares
outstanding 29,485 30,378 30,933 30,406 30,827
CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Average Balances, Interest Income & Expense, Yields and Rates (Taxable
Equivalent)
Three Months Ended Three Months Ended
December 31, 2007 December 31, 2006
Average Average Average Average
Balance Yield Interest Balance Yield Interest
(Dollars in thousands) /Rate /Rate
Assets:
Interest earning
assets:
Interest-
bearing
deposits
in other banks $1,268 4.51% $14 $18,813 5.16% $244
Federal funds
sold &
securities
purchased
under agreements
to resell 5,354 4.56% 62 4,353 5.26% 58
Taxable investment
securities,
excluding
valuation
allowance 729,677 4.84% 8,828 796,725 4.55% 9,053
Tax-exempt
investment
securities,
excluding
valuation
allowance 151,935 5.47% 2,076 140,647 5.51% 1,935
Loans and leases,
net of
unearned
income 4,171,889 7.35% 77,159 3,803,169 7.80% 74,643
Federal Home
Loan Bank stock 48,797 0.80% 98 48,797 0.40% 49
Total interest
earning
assets 5,108,920 6.87% 88,237 4,812,504 7.10% 85,982
Nonearning assets 609,792 585,083
Total assets $5,718,712 $5,397,587
Liabilities & Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing
demand
deposits $450,008 0.12% $138 $428,395 0.13% $138
Savings and money
market
deposits 1,170,325 1.76% 5,177 1,224,906 1.95% 6,017
Time deposits
under $100,000 564,265 3.75% 5,337 619,302 3.56% 5,558
Time deposits
$100,000 and
over 1,171,825 4.38% 12,948 930,203 4.49% 10,532
Short-term
borrowings 41,334 4.86% 506 12,019 5.34% 162
Long-term debt 872,753 4.96% 10,906 758,593 4.97% 9,503
Total interest-
bearing
liabilities 4,270,510 3.25% 35,012 3,973,418 3.19% 31,910
Noninterest-bearing
deposits 608,734 587,886
Other liabilities 91,894 100,208
Stockholders'
equity 747,574 736,075
Total liabilities
& stockholders'
equity $5,718,712 $5,397,587
Net interest income $53,225 $54,072
Net interest margin 4.15% 4.47%
(Dollars in thousands) Year Ended Year Ended
December 31, 2007 December 31, 2006
Average Average Average Average
Balance Yield Interest Balance Yield Interest
/Rate /Rate
Assets:
Interest earning
assets:
Interest-bearing
deposits in other
banks $3,358 5.08% $170 $11,919 4.62% $550
Federal funds
sold & securities
purchased under
agreements to
resell 6,065 5.04% 306 2,880 4.95% 143
Taxable investment
securities,
excluding
valuation
allowance 733,105 4.77% 34,968 799,583 4.42% 35,313
Tax-exempt
investment
securities,
excluding
valuation
allowance 153,459 5.43% 8,338 136,809 5.71% 7,815
Loans and
leases, net of
unearned
income 4,021,094 7.68% 308,720 3,689,979 7.57% 279,246
Federal Home
Loan Bank
stock 48,797 0.60% 293 48,797 0.10% 49
Total interest
earning
assets 4,965,878 7.10% 352,795 4,689,967 6.89% 323,116
Nonearning assets 597,237 581,677
Total assets $5,563,115 $5,271,644
Liabilities & Stockholders'
Equity:
Interest-bearing
liabilities:
Interest-bearing
demand
deposits $440,537 0.13% $556 $426,828 0.13% $566
Savings and money
market
deposits 1,206,392 1.99% 23,950 1,153,651 1.53% 17,684
Time deposits
under
$100,000 612,793 3.83% 23,450 590,335 3.08% 18,156
Time deposits
$100,000 and
over 1,018,123 4.52% 46,017 876,513 4.02% 35,263
Short-term
borrowings 30,640 5.28% 1,616 41,401 5.31% 2,197
Long-term debt 816,591 5.19% 42,390 755,378 4.72% 35,666
Total interest-
bearing
liabilities 4,125,076 3.34% 137,979 3,844,106 2.85% 109,532
Noninterest-
bearing
deposits 594,361 628,736
Other liabilities 88,368 89,558
Stockholders'
equity 755,310 709,244
Total liabilities
& stockholders'
equity $5,563,115 $5,271,644
Net interest income $214,816 $213,584
Net interest margin 4.33% 4.55%
SOURCE Central Pacific Financial Corp.
