CENTRAL PACIFIC FINANCIAL CORP - FORM 8-K - EX-99 - EXHIBIT 99

Attached files

file	filename
8-K - FORM 8-K - CENTRAL PACIFIC FINANCIAL CORP	form8-k.htm

Investor Contact:	David Morimoto	Media Contact:	Wayne Kirihara
	SVP & Treasurer		SVP - Corporate Communications
	(808) 544-3627		(808) 544-3687
	david.morimoto@centralpacificbank.com		wayne.kirihara@centralpacificbank.com

NEWS RELEASE

CENTRAL PACIFIC FINANCIAL CORP. REVISES ITS PREVIOUSLY

ANNOUNCED ALLOWANCE FOR LOAN AND LEASE LOSSES

Fourth Quarter Net Income Expected To Be Revised Up To $10.3 Million

HONOLULU, HI, February 6, 2014 – Central Pacific Financial Corp. (NYSE: CPF), parent company of Central Pacific Bank (the “Bank”), revised its previously announced results of operations because it has determined that certain third party market data applied in the calculation of its allowance for loan and lease losses (“ALLL”) was not updated based on recently available data. As a result of this error, its fourth quarter 2013 net income is expected to be $10.3 million, or $0.24 per diluted share, compared to $9.0 million, or $0.21 per diluted share, previously announced on January 30, 2014. Net income for the year ended December 31, 2013 is expected to increase to $172.1 million, or $4.07 per diluted share.

The Company issued the revision upon further review of the calculation of its ALLL. The failure to update certain third party market data applied in the methodology to reflect the most recently available data resulted in the previously reported provision for loan and lease losses of $0.8 million. Applying the updated third party market data, the provision for loan and lease losses is expected to improve to a credit of $1.3 million in the fourth quarter of 2013. Management is assessing the implications of the identified error on the Company’s internal controls over financial reporting. In addition to completing the final items for the year end audit of the Company’s consolidated financial statements, the Company’s auditor, KPMG LLP, is conducting a further review of the ALLL. The Company anticipates that KPMG’s review will be completed by the end of February 2014. There can be no assurance that such review will not result in further revisions to the announced results of operations for the fourth quarter and full year ended December 31, 2013.

Revised financial highlights are included in this release.

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.

About Central Pacific Financial Corp.

Central Pacific Financial Corp. is a Hawaii-based bank holding company with approximately $4.7 billion in assets. Central Pacific Bank, its primary subsidiary, operates 35 branches and 112 ATMs in the state of Hawaii, as of December 31, 2013. For additional information, please visit the Company’s website at http://www.centralpacificbank.com.

**********

Forward-Looking Statements

This document may contain forward-looking statements. 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 “expects,” “believes,” “plans,” “anticipates,” “should,” or words of similar meaning. While the Company believes 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 expectations for a variety of reasons. For further information on factors that could cause actual results to materially differ from expectations, please see the Company’s publicly available Securities and Exchange Commission filings, including the Company’s Form 10-K for the last fiscal year and, in particular, the discussion of “Risk Factors” set forth therein. The Company does not update any of its forward-looking statements except as required by law.

#####

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Financial Highlights - December 31, 2013
(Unaudited)

	Three Months Ended						Year Ended
	December 31,						December 31,
(in thousands, except per share data)	2013			2012			2013			2012

INCOME STATEMENT
Net income	$	10,295		$	12,410		$	172,075		$	47,421
Per common share data:
Basic earnings per share		0.24			0.30			4.10			1.14
Diluted earnings per share		0.24			0.29			4.07			1.13
Cash dividends declared		0.08			-			0.16			-

PERFORMANCE RATIOS
Return on average assets (1)		0.87	%		1.16	%		3.73	%		1.13	%
Return on average shareholders' equity (1)		6.22			9.81			27.70			9.81
Net income to average tangible shareholders' equity (1)		6.35			10.13			28.34			10.17
Efficiency ratio (2)		72.50			81.70			74.97			78.89
Net interest margin (1)		3.29			3.00			3.19			3.10

							December 31,
REGULATORY CAPITAL RATIOS								2013			2012
Central Pacific Financial Corp.
Tier 1 risk-based capital								20.30	%		22.54	%
Total risk-based capital								21.57			23.83
Leverage capital								13.68			14.32

Central Pacific Bank
Tier 1 risk-based capital								19.63	%		21.47	%
Total risk-based capital								20.90			22.75
Leverage capital								13.22			13.65

							December 31,						%
								2013			2012		Change
BALANCE SHEET
Total assets							$	4,741,198		$	4,370,368		8.5	%
Loans and leases								2,630,601			2,203,944		19.4
Net loans and leases								2,546,781			2,107,531		20.8
Deposits								3,936,173			3,680,772		6.9
Total shareholders' equity								660,113			504,822		30.8
Book value per common share								15.68			12.06		30.0
Tangible book value per common share								15.37			11.69		31.5
Market value per common share								20.08			15.59		28.8
Tangible common equity ratio (3)								13.69	%		11.24	%	21.8

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Financial Highlights - December 31, 2013
(Unaudited)

(in thousands, except per share data)		Three Months Ended								Year Ended
		December 31,						%		December 31,						%
		2013			2012			Change		2013			2012			Change
SELECTED AVERAGE BALANCES
Total assets		$	4,746,897		$	4,293,042		10.6	%	$	4,610,822		$	4,207,655		9.6	%
Interest-earning assets			4,368,386			3,983,983		9.6			4,235,052			3,898,677		8.6
Loans and leases, including loans held for sale			2,553,574			2,172,818		17.5			2,394,955			2,130,758		12.4
Other real estate			5,166			28,692		(82.0	)		7,767			46,913		(83.4	)
Deposits			3,928,031			3,596,155		9.2			3,804,662			3,532,318		7.7
Interest-bearing liabilities			3,152,826			2,879,056		9.5			3,061,652			2,868,352		6.7
Total shareholders' equity			662,106			505,805		30.9			621,282			483,435		28.5

										December 31,						%
											2013			2012		Change
NONPERFORMING ASSETS
Nonaccrual loans (including loans held for sale)										$	41,588		$	79,332		(47.6	) %
Other real estate											5,163			10,686		(51.7	)
	Total nonperforming assets										46,751			90,018		(48.1	)
Loans delinquent for 90 days or more (still accruing interest)											15			503		(97.0	)
Restructured loans (still accruing interest)											23,273			31,760		(26.7	)
	Total nonperforming assets, loans delinquent for 90 days or more (still
	accruing interest) and restructured loans (still accruing interest)									$	70,039		$	122,281		(42.7	)



		Three Months Ended								Year Ended
		December 31,						%		December 31,						%
			2013			2012		Change			2013			2012		Change
Loan charge-offs		$	4,503		$	4,098		9.9	%	$	12,616		$	17,429		(27.6	) %
Recoveries			4,428			5,866		(24.5	)		11,333			10,634		6.6
	Net loan charge-offs (recoveries)	$	75		$	(1,768	)	(104.2	)	$	1,283		$	6,795		(81.1	)
Net loan charge-offs (recoveries) to average loans (1)			0.01	%		(0.33	) %				0.05	%		0.32	%

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Financial Highlights - December 31, 2013
(Unaudited)

		December 31,
		2013		2012
ASSET QUALITY RATIOS
Nonaccrual loans (including loans held for sale) to total loans and leases and loans held for sale		1.57	%	3.54	%
Nonperforming assets to total assets		0.99		2.06
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	2.64		5.43
Allowance for loan and lease losses to total loans and leases		3.19		4.37
Allowance for loan and lease losses to nonaccrual loans (including loans held for sale)		201.55		121.53
Allowance for loan and lease losses to nonperforming assets		179.29		107.10

(1)	Annualized

(2)	The efficiency ratio is a non-GAAP financial measure which should be read and used in conjunction with the Company's GAAP financial information. Comparison of our efficiency ratio with those of other companies may not be possible because other companies may calculate the efficiency ratio differently. Our 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 assets, loss on early extinguishment of debt, 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 and gains on sale of foreclosed assets). See Reconciliation of Non-GAAP Financial Measures.
(3)	The tangible common equity ratio is a non-GAAP financial measure which should be read and used in conjunction with the Company's GAAP financial information. Comparison of our tangible common equity ratio with those of other companies may not be possible because other companies may calculate the tangible common equity ratio differently. Our tangible common equity ratio is derived by dividing common shareholders' equity, less intangible assets (excluding mortgage servicing rights (MSRs)) by total assets, less intangible assets (excluding MSRs).

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)

	Quarter Ended			Quarter Ended			Quarter Ended
(Dollars in thousands, except per share data)	December 31, 2013			September 30, 2013			December 31, 2012

Efficiency Ratio
Total other operating expenses	$	35,271		$	36,512		$	36,066
Less:
Amortization of other intangible assets		668			669			669
Foreclosed asset expense		43			(12	)		364
Write down of assets		-			-			-
Adjusted other operating expenses	$	34,560		$	35,855		$	35,033

Net interest income (tax equivalent)	$	36,031		$	34,305		$	29,910
Total other operating income		12,173			11,930			16,803
Less:
Net gains on sales of foreclosed assets		56			276			3,834
Net gains on sales of investment securities		482			-			-
Adjusted other operating income	$	47,666		$	45,959		$	42,879

Efficiency ratio		72.50	%		78.02	%		81.70	%

	December 31, 2013			December 31, 2012
Tangible Common Equity Ratio
Total shareholders' equity	$	660,113		$	504,822
Less: Other intangible assets		(12,704	)		(15,378	)
Tangible common equity		647,409			489,444

Total assets		4,741,198			4,370,368
Less: Other intangible assets		(12,704	)		(15,378	)
Tangible assets		4,728,494			4,354,990

Tangible common equity / Tangible assets		13.69	%		11.24	%

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)

(In thousands, except share data)	December 31,			September 30,			December 31,
	2013			2013			2012
ASSETS
Cash and due from banks	$	45,092		$	59,400		$	56,473
Interest-bearing deposits in other banks		4,256			37,499			120,902
Investment securities:
Available for sale		1,407,999			1,501,948			1,536,745
Held to maturity (fair value of $238,705 at December 31, 2013,
$245,519 at September 30, 2013 and $162,528 at December 31, 2012)		252,047			255,663			161,848
Total investment securities		1,660,046			1,757,611			1,698,593

Loans held for sale		12,370			12,437			38,283
Loans and leases		2,630,601			2,484,318			2,203,944
Less allowance for loan and lease losses		83,820			85,228			96,413
Net loans and leases		2,546,781			2,399,090			2,107,531

Premises and equipment, net		49,039			48,151			48,759
Accrued interest receivable		14,072			13,765			13,896
Investment in unconsolidated subsidiaries		9,127			18,558			10,975
Other real estate		5,163			5,761			10,686
Mortgage servicing rights		20,079			20,249			22,121
Other intangible assets		12,704			13,372			15,378
Bank-owned life insurance		149,604			148,903			147,411
Federal Home Loan Bank stock		46,193			46,626			47,928
Other assets		166,672			163,061			31,432
Total assets	$	4,741,198		$	4,744,483		$	4,370,368

LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	891,017		$	878,262		$	843,292
Interest-bearing demand		728,619			739,421			672,838
Savings and money market		1,207,016			1,212,488			1,186,011
Time		1,109,521			1,076,093			978,631
Total deposits		3,936,173			3,906,264			3,680,772

Short-term borrowings		8,015			28,000			-
Long-term debt		92,799			108,268			108,281
Other liabilities		44,037			48,415			66,536
Total liabilities		4,081,024			4,090,947			3,855,589

Equity:
Preferred stock, no par value, authorized 1,100,000 shares; issued and outstanding
none at December 31, 2013, September 30, 2013, and December 31, 2012		-			-			-
Common stock, no par value, authorized 185,000,000 shares; issued and outstanding
42,107,633 shares at December 31, 2013, 42,091,180 shares at September 30, 2013,
and 41,867,046 shares at December 31, 2012		784,547			784,473			784,512
Surplus		75,498			73,735			70,567
Accumulated deficit		(184,087	)		(191,014	)		(349,427	)
Accumulated other comprehensive income (loss)		(15,845	)		(13,718	)		(830	)
Total shareholders' equity		660,113			653,476			504,822
Non-controlling interest		61			60			9,957
Total equity		660,174			653,536			514,779
Total liabilities and equity	$	4,741,198		$	4,744,483		$	4,370,368

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

	Three Months Ended									Year Ended
	December 31,			September 30,			December 31,			December 31,
(In thousands, except per share data)	2013			2013			2012			2013			2012

Interest income:
Interest and fees on loans and leases	$	27,117		$	26,414		$	23,387		$	104,479		$	97,029
Interest and dividends on investment securities:
Taxable interest		8,980			8,114			6,959			31,498			28,803
Tax-exempt interest		992			992			965			4,051			2,312
Dividends		7			5			5			23			16
Interest on deposits in other banks		25			21			73			203			285
Dividends on Federal Home Loan Bank stock		12			12			-			24			-
Total interest income		37,133			35,558			31,389			140,278			128,445

Interest expense:
Interest on deposits:
Demand		90			91			81			349			339
Savings and money market		231			227			223			894			1,006
Time		651			671			784			2,801			3,688
Interest on short-term borrowings		3			3			-			6			-
Interest on long-term debt		662			795			911			3,119			3,701
Total interest expense		1,637			1,787			1,999			7,169			8,734

Net interest income		35,496			33,771			29,390			133,109			119,711
Provision (credit) for loan and lease losses		(1,333	)		(3,189	)		(2,283	)		(11,310	)		(18,885	)
Net interest income after provision for loan and lease losses		36,829			36,960			31,673			144,419			138,596

Other operating income:
Service charges on deposit accounts		2,091			1,776			1,648			7,041			8,367
Other service charges and fees		4,643			4,931			4,454			18,547			17,569
Income from fiduciary activities		748			724			669			2,855			2,599
Equity in earnings of unconsolidated subsidiaries		57			513			188			790			574
Fees on foreign exchange		160			149			104			508			551
Investment securities gains		482			-			-			482			789
Income from bank-owned life insurance		841			611			625			2,333			2,899
Loan placement fees		162			81			143			570			690
Net gains on sales of residential loans		1,494			1,476			6,011			9,986			17,095
Net gains on sales of foreclosed assets		56			276			3,890			8,584			4,999
Other		1,439			1,393			(873	)		3,249			4,611
Total other operating income		12,173			11,930			16,859			54,945			60,743

Other operating expense:
Salaries and employee benefits		20,350			19,167			17,833			76,294			69,344
Net occupancy		3,672			3,802			3,761			14,323			13,920
Equipment		888			952			958			3,676			3,966
Amortization of other intangible assets		1,424			1,637			2,689			7,418			10,179
Communication expense		796			907			886			3,523			3,428
Legal and professional services		1,684			2,155			3,189			8,094			13,824
Computer software expense		1,397			1,056			1,109			4,579			3,961
Advertising expense		525			601			884			2,666			3,516
Foreclosed asset expense		43			(12	)		420			1,036			6,887
Write down of assets		-			-			-			-			2,586
Other		4,492			6,247			4,393			17,927			20,307
Total other operating expense		35,271			36,512			36,122			139,536			151,918

Income before income taxes		13,731			12,378			12,410			59,828			47,421
Income tax expense (benefit)		3,436			2,174			-			(112,247	)		-
Net income	$	10,295		$	10,204		$	12,410		$	172,075		$	47,421

Per common share data:
Basic earnings per share	$	0.24		$	0.24		$	0.30		$	4.10		$	1.14
Diluted earnings per share		0.24			0.24			0.29			4.07			1.13
Cash dividends declared		0.08			0.08			-			0.16			-

Basic weighted average shares outstanding		42,040			42,028			41,766			41,961			41,720
Diluted weighted average shares outstanding		42,536			42,421			42,183			42,317			42,084

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Average Balances, Interest Income & Expense, Yields and Rates (Taxable Equivalent)

	Three Months Ended						Three Months Ended						Year Ended						Year Ended
(Dollars in thousands)	December 31, 2013						December 31, 2012						December 31, 2013						December 31, 2012
	Average		Average				Average		Average				Average		Average				Average		Average
	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	$	39,316	0.25	%	$	25	$	115,841	0.25	%	$	73	$	81,249	0.25	%	$	203	$	114,438	0.25	%	$	285
Taxable investment securities, excluding
valuation allowance		1,551,844	2.32			8,987		1,489,529	1.87			6,964		1,534,136	2.05			31,521		1,521,164	1.89			28,819
Tax-exempt investment securities,
excluding valuation allowance		177,135	3.44			1,526		157,536	3.77			1,485		177,510	3.51			6,232		83,663	4.25			3,557
Loans and leases, including loans held for sale		2,553,574	4.23			27,117		2,172,818	4.29			23,387		2,394,955	4.36			104,479		2,130,758	4.55			97,029
Federal Home Loan Bank stock		46,517	0.10			12		48,259	-			-		47,202	0.05			24		48,654	-			-
Total interest earning assets		4,368,386	3.44			37,667		3,983,983	3.20			31,909		4,235,052	3.36			142,459		3,898,677	3.33			129,690
Nonearning assets		378,511						309,059						375,770						308,978
Total assets	$	4,746,897					$	4,293,042					$	4,610,822					$	4,207,655

Liabilities & Equity:
Interest-bearing liabilities:
Interest-bearing demand deposits	$	726,449	0.05	%	$	90	$	648,630	0.05	%	$	81	$	708,658	0.05	%	$	349	$	615,960	0.05	%	$	339
Savings and money market deposits		1,218,088	0.08			231		1,178,745	0.08			223		1,191,919	0.07			894		1,163,963	0.09			1,006
Time deposits under $100,000		272,051	0.42			285		308,619	0.52			405		285,042	0.46			1,301		326,288	0.59			1,937
Time deposits $100,000 and over		839,198	0.17			366		634,748	0.24			379		769,672	0.19			1,500		652,339	0.27			1,751
Short-term borrowings		4,239	0.32			3		32	0.63			-		1,988	0.32			6		11	0.67			-
Long-term debt		92,801	2.83			662		108,282	3.34			911		104,373	2.99			3,119		109,791	3.37			3,701
Total interest-bearing liabilities		3,152,826	0.21			1,637		2,879,056	0.28			1,999		3,061,652	0.23			7,169		2,868,352	0.30			8,734
Noninterest-bearing deposits		872,245						825,413						849,371						773,768
Other liabilities		59,659						72,807						73,040						72,131
Total liabilities		4,084,730						3,777,276						3,984,063						3,714,251
Shareholders' equity		662,106						505,805						621,282						483,435
Non-controlling interest		61						9,961						5,477						9,969
Total equity		662,167						515,766						626,759						493,404
Total liabilities & equity	$	4,746,897					$	4,293,042					$	4,610,822					$	4,207,655

Net interest income					$	36,030					$	29,910					$	135,290					$	120,956

Net interest margin			3.29	%					3.00	%					3.19	%					3.10	%

CENTRAL PACIFIC FINANCIAL CORP - FORM 8-K - EX-99 - EXHIBIT 99 - February 5, 2014

Attached files

CENTRAL PACIFIC FINANCIAL CORP Reports