Exhibit 99
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Investor Contact: |
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David Morimoto |
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Media Contact: |
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Wayne Kirihara |
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SVP & Treasurer |
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SVP & Director of Marketing & PR |
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(808) 544-0627 |
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(808) 544-0687 |
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david.morimoto@centralpacificbank.com |
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wayne.kirihara@centralpacificbank.com |
NEWS RELEASE
CENTRAL PACIFIC FINANCIAL CORP.
REPORTS INCREASE IN FIRST QUARTER NET
INCOME TO $20.1 MILLION
HONOLULU, April 30, 2007 — Central Pacific Financial Corp. (NYSE: CPF), parent company of Central Pacific Bank, today reported net income for the first quarter of 2007 of $20.1 million, or $0.65 per diluted share, compared to $19.3 million, or $0.63 per diluted share, reported in the first quarter of 2006 and $18.8 million, or $0.61 per diluted share, reported in the fourth quarter of 2006.
“It’s rewarding to see continued earnings growth despite an increasingly challenging environment,” said Clint Arnoldus, President and Chief Executive Officer. “We are particularly pleased with the growth in our commercial lines as we continue to roll out innovative products for our customers.”
First Quarter Highlights
· Quarterly net income of $20.1 million.
· Loans and leases increased by $284.1 million, or 7.8% from a year ago.
· Nonperforming assets to total assets improved to 0.03%, compared to 0.12% a year ago.
· Deposits increased by $166.4 million, or 4.5% from a year ago.
· Introduction of remote deposit capture service for business customers.
Earnings Highlights
Net interest income for the first quarter of 2007 was $53.7 million, an increase of 2.9% over the year-ago quarter and 0.5% over the fourth quarter of 2006. The year-over-year growth in net interest income was attributable to a 5.5% increase in average interest earning assets and the recognition of $0.9 million in interest income on the payoff of a nonaccrual loan. The net interest margin for the current quarter was 4.52%, compared to 4.64% in the year-ago quarter and 4.47% in the fourth quarter of 2006. Excluding the nonaccrual interest, the net interest margin was 4.46% for the current quarter. The net interest margin compression during the last year reflects the upward pricing of deposits and borrowings and the higher proportion of balances in higher-rate savings and time deposits.
The provision for loan and lease losses in the first quarter of 2007 was $2.6 million, compared to $0.5 million in the year-ago quarter and no provision in the fourth quarter of 2006. The increase in the provision in the current quarter resulted from commercial loan charge-offs from a single borrower totaling $2.9 million. “The majority of the commercial loan charge-offs were isolated to a single borrower. We believe our overall credit quality remains strong as evidenced by our asset quality ratios,” commented Arnoldus.
Other operating income totaled $11.2 million for the first quarter of 2007, compared to $12.2 million in the year-ago quarter and $9.5 million in the fourth quarter of 2006. The decrease from the year-ago quarter was primarily due to a decrease in loan sale activity from Central Pacific HomeLoans, Inc. (“CPHL”). The increase over the previous quarter was primarily due to the recognition of a $1.5 million loss in the fourth quarter of 2006 in connection with an investment portfolio repositioning.
Other operating expense for the first quarter of 2007 was $30.5 million, compared to $33.8 million in the year-ago quarter and $35.7 million in the fourth quarter of 2006. First quarter 2007 expenses included adjustments to certain employee benefit accruals totaling $0.2 million, offset by a $1.8 million reversal of incentive compensation accruals and a $0.8 million reversal of reserves for unfunded commitments. First quarter 2006 expenses included a $2.2 million retirement charge paid to a former senior executive, offset by a $0.5 million partial refund of an FDIC assessment and fourth quarter 2006 expenses included adjustments to certain employee benefit accruals totaling $0.9 million. Excluding the aforementioned items, other operating expense for the current quarter decreased by 5.5% on a sequential-quarter basis and increased by 2.5% on a year-over-year basis.
The Company’s efficiency ratio for the first quarter of 2007 was 45.43%, compared with 50.42% for the year-ago quarter and 53.40% for the fourth quarter of 2006. The lower efficiency ratio in the current quarter was primarily attributable to the expense items discussed above. Excluding these items, the Company’s efficiency ratio was 49.20% for the current quarter, compared to 47.93% for the year-ago quarter and 52.05% for the fourth quarter of 2006.
The effective tax rate was 36.61% for the first quarter of 2007, compared to 35.65% in the year-ago quarter and 30.81% in the fourth quarter of 2006. The sequential-quarter increase was primarily due to federal and state tax credits related to high-technology investments and energy conservation leases in the fourth quarter of 2006.
Balance Sheet Highlights
Total assets of $5.5 billion at March 31, 2007 increased by $259.7 million, or 4.9%, from a year ago and by $21.6 million, or 0.4%, from December 31, 2006.
Total loans and leases of $3.9 billion at March 31, 2007 increased by $284.1 million, or 7.8%, from a year ago and by $58.5 million, or 1.5%, from December 31, 2006. The mainland loan production offices contributed approximately 70% of the current quarter’s loan growth, while the Hawaii operations contributed the remaining 30%.
Total deposits of $3.8 billion at March 31, 2007 increased by $166.4 million, or 4.5%, from a year ago and was virtually unchanged from December 31, 2006. During the first quarter of 2007, increases in savings and money market deposits of $23.5 million and time deposits of $21.4 million were offset by a decrease in noninterest-bearing demand deposits of $44.8 million.
Shareholders’ equity of $753.5 million at March 31, 2007, increased from $686.5 million a year ago and from $738.1 million at December 31, 2006.
Asset Quality
Net loan charge-offs in the first quarter of 2007 totaled $4.3 million, compared to net loan charge-offs of $0.4 million in the year-ago quarter and $0.3 million in the fourth quarter of 2006. Loan charge-offs in the current quarter included the aforementioned commercial loan charge-offs from a single borrower totaling $2.9 million.
At March 31, 2007, nonperforming assets totaled $1.6 million, or 0.03%, of total assets, compared to $6.1 million, or 0.12%, of total assets at March 31, 2006 and $9.0 million, or 0.16%, of total assets at December 31, 2006. Loans delinquent for 90 days or more of $0.6 million declined by 80.2% from a year ago and by 34.8% from December 31, 2006.
The allowance for loan and lease losses as a percentage of total loans and leases was 1.30% at March 31, 2007, compared to 1.47% a year ago and 1.36% at December 31, 2006.
Bank Launches Remote Deposit Central® for Business Customers
Earlier this month, Central Pacific Bank announced it was the first Hawaii bank to offer a remote deposit service for business customers, allowing customers to deposit checks from the comfort of their office or home office.
“We’re excited about Remote Deposit Central® because it allows our customers to manage their cash flow more efficiently while saving them time,” remarked Arnoldus. “This product also demonstrates our commitment to bringing innovation to our customers. Moreover, because we’re currently the only Hawaii institution to offer this service, we believe we have a competitive advantage and an opportunity to win new business customers.”
Remote Deposit Central is a product that is primarily intended for professional service companies — such as wholesalers, physicians, accountants and property managers — whose customer transactions are ‘check intensive’ rather than cash heavy. Feedback from customers who have piloted the service has been overwhelmingly positive, saying they appreciate the convenience and efficiency of Remote Deposit Central.
Business and Earnings Outlook
Based on current and anticipated economic and business conditions, management forecasts diluted earnings per share for 2007 in the range of $2.75 to $2.85.
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 1-877-704-5381 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, 2007 by dialing 1-888-203-1112 (passcode: 4535249) and on the Company’s website.
About Central Pacific Financial Corp.
Central Pacific Financial Corp. is the fourth largest financial institution in Hawaii with $5.5 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 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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