EX-99.1 2 exhibit99-1q12016.htm EXHIBIT 99.1

Exhibit

Central Pacific Financial Corp. Reports $11.2 Million First Quarter Earnings

April 28, 2016

Page 1

Exhibit 99

			FOR IMMEDIATE RELEASE
Investor Contact:	Dane Teruya	Media Contact:	Wayne Kirihara
	VP, Treasury Manager		SVP, Chief Marketing Officer
	(808) 544-3626		(808) 544-3687
	dane.teruya@centralpacificbank.com		wayne.kirihara@centralpacificbank.com

NEWS RELEASE

CENTRAL PACIFIC FINANCIAL CORP. REPORTS $11.2 MILLION

FIRST QUARTER EARNINGS

HONOLULU, HI, April 28, 2016 – Central Pacific Financial Corp. (NYSE: CPF), (the “Company”), today reported net income for the first quarter of 2016 of $11.2 million, or $0.35 per diluted share, compared to net income in the first quarter of 2015 of $10.4 million, or $0.29 per diluted share, and net income in the fourth quarter of 2015 of $10.9 million, or $0.34 per diluted share.

“We are pleased with our first quarter results and believe this positions us well for the remainder of the year,” said Catherine Ngo, President and Chief Executive Officer. “Our ongoing and consistent efforts to grow our loan portfolio and strengthen profitability are reflected in our net interest margin expansion and efficiency ratio improvement.”

During the first quarter of 2016, the Company repurchased 233,722 shares of common stock, or approximately 0.7% of its common stock outstanding as of December 31, 2015, at a total cost of $4.7 million. The Company's remaining repurchase authority under its common stock repurchase program at March 31, 2016 is $25.3 million.

On April 27, 2016, the Company’s Board of Directors declared a quarterly cash dividend of $0.14 per share on the Company’s outstanding common shares. The dividend will be payable on June 15, 2016 to shareholders of record at the close of business on May 31, 2016.

Since reinstating quarterly cash dividends in 2013, the Company has returned a total of $290.2 million in cash to its shareholders, in the form of cash dividends totaling $50.7 million, and through the repurchase of 11,402,223 shares of common stock at a total cost of $239.5 million, excluding fees and expenses.

Central Pacific Financial Corp. Reports $11.2 Million First Quarter Earnings

April 28, 2016

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Significant Highlights and First Quarter Results

• Reported net income of $11.2 million, compared to net income in the first quarter of 2015 of $10.4 million and net income in the fourth quarter of 2015 of $10.9 million.

• Loans and leases were up 11.5% from the prior year period and increased by $97.4 million, or 3.0%, during the quarter to $3.31 billion at March 31, 2016, with balanced growth across the portfolio.

• Total deposits were up 7.4% from the prior year period and increased by $63.2 million, or 1.4%, during the quarter to $4.50 billion at March 31, 2016. Core deposits were up 10.0% from the prior year period and increased by $81.7 million, or 2.3%, during the quarter to $3.66 billion at March 31, 2016.

• Reported net interest income of $39.2 million, compared to $36.2 million in first quarter of 2015 and $38.2 million in the fourth quarter of 2015. Reported a net interest margin of 3.33%, compared to 3.28% in the prior year period and 3.30% in the fourth quarter of 2015.

• Recorded a credit to the provision for loan and lease losses of $0.7 million in the first quarter of 2016, compared to a credit of $2.7 million in the first quarter of 2015 and a credit of $2.0 million in the fourth quarter of 2015.

• Reported an efficiency ratio of 66.58% in the first quarter of 2016, compared to 71.73% in the first quarter of 2015 and 67.82% in the fourth quarter of 2015.

• Maintained a strong capital position with leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ratios at the holding company of 10.8%, 14.5%, 15.8%, and 12.5%, respectively, as of March 31, 2016.  The Company’s capital ratios continue to be in excess of the minimum levels required for a “well-capitalized” regulatory designation under Basel III.

Earnings Highlights

Net interest income for the first quarter of 2016 was $39.2 million, compared to $36.2 million in the year-ago quarter and $38.2 million in the fourth quarter of 2015.  Net interest margin was 3.33%, compared to 3.28% in the year-ago quarter and 3.30% in the fourth quarter of 2015. The increases in net interest income and net interest margin from the year-ago quarter were primarily attributable to average loan portfolio balances increasing by $303.3 million. This increase was partially offset by a 4 basis point increase in rates paid on our average total interest-bearing deposits. The sequential quarter increases in net interest income and net interest margin were primarily attributable to average loan portfolio balances increasing by $116.0 million. In addition, the taxable equivalent yield on the loan portfolio increased to 3.92% in the current quarter from 3.87% last quarter and the taxable equivalent yield on the investment securities portfolio increased to 2.64% in the current quarter from 2.60% last quarter. These increases were partially offset by a $158.8 million increase in our average total interest-bearing deposits, combined with a 3 basis point increase in rates paid on our average total interest-bearing deposits.

In the first quarter of 2016, a credit to the provision for loan and lease losses of $0.7 million was recorded, compared to a credit of $2.7 million in the year-ago quarter and a credit of $2.0 million in the fourth quarter of 2015.

Other operating income for the first quarter of 2016 totaled $10.2 million, compared to $11.2 million in the year-ago quarter and $9.8 million in the fourth quarter of 2015. The decrease from the year-ago quarter was primarily due to lower unrealized gains on loans held for sale and interest rate lock commitments of $0.5 million, and lower other service charges and fees and lower other recoveries of $0.3 million each. The sequential quarter increase was primarily due to higher income from bank-owned life ins

Central Pacific Financial Corp. Reports $11.2 Million First Quarter Earnings

April 28, 2016

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urance of $0.2 million, and higher net gain on sales of residential mortgage loans and higher net gain on sales of foreclosed assets of $0.1 million each.

Other operating expense for the first quarter of 2016 totaled $32.9 million, compared to $34.0 million in the year-ago quarter and $32.6 million in the fourth quarter of 2015. The decrease from the year-ago quarter was primarily attributable to a credit to the reserve for residential mortgage loan repurchase losses of $0.4 million in the current quarter compared to an increase to the provision of $0.2 million in the year-ago quarter, and lower legal and professional services of $0.6 million, partially offset by higher computer software expense of $0.6 million. The sequential quarter increase was primarily due to higher amortization of mortgage servicing rights of $0.7 million and higher computer software expense of $0.6 million, partially offset by lower net occupancy expense of $0.7 million.

The efficiency ratio for the first quarter of 2016 was 66.58%, compared to 71.73% in the year-ago quarter and 67.82% in the fourth quarter of 2015. The improvement in the efficiency ratio from the year-ago quarter was attributable to the growth in net interest income, combined with the decrease in other operating expenses, offset by lower other operating income in the current quarter as described above. The sequential quarter improvement in the efficiency ratio was attributable to higher net interest income and higher other operating income, offset by higher other operating expenses in the current quarter as described above.

In the first quarter of 2016, the Company recorded income tax expense of $6.1 million, compared to income tax expense of $5.8 million in the year-ago quarter and $6.5 million in the fourth quarter of 2015. The effective tax rate for the first quarter of 2016 was 35.2%, compared to 35.7% in the year-ago quarter and 37.2% in the fourth quarter of 2015. As of March 31, 2016, the Company’s net deferred tax assets totaled $67.9 million, compared to $94.3 million and $82.0 million at March 31, 2015 and December 31, 2015, respectively.

Balance Sheet Highlights

Total assets at March 31, 2016, of $5.24 billion increased by $276.3 million from March 31, 2015, and increased by $110.9 million from December 31, 2015.

Total loans and leases at March 31, 2016, of $3.31 billion increased by $341.2 million and $97.4 million from March 31, 2015 and December 31, 2015, respectively.  The increase in total loans and leases from March 31, 2015 was primarily due to an increase in the commercial, residential mortgage, commercial mortgage, and consumer loan portfolios of $34.4 million, $158.9 million, $71.8 million, and $89.4 million, respectively, partially offset a decrease in the construction loan portfolio of $11.4 million. The increase in total loans and leases from the fourth quarter of 2015 was primarily due to an increase in the commercial, construction, residential mortgage, commercial mortgage, and consumer loan portfolios of $14.0 million, $16.5 million, $22.9 million, $12.3 million, and $31.9 million, respectively.

Total deposits at March 31, 2016 of $4.50 billion increased by $308.0 million from March 31, 2015, and increased by $63.2 million from December 31, 2015.  Core deposits, which include demand deposits, savings and money market deposits, and time deposits less than $100,000, totaled $3.66 billion at March 31, 2016.  This represents an increase of $333.8 million and $81.7 million from March 31, 2015 and December 31, 2015, respectively.  Changes in total deposits from March 31, 2015 included net increases in savings and money market deposits of $218.3 million, noninterest-bearing demand deposits of $98.0 million, and interest-bearing demand deposits of $43.3 million, offset by net decreases in time deposits $100,000 and over of $25.8 million and time deposits less than $100,000 of $25.8 million. Changes in total deposits during the quarter included net increases in savings and money market deposits of $66.4 million and interest-bearing demand deposits of $25.0 million, offset by net decreases in time deposits $100,000 and over of $18.6 million, time deposits less than $100,000 of $5.2 million, and noninterest-bearing demand deposits of $4.5 million.

Central Pacific Financial Corp. Reports $11.2 Million First Quarter Earnings

April 28, 2016

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Total shareholders’ equity was $509.4 million at March 31, 2016, compared to $572.9 million and $494.6 million at March 31, 2015 and December 31, 2015, respectively. The sequential quarter increase reflects an increase in unrealized gains on investment securities of $11.9 million and net income of $11.2 million, partially offset by repurchases of common stock under the Company's common stock repurchase program of $4.7 million and common stock dividends paid of $4.4 million.

Asset Quality

Nonperforming assets at March 31, 2016 totaled $15.9 million, or 0.30% of total assets, compared to $40.8 million, or 0.82% of total assets at March 31, 2015, and $16.2 million, or 0.32% of total assets at December 31, 2015.  The sequential-quarter decrease in nonperforming assets reflects net decreases in Hawaii residential mortgage assets of $1.3 million and Hawaii commercial mortgage assets of $0.2 million, partially offset by a net increase in Hawaii commercial assets of $1.2 million.

Loans delinquent for 90 days or more still accruing interest totaled $0.8 million at March 31, 2016, compared to $5 thousand and $0.3 million at March 31, 2015 and December 31, 2015, respectively.  In addition, loans delinquent for 30 days or more still accruing interest totaled $7.4 million at March 31, 2016, compared to $3.6 million at March 31, 2015 and $7.1 million at December 31, 2015.

Net charge-offs in the first quarter of 2016 totaled $0.4 million, compared to net recoveries of $0.1 million in the first quarter of 2015, and net charge-offs of $1.4 million in the fourth quarter of 2015.

The ALLL, as a percentage of total loans and leases, was 1.88% at March 31, 2016, compared to 2.41% at March 31, 2015 and 1.97% at December 31, 2015.  The ALLL, as a percentage of nonperforming assets, was 389.80% at March 31, 2016, compared to 175.21% at March 31, 2015 and 390.10% at December 31, 2015.  The ALLL, as a percentage of nonaccrual loans, was 423.24% at March 31, 2016, compared to 190.89% at March 31, 2015 and 443.75% at December 31, 2015.

Capital Levels

At March 31, 2016, the Company’s leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ratios were 10.8%, 14.5%, 15.8%, and 12.5%, respectively.  At December 31, 2015, the Company’s leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ratios were 10.7%, 14.4%, 15.7%, and 12.8%, respectively. The Company’s capital ratios continue to exceed the levels required to be considered a “well-capitalized” institution for regulatory purposes under Basel III.

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.

Conference Call

Central Pacific Financial Corp. Reports $11.2 Million First Quarter Earnings

April 28, 2016

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The Company’s management will host a conference call today at 1:00 p.m. Eastern Time (7:00 a.m. Hawaii Time) to discuss the quarterly results.  Individuals are encouraged to listen to the live webcast of the presentation by visiting the investor relations page of the Company’s website at http://ir.centralpacificbank.com.  Alternatively, investors may participate in the live call by dialing 1-877-505-7644.  A playback of the call will be available through May 28, 2016 by dialing 1-877-344-7529 (passcode: 10084062) and on the Company’s website.

About Central Pacific Financial Corp.

Central Pacific Financial Corp. is a Hawaii-based bank holding company with approximately $5.2 billion in assets.  Central Pacific Bank, its primary subsidiary, operates 35 branches and 103 ATMs in the state of Hawaii, as of March 31, 2016.  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/loss, earnings/loss per share, capital expenditures, dividends, capital structure, or other financial items, plans and objectives of management for future operations, future economic performance, or 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,” “expects,” “anticipates,” “forecasts,” “intends,” “hopes,” “should,” “estimates,” 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 projections for a variety of reasons, to include, but not limited to:  the effect of, and our failure to comply with any regulatory orders we are or may become subject to; oversupply of inventory and adverse conditions in the Hawaii and California real estate markets and any weakness in the construction industry;  adverse changes in the financial performance and/or condition of our borrowers and, as a result, increased loan delinquency rates,  deterioration in asset quality, and losses in our loan portfolio; the impact of local, national, and international economies and events (including political events, acts of war or terrorism, natural disasters such as wildfires, tsunamis and earthquakes) 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; deterioration or malaise in economic conditions, including destabilizing factors in the financial industry and deterioration of the real estate market, as well as the impact from any declining levels of consumer and business confidence in the state of the economy in general and in financial institutions in particular;  our ability to continue making progress on our recovery plan; the impact of regulatory action on the Company and Central Pacific Bank and legislation affecting the banking industry; changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, other regulatory reform, and any related rules and regulations on our business operations and competitiveness; the costs and effects of legal and regulatory developments, including legal proceedings or regulatory or other governmental inquiries and proceedings and the resolution thereof, and the results of regulatory examinations or reviews;  the effects of and changes in trade, monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System; inflation, interest rate, securities market and monetary fluctuations;  negative trends in our market capitalization and adverse changes in the price of the Company’s common shares; changes in consumer spending, borrowings and savings habits; technological changes and developments; changes in the competitive environment among financial holding companies and other financial service providers; the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards

Central Pacific Financial Corp. Reports $11.2 Million First Quarter Earnings

April 28, 2016

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Board and other accounting standard setters; our ability to attract and retain skilled executives and employees; changes in our organization, compensation and benefit plans; and our success at managing the risks involved in any of the foregoing items. 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 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
(Unaudited)	TABLE 1

		Three Months Ended
		Mar 31,				Dec 31,				Sep 30,				Jun 30,				Mar 31,
(dollars in thousands, except for per share amounts)		2016				2015				2015				2015				2015
CONDENSED INCOME STATEMENT
Net interest income		$	39,211			$	38,194			$	37,805			$	37,294			$	36,235
Provision (credit) for loan and lease losses		(747		)		(1,958		)		(3,647		)		(7,319		)		(2,747		)
Net interest income after provision (credit) for loan and lease losses		39,958				40,152				41,452				44,613				38,982
Total other operating income		10,165				9,841				9,829				8,124				11,190
Total other operating expense		32,875				32,576				32,175				32,458				34,018
Income before taxes		17,248				17,417				19,106				20,279				16,154
Income tax expense		6,067				6,485				6,900				7,944				5,759
Net income		11,181				10,932				12,206				12,335				10,395
Basic earnings per common share		$	0.36			$	0.35			$	0.39			$	0.39			$	0.30
Diluted earnings per common share		0.35				0.34				0.38				0.39				0.29
Dividends declared per common share (1)		0.14				0.46				0.12				0.12				0.12
PERFORMANCE RATIOS
Return on average assets (2)		0.87		%		0.87		%		0.98		%		1.00		%		0.85		%
Return on average shareholders’ equity (2)		8.85				8.68				9.91				9.93				7.32
Return on average tangible shareholders’ equity (2)		8.98				8.82				10.08				10.11				7.45
Efficiency ratio (3)		66.58				67.82				67.55				71.47				71.73
Net interest margin (2)		3.33				3.30				3.31				3.32				3.28
Dividend payout ratio (1) (4)		40.00				135.29				31.58				30.77				41.38
Average shareholders’ equity to average assets		9.81				9.97				9.90				10.04				11.62
SELECTED AVERAGE BALANCES
Average loans and leases, including loans held for sale		$	3,258,872			$	3,142,895			$	3,070,384			$	2,981,184			$	2,955,525
Average interest-earning assets		4,786,256				4,676,931				4,611,234				4,566,577				4,505,895
Average assets		5,148,744				5,049,232				4,974,154				4,947,802				4,889,722
Average deposits		4,468,070				4,327,908				4,242,043				4,198,758				4,123,293
Average interest-bearing liabilities		3,492,748				3,370,560				3,346,484				3,357,400				3,266,067
Average shareholders’ equity		505,330				503,570				492,683				496,881				567,991
Average tangible shareholders' equity		498,271				495,845				484,246				487,797				558,219

		Mar 31,				Dec 31,				Sep 30,				Jun 30,				Mar 31,
(dollars in thousands)		2016				2015				2015				2015				2015
REGULATORY CAPITAL
Central Pacific Financial Corp.
Leverage capital		$	547,195			$	532,787			$	533,984			$	508,699			$	572,957
Tier 1 risk-based capital		547,195				532,787				533,984				508,699				572,957
Total risk-based capital		594,801				579,651				579,182				552,999				618,003
Common equity tier 1 capital		472,171				472,698				474,169				460,004				528,880
Central Pacific Bank
Leverage capital		533,307				518,617				515,625				501,732				559,137
Tier 1 risk-based capital		533,307				518,617				515,625				501,732				559,137
Total risk-based capital		580,715				565,231				560,569				546,005				604,155
Common equity tier 1 capital		533,307				518,617				515,625				501,732				559,137
REGULATORY CAPITAL RATIOS
Central Pacific Financial Corp.
Leverage capital ratio		10.8		%		10.7		%		10.9		%		10.5		%		12.0		%
Tier 1 risk-based capital ratio		14.5				14.4				15.0				14.5				16.0
Total risk-based capital ratio		15.8				15.7				16.3				15.7				17.3
Common equity tier 1 capital ratio		12.5				12.8				13.3				13.1				14.8
Central Pacific Bank
Leverage capital ratio		10.5				10.4				10.5				10.3				11.7
Tier 1 risk-based capital ratio		14.2				14.1				14.5				14.3				15.7
Total risk-based capital ratio		15.4				15.3				15.8				15.5				16.9
Common equity tier 1 capital ratio		14.2				14.1				14.5				14.3				15.7

		Mar 31,				Dec 31,				Sep 30,				Jun 30,				Mar 31,
(dollars in thousands, except for per share amounts)		2016				2015				2015				2015				2015
BALANCE SHEET
Loans and leases		$	3,308,968			$	3,211,532			$	3,101,463			$	3,006,055			$	2,967,772
Total assets		5,242,202				5,131,288				5,021,833				4,967,851				4,965,925
Total deposits		4,496,602				4,433,439				4,230,503				4,182,322				4,188,642
Long-term debt		92,785				92,785				92,785				92,785				92,785
Total shareholders’ equity		509,358				494,614				503,261				488,847				572,925
Total shareholders’ equity to total assets		9.72		%		9.64		%		10.02		%		9.84		%		11.54		%
Tangible common equity to tangible assets (5)		9.60				9.51				9.88				9.68				11.37
ASSET QUALITY
Allowance for loan and lease losses		$	62,149			$	63,314			$	66,644			$	66,924			$	71,433
Non-performing assets		15,944				16,230				14,001				32,108				40,770
Allowance to loans and leases outstanding		1.88		%		1.97		%		2.15		%		2.23		%		2.41		%
Allowance to non-performing assets		389.80				390.10				475.99				208.43				175.21
PER SHARE OF COMMON STOCK
Book value per common share		$	16.34			$	15.77			$	16.06			$	15.52			$	16.46
Tangible book value per common share		16.13				15.54				15.81				15.24				16.20
Closing market price per common share		21.77				22.02				20.97				23.75				22.97
(1) Dividends declared in the fourth quarter of 2015 include a special cash dividend of $0.32 per share.
(2) Annualized.
(3) Efficiency ratio is defined as total operating expense divided by total revenue (net interest income and total other operating income).
(4) Dividend payout ratio is defined as dividends declared per share divided by diluted earnings per share.
(5) The tangible common equity ratio is a non-GAAP measure which should be read in conjunction with the Company’s GAAP financial information. Comparison of our ratio with those of other companies may not be possible because other companies may calculate the ratio differently. See Reconciliation of Non-GAAP Financial Measures.

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)	TABLE 2

		March 31,				December 31,				September 30,				June 30,				March 31,
(Dollars in thousands)		2016				2015				2015				2015				2015
Tangible Common Equity Ratio:
Total shareholders’ equity		$	509,358			$	494,614			$	503,261			$	488,847			$	572,925
Less: Other intangible assets		(6,686		)		(7,355		)		(8,023		)		(8,692		)		(9,361		)
Tangible common equity		$	502,672			$	487,259			$	495,238			$	480,155			$	563,564
Total assets		$	5,242,202			$	5,131,288			$	5,021,833			$	4,967,851			$	4,965,925
Less: Other intangible assets		(6,686		)		(7,355		)		(8,023		)		(8,692		)		(9,361		)
Tangible assets		$	5,235,516			$	5,123,933			$	5,013,810			$	4,959,159			$	4,956,564
Tangible common equity to tangible assets		9.60		%		9.51		%		9.88		%		9.68		%		11.37		%

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)	TABLE 3

		March 31,				December 31,				September 30,				June 30,				March 31,
(Dollars in thousands, except share data)		2016				2015				2015				2015				2015
ASSETS
Cash and due from banks		$	85,495			$	71,797			$	69,628			$	66,715			$	74,743
Interest-bearing deposits in other banks		7,180				8,397				14,376				14,775				10,478
Investment securities:
Available for sale		1,299,176				1,272,255				1,272,382				1,274,312				1,298,487
Held to maturity (fair value of $243,072 at March 31, 2016, $244,136 at December 31, 2015, $254,540 at September 30, 2015, $259,150 at June 30, 2015, and $256,357 at March 31, 2015)		241,597				247,917				254,719				262,778				255,592
Total investment securities		1,540,773				1,520,172				1,527,101				1,537,090				1,554,079
Loans held for sale		11,270				14,109				9,786				22,917				7,206
Loans and leases		3,308,968				3,211,532				3,101,463				3,006,055				2,967,772
Less allowance for loan and lease losses		62,149				63,314				66,644				66,924				71,433
Net loans and leases		3,246,819				3,148,218				3,034,819				2,939,131				2,896,339
Premises and equipment, net		48,322				49,161				47,822				47,681				48,768
Accrued interest receivable		14,818				14,898				13,779				14,021				13,420
Investment in unconsolidated subsidiaries		5,627				6,157				6,489				6,720				6,840
Other real estate		1,260				1,962				1,913				5,278				3,349
Mortgage servicing rights		16,800				17,797				18,174				18,586				18,869
Other intangible assets		6,686				7,355				8,023				8,692				9,361
Bank-owned life insurance		154,592				153,967				153,449				153,015				153,251
Federal Home Loan Bank stock		10,420				8,606				12,048				12,129				43,442
Other assets		92,140				108,692				104,426				121,101				125,780
Total assets		$	5,242,202			$	5,131,288			$	5,021,833			$	4,967,851			$	4,965,925
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand		$	1,140,741			$	1,145,244			$	1,112,761			$	1,080,428			$	1,042,781
Interest-bearing demand		849,880				824,895				785,936				807,851				806,555
Savings and money market		1,465,524				1,399,093				1,283,517				1,261,180				1,247,266
Time		1,040,457				1,064,207				1,048,289				1,032,863				1,092,040
Total deposits		4,496,602				4,433,439				4,230,503				4,182,322				4,188,642
Short-term borrowings		106,000				69,000				155,000				157,000				70,000
Long-term debt		92,785				92,785				92,785				92,785				92,785
Other liabilities		37,438				41,425				40,284				46,897				41,573
Total liabilities		4,732,825				4,636,649				4,518,572				4,479,004				4,393,000
Equity:
Preferred stock, no par value, authorized 1,100,000 shares; issued and outstanding none at: March 31, 2016, December 31, 2015, September 30, 2015, June 30, 2015, and March 31, 2015		—				—				—				—				—
Common stock, no par value, authorized 185,000,000 shares; issued and outstanding: 31,164,287 at March 31, 2016; 31,361,452 shares at December 31, 2015, 31,330,644 shares at September 30, 2015, 31,501,633 shares at June 30, 2015, and 34,797,133 shares at March 31, 2015		544,029				548,878				548,518				552,527				632,867
Surplus		83,534				82,847				81,528				79,373				80,545
Accumulated deficit		(130,511		)		(137,314		)		(133,821		)		(142,267		)		(150,815		)
Accumulated other comprehensive income (loss)		12,306				203				7,036				(786		)		10,328
Total shareholders' equity		509,358				494,614				503,261				488,847				572,925
Non-controlling interest		19				25				—				—				—
Total equity		509,377				494,639				503,261				488,847				572,925
Total liabilities and equity		$	5,242,202			$	5,131,288			$	5,021,833			$	4,967,851			$	4,965,925

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)	TABLE 4

		Three Months Ended
		Mar 31,				Dec 31,				Sep 30,				Jun 30,				Mar 31,
(Dollars in thousands, except per share data)		2016				2015				2015				2015				2015
Interest income:
Interest and fees on loans and leases		$	31,793			$	30,565			$	30,148			$	29,572			$	28,602
Interest and dividends on investment securities:
Taxable interest		8,396				8,282				8,260				8,277				8,150
Tax-exempt interest		996				1,006				1,008				1,010				998
Dividends		10				10				9				8				9
Interest on deposits in other banks		17				7				6				11				11
Dividends on Federal Home Loan Bank stock		37				46				11				18				11
Total interest income		41,249				39,916				39,442				38,896				37,781
Interest expense:
Interest on deposits:
Demand		111				101				104				99				95
Savings and money market		263				238				230				225				223
Time		898				647				568				549				548
Interest on short-term borrowings		50				59				73				79				43
Interest on long-term debt		716				677				662				650				637
Total interest expense		2,038				1,722				1,637				1,602				1,546
Net interest income		39,211				38,194				37,805				37,294				36,235
Provision (credit) for loan and lease losses		(747		)		(1,958		)		(3,647		)		(7,319		)		(2,747		)
Net interest income after provision for loan and lease losses		39,958				40,152				41,452				44,613				38,982
Other operating income:
Service charges on deposit accounts		1,964				1,999				1,947				1,915				1,968
Loan servicing fees		1,362				1,399				1,407				1,427				1,423
Other service charges and fees		2,767				2,772				2,803				2,781				3,105
Income from fiduciary activities		840				825				854				830				834
Equity in earnings of unconsolidated subsidiaries		90				88				165				229				96
Fees on foreign exchange		148				98				126				98				128
Investment securities gains (losses)		—				—				—				(1,866		)		—
Income from bank-owned life insurance		625				465				434				461				674
Loan placement fees		46				146				202				225				147
Net gains on sales of residential loans		1,466				1,332				1,551				1,630				1,594
Net gains on sales of foreclosed assets		308				189				252				94				33
Other (refer to Table 5)		549				528				88				300				1,188
Total other operating income		10,165				9,841				9,829				8,124				11,190
Other operating expense:
Salaries and employee benefits		16,937				16,895				17,193				15,176				17,165
Net occupancy		3,314				3,981				3,547				3,403				3,501
Equipment		811				858				775				933				909
Amortization of other intangible assets		2,178				1,512				1,683				1,559				2,105
Communication expense		959				822				895				942				824
Legal and professional services		1,613				1,671				1,808				1,642				2,219
Computer software expense		2,704				2,067				2,286				2,382				2,096
Advertising expense		634				964				502				449				635
Foreclosed asset expense		15				154				3				257				72
Other (refer to Table 5)		3,710				3,652				3,483				5,715				4,492
Total other operating expense		32,875				32,576				32,175				32,458				34,018
Income before income taxes		17,248				17,417				19,106				20,279				16,154
Income tax expense		6,067				6,485				6,900				7,944				5,759
Net income		$	11,181			$	10,932			$	12,206			$	12,335			$	10,395
Per common share data:
Basic earnings per share		$	0.36			$	0.35			$	0.39			$	0.39			$	0.30
Diluted earnings per share		0.35				0.34				0.38				0.39				0.29
Cash dividends declared		0.14				0.46				0.12				0.12				0.12
Basic weighted average shares outstanding		31,263				31,318				31,331				31,525				34,827
Diluted weighted average shares outstanding		31,506				31,726				31,750				31,953				35,479

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Other Operating Income and Other Operating Expense - Other
(Unaudited)	TABLE 5

		Three Months Ended
		Mar 31,				Dec 31,				Sep 30,				Jun 30,				Mar 31,
(Dollars in thousands)		2016				2015				2015				2015				2015
Income recovered on nonaccrual loans previously charged-off		$	157			$	104			$	262			$	209			$	219
Other recoveries		21				17				244				15				274
Unrealized gains (losses) on loans-held-for-sale and interest rate locks		(79		)		54				(646		)		(198		)		466
Commissions on sale of checks		86				79				86				82				78
Other		364				274				142				192				151
Total other operating income - Other		$	549			$	528			$	88			$	300			$	1,188

		Three Months Ended
		Mar 31,				Dec 31,				Sep 30,				Jun 30,				Mar 31,
(Dollars in thousands)		2016				2015				2015				2015				2015
Charitable contributions		$	218			$	103			$	179			$	2,138			$	139
FDIC insurance assessment		639				622				685				701				698
Miscellaneous loan expenses		254				325				314				434				275
ATM and debit card expenses		428				407				365				180				586
Amortization of investments in low-income housing tax credit partnerships		257				258				258				274				288
Armored car expenses		201				254				213				195				234
Entertainment and promotions		231				405				191				266				197
Stationery and supplies		267				230				381				219				196
Directors’ fees and expenses		205				101				156				214				191
Provision (credit) for residential mortgage loan repurchase losses		(351		)		(596		)		(883		)		(32		)		159
Increase (decrease) to the reserve for unfunded commitments		44				(223		)		255				(272		)		(31		)
Other		1,317				1,766				1,369				1,398				1,560
Total other operating expense - Other		$	3,710			$	3,652			$	3,483			$	5,715			$	4,492

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Average Balances, Interest Income & Expense, Yields and Rates (Taxable Equivalent)
(Unaudited)	TABLE 6

		Three Months Ended											Three Months Ended											Three Months Ended
		March 31, 2016											December 31, 2015											March 31, 2015
		Average				Average							Average				Average							Average				Average
(Dollars in thousands)		Balance				Yield/Rate			Interest				Balance				Yield/Rate			Interest				Balance				Yield/Rate			Interest
ASSETS
Interest-earning assets:
Interest-bearing deposits in other banks		$	13,990			0.49	%		$	17			$	10,504			0.27	%		$	7			$	18,046			0.25	%		$	11
Investment securities, excluding valuation allowance:
Taxable		1,331,717				2.52			8,406				1,339,764				2.48			8,292				1,310,909				2.49			8,159
Tax-exempt		174,044				3.52			1,532				174,681				3.54			1,547				177,606				3.46			1,536
Total investment securities		1,505,761				2.64			9,938				1,514,445				2.60			9,839				1,488,515				2.61			9,695
Loans and leases, incl. loans held for sale		3,258,872				3.92			31,793				3,142,895				3.87			30,565				2,955,525				3.90			28,602
Federal Home Loan Bank stock		7,633				1.92			37				9,087				2.00			46				43,809				0.10			11
Total interest-earning assets		4,786,256				3.50			41,785				4,676,931				3.45			40,457				4,505,895				3.42			38,319
Noninterest-earning assets		362,488											372,301											383,827
Total assets		$	5,148,744										$	5,049,232										$	4,889,722
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits		$	827,502			0.05	%		$	111			$	804,544			0.05	%		$	101			$	787,717			0.05	%		$	95
Savings and money market deposits		1,427,733				0.07			263				1,322,220				0.07			238				1,248,867				0.07			223
Time deposits under $100,000		211,622				0.37			197				218,188				0.36			201				237,239				0.38			222
Time deposits $100,000 and over		888,683				0.32			701				851,796				0.21			446				836,232				0.16			326
Total interest-bearing deposits		3,355,540				0.15			1,272				3,196,748				0.12			986				3,110,055				0.11			866
Short-term borrowings		44,423				0.45			50				81,027				0.29			59				63,227				0.27			43
Long-term debt		92,785				3.10			716				92,785				2.90			677				92,785				2.78			637
Total interest-bearing liabilities		3,492,748				0.23			2,038				3,370,560				0.20			1,722				3,266,067				0.19			1,546
Noninterest-bearing deposits		1,112,530											1,131,160											1,013,238
Other liabilities		38,111											43,941											42,426
Total liabilities		4,643,389											4,545,661											4,321,731
Shareholders’ equity		505,330											503,570											567,991
Non-controlling interest		25											1											—
Total equity		505,355											503,571											567,991
Total liabilities and equity		$	5,148,744										$	5,049,232										$	4,889,722
Net interest income									$	39,747										$	38,735										$	36,773
Interest rate spread						3.27	%										3.25	%										3.23	%
Net interest margin						3.33	%										3.30	%										3.28	%

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Loans and Leases by Geographic Distribution
(Unaudited)	TABLE 7

		March 31,				December 31,				September 30,				June 30,				March 31,
(Dollars in thousands)		2016				2015				2015				2015				2015
HAWAII:
Commercial, financial and agricultural		$	358,432			$	339,738			$	335,919			$	341,468			$	318,228
Real estate:
Construction		98,203				81,655				72,071				80,168				109,256
Mortgage - residential		1,459,202				1,436,305				1,385,286				1,351,962				1,300,304
Mortgage - commercial		646,013				642,845				616,085				588,334				586,281
Consumer		267,855				273,248				263,568				254,655				249,151
Leases		936				1,028				1,123				2,589				2,885
Total loans and leases		2,830,641				2,774,819				2,674,052				2,619,176				2,566,105
Allowance for loan and lease losses		(52,068		)		(54,141		)		(56,150		)		(57,402		)		(60,676		)
Net loans and leases		$	2,778,573			$	2,720,678			$	2,617,902			$	2,561,774			$	2,505,429
U.S. MAINLAND:
Commercial, financial and agricultural		$	176,659			$	181,348			$	170,624			$	158,133			$	182,455
Real estate:
Construction		3,151				3,230				3,309				3,387				3,465
Mortgage - residential		—				—				—				—				—
Mortgage - commercial		127,023				117,904				120,900				106,859				114,975
Consumer		171,494				134,231				132,578				118,500				100,772
Leases		—				—				—				—				—
Total loans and leases		478,327				436,713				427,411				386,879				401,667
Allowance for loan and lease losses		(10,081		)		(9,173		)		(10,494		)		(9,522		)		(10,757		)
Net loans and leases		$	468,246			$	427,540			$	416,917			$	377,357			$	390,910
TOTAL:
Commercial, financial and agricultural		$	535,091			$	521,086			$	506,543			$	499,601			$	500,683
Real estate:
Construction		101,354				84,885				75,380				83,555				112,721
Mortgage - residential		1,459,202				1,436,305				1,385,286				1,351,962				1,300,304
Mortgage - commercial		773,036				760,749				736,985				695,193				701,256
Consumer		439,349				407,479				396,146				373,155				349,923
Leases		936				1,028				1,123				2,589				2,885
Total loans and leases		3,308,968				3,211,532				3,101,463				3,006,055				2,967,772
Allowance for loan and lease losses		(62,149		)		(63,314		)		(66,644		)		(66,924		)		(71,433		)
Net loans and leases		$	3,246,819			$	3,148,218			$	3,034,819			$	2,939,131			$	2,896,339

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Deposits
(Unaudited)	TABLE 8

		March 31,				December 31,				September 30,				June 30,				March 31,
(Dollars in thousands)		2016				2015				2015				2015				2015
Noninterest-bearing demand		$	1,140,741			$	1,145,244			$	1,112,761			$	1,080,428			$	1,042,781
Interest-bearing demand		849,880				824,895				785,936				807,851				806,555
Savings and money market		1,465,524				1,399,093				1,283,517				1,261,180				1,247,266
Time deposits less than $100,000		207,757				212,946				219,134				227,144				233,518
Core deposits		3,663,902				3,582,178				3,401,348				3,376,603				3,330,120
Government time deposits		644,877				664,756				640,708				612,979				663,569
Other time deposits $100,000 and over		187,823				186,505				188,447				192,740				194,953
Total time deposits $100,000 and over		832,700				851,261				829,155				805,719				858,522
Total deposits		4,496,602				4,433,439				4,230,503				4,182,322				4,188,642

CENTRAL PACIFIC FINANCIAL CORP AND SUBSIDIARIES
Nonperforming Assets, Past Due and Restructured Loans
(Unaudited)	TABLE 9

		March 31,				December 31,				September 30,				June 30,				March 31,
(Dollars in thousands)		2016				2015				2015				2015				2015
Nonaccrual loans (including loans held for sale):
Commercial, financial and agricultural		$	2,244			$	1,044			$	3,056			$	3,175			$	13,377
Real estate:
Construction		—				—				—				133				146
Mortgage - residential		5,527				6,130				6,301				10,032				11,430
Mortgage - commercial		6,913				7,094				2,731				13,490				12,468
Total nonaccrual loans		14,684				14,268				12,088				26,830				37,421
Other real estate owned ("OREO"):
Real estate:
Mortgage - residential		1,260				1,962				1,913				2,433				3,349
Mortgage - commercial		—				—				—				2,845				—
Total OREO		1,260				1,962				1,913				5,278				3,349
Total nonperforming assets ("NPAs")		15,944				16,230				14,001				32,108				40,770
Loans delinquent for 90 days or more:
Real estate:
Mortgage - residential		656				—				—				—				—
Consumer		125				273				130				45				5
Leases		—				—				—				—				—
Total loans delinquent for 90 days or more		781				273				130				45				5
Restructured loans still accruing interest:
Commercial, financial and agricultural		—				—				327				339				350
Real estate:
Construction		776				809				841				839				866
Mortgage - residential		16,197				16,224				17,592				16,428				17,084
Mortgage - commercial		3,128				3,224				2,253				1,360				1,516
Total restructured loans still accruing interest		20,101				20,257				21,013				18,966				19,816
Total NPAs, loans delinquent for 90 days or more and restructured loans still accruing interest		$	36,826			$	36,760			$	35,144			$	51,119			$	60,591
Total nonaccrual loans as a percentage of loans and leases		0.44		%		0.44		%		0.39		%		0.89		%		1.26		%
Total NPAs as a percentage of loans and leases and OREO		0.48		%		0.51		%		0.45		%		1.07		%		1.37		%
Total NPAs and loans delinquent for 90 days or more as a percentage of loans and leases and OREO		0.51		%		0.51		%		0.46		%		1.07		%		1.37		%
Total NPAs, loans delinquent for 90 days or more, and restructured loans still accruing interest as a percentage of loans and leases and OREO		1.11		%		1.14		%		1.13		%		1.70		%		2.04		%
Quarter-to-quarter changes in NPAs:
Balance at beginning of quarter		$	16,230			$	14,001			$	32,108			$	40,770			$	42,035
Additions		1,303				2,992				681				6,761				1,429
Reductions:
Payments		(754		)		(439		)		(4,002		)		(3,411		)		(1,712		)
Return to accrual status		(133		)		(216		)		(10,799		)		(274		)		(197		)
Sales of NPAs		(702		)		(71		)		(4,007		)		(8,280		)		(949		)
Charge-offs/valuation adjustments		—				(37		)		20				(3,458		)		164
Total reductions		(1,589		)		(763		)		(18,788		)		(15,423		)		(2,694		)
Balance at end of quarter		$	15,944			$	16,230			$	14,001			$	32,108			$	40,770

CENTRAL PACIFIC FINANCIAL CORP AND SUBSIDIARIES
Allowance for Loan and Lease Losses
(Unaudited)	TABLE 10

		Three Months Ended
		March 31,				December 31,				September 30,				June 30,				March 31,
(Dollars in thousands)		2016				2015				2015				2015				2015
Allowance for loan and lease losses:
Balance at beginning of period		$	63,314			$	66,644			$	66,924			$	71,433			$	74,040
Provision (credit) for loan and lease losses		(747		)		(1,958		)		(3,647		)		(7,319		)		(2,747		)
Charge-offs:
Commercial, financial and agricultural		352				554				170				4,003				931
Real estate:
Mortgage - residential		—				—				46				50				14
Mortgage - commercial		—				838				—				—				—
Consumer		1,112				721				874				1,214				1,841
Leases		—				—				—				—				—
Total charge-offs		1,464				2,113				1,090				5,267				2,786
Recoveries:
Commercial, financial and agricultural		349				411				504				3,279				594
Real estate:
Construction		9				10				283				464				123
Mortgage - residential		37				96				196				397				1,488
Mortgage - commercial		13				14				3,130				3,562				13
Consumer		638				210				317				375				708
Leases		—				—				27				—				—
Total recoveries		1,046				741				4,457				8,077				2,926
Net charge-offs (recoveries)		418				1,372				(3,367		)		(2,810		)		(140		)
Balance at end of period		$	62,149			$	63,314			$	66,644			$	66,924			$	71,433
Average loans and leases, net of unearned		$	3,258,872			$	3,142,895			$	3,070,384			$	2,981,184			$	2,955,525
Annualized ratio of net charge-offs (recoveries) to average loans and leases		0.05		%		0.17		%		(0.44		)%		(0.38		)%		(0.02		)%
Ratio of allowance for loan and lease losses to loans and leases		1.88		%		1.97		%		2.15		%		2.23		%		2.41		%