EX-99.1 2 exhibit99-1erq32017.htm EXHIBIT 99.1

Exhibit

Central Pacific Financial Corp. Reports $11.8 Million Third Quarter 2017 Earnings

Page 1

Exhibit 99

			FOR IMMEDIATE RELEASE
Investor Contact:	Isaac Okita	Media Contact:	Wayne Kirihara
	VP, Treasury Manager		EVP, Chief Marketing Officer
	(808) 544-3626		(808) 544-3687
	isaac.okita@centralpacificbank.com		wayne.kirihara@centralpacificbank.com

NEWS RELEASE

CENTRAL PACIFIC FINANCIAL CORP. REPORTS $11.8 MILLION

THIRD QUARTER 2017 EARNINGS

• Net income of $11.8 million, or fully diluted EPS of $0.39.

• ROA of 0.85% and ROE of 9.16%.

• Total loans increased by $44.6 million, or 1.2% sequentially and 5.7% year-over-year.

• Total deposits increased by $41.1 million, or 0.8% sequentially and 9.0% year-over-year. Core deposits increased by $11.7 million, or 0.3% sequentially and 9.2% year-over-year.

HONOLULU, HI, October 25, 2017 – Central Pacific Financial Corp. (NYSE: CPF), (the "Company"), today reported net income in the third quarter of 2017 of $11.8 million, or diluted earnings per share ("EPS") of $0.39, compared to net income in the third quarter of 2016 of $11.5 million, or EPS of $0.37, and net income in the second quarter of 2017 of $12.0 million, or EPS of $0.39. Net income in the nine months ended September 30, 2017 totaled $36.9 million, or EPS of $1.20, compared to net income in the nine months ended September 30, 2016 of $34.8 million, or EPS of $1.11.

"Continued stable loan and deposit growth, as well as improved asset quality, were achieved with the favorable economic conditions in Hawaii and the execution of our business plan," said Catherine Ngo, President and CEO. "We are also on track with our capital plan and stock repurchase program."

In October 2017, the Company's Board of Directors declared a quarterly cash dividend of $0.18 per share on its outstanding common shares. The dividend will be payable on December 15, 2017 to shareholders of record at the close of business on November 30, 2017.

During the third quarter of 2017, the Company repurchased 335,112 shares of common stock at a total cost of $10.1 million, or an average cost per share of $30.13. During the nine months ended September 30, 2017, the Company repurchased 697,483 shares of common stock, or approximately 2.3% of its common stock outstanding as of December 31, 2016. Total cost of the shares repurchased during the nine months ended September 30, 2017 was $21.3 million, or an average cost per share of $30.54. The Company's remaining repurchase authority under its common stock repurchase program at September 30, 2017 is $8.7 million.

Central Pacific Financial Corp. Reports $11.8 Million Third Quarter 2017 Earnings

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Earnings Highlights

Net interest income for the third quarter of 2017 was $42.0 million, compared to $39.4 million in the year-ago quarter and $41.6 million in the previous quarter. Net interest margin was 3.25%, compared to 3.29% in the previous quarter and remained unchanged from 3.25% in the year-ago quarter. The increase in net interest income from the year-ago and sequential quarters was primarily attributable to the growth in the loan and investment securities portfolios, combined with increases in yields earned on the loan portfolio. The sequential quarter decrease in the net interest margin is primarily due to higher time deposit cost attributable to the recent increases in the federal funds rate.

Other operating income for the third quarter of 2017 totaled $9.6 million, compared to $10.0 million in the year-ago quarter and $7.9 million in the previous quarter. The decrease from the year-ago quarter was primarily due to lower mortgage banking income of $1.0 million, partially offset by higher income from bank-owned life insurance of $0.5 million. The higher income from bank-owned life insurance was primarily attributable to death benefit income totaling $0.4 million recorded in the current quarter. The sequential quarter increase was primarily due to investment securities losses of $1.6 million related to the investment portfolio repositioning completed last quarter.

Other operating expense for the third quarter of 2017 totaled $33.5 million, which increased from $32.3 million in the year-ago quarter and increased from $32.3 million in the previous quarter. The increase from the year-ago quarter was primarily due to higher salaries and employee benefits of $0.7 million, combined with higher entertainment and promotions expenses of $0.6 million (included in other). The increase in entertainment and promotions expense was attributable to a recent core deposit gathering campaign. The sequential quarter increase was primarily due to higher entertainment and promotions expenses of $0.6 million and higher advertising expenses of $0.2 million attributable to the core deposit campaign, combined with higher salaries and employee benefits and computer software expenses of $0.2 million each.

The efficiency ratio for the third quarter of 2017 was 65.0%, compared to 65.3% in both the year-ago and previous quarters. The efficiency ratio during the current quarter was positively impacted by higher net interest income, offset by the aforementioned higher other operating expenses. The efficiency ratio last quarter was negatively impacted by the aforementioned investment securities loss of $1.6 million.

In the third quarter of 2017, the Company recorded income tax expense of $6.4 million, compared to $6.4 million in the year-ago quarter and $7.4 million in the previous quarter. The effective tax rate for the third quarter of 2017 was 35.0%, compared to 35.8% in the year-ago quarter and 38.2% in the previous quarter. The effective tax rate in the current quarter was positively impacted by the aforementioned death benefit income from bank-owned life insurance which is tax-exempt. The effective tax rate last quarter was negatively impacted by $0.9 million in additional income tax expense related to a former executive's supplemental executive retirement plan ("SERP") benefit payout and adjustment to the deferred tax asset related to the SERP.

Balance Sheet Highlights

Total assets at September 30, 2017 of $5.57 billion increased by $249.3 million, or 4.7% from September 30, 2016, and increased by $36.1 million, or 0.7% from June 30, 2017.

Total loans and leases at September 30, 2017 of $3.64 billion increased by $196.7 million, or 5.7% and $44.6 million, or 1.2% from September 30, 2016 and June 30, 2017, respectively.  The increase in total loans and leases from September 30, 2016 was primarily attributable to strong organic growth in the Hawaii loan portfolios, offset by reductions in the U.S. mainland commercial and other consumer loan portfolios. The increase in total loans and leases from the second quarter of 2017 was primarily due to strong organic growth in the Hawaii loan portfolios, offset by reductions in the U.S. mainland commercial, automobile, and other consumer loan portfolios.

Total deposits at September 30, 2017 of $4.93 billion increased by $408.9 million, or 9.0% from September 30, 2016, and increased by $41.1 million, or 0.8% from June 30, 2017.  Core deposits, which include demand deposits, savings and money market deposits, and time deposits less than $100,000, totaled $3.96 billion at September 30, 2017.  This represents an increase of $334.1 million, or 9.2% from September 30, 2016, and an increase of $11.7 million, or 0.3% from June 30, 2017.

Asset Quality

Nonperforming assets at September 30, 2017 totaled $6.0 million, or 0.11% of total assets, compared to $11.7 million, or 0.22% of total assets at September 30, 2016, and $9.0 million, or 0.16% of total assets at June 30, 2017.

Central Pacific Financial Corp. Reports $11.8 Million Third Quarter 2017 Earnings

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Loans delinquent for 90 days or more still accruing interest totaled $0.4 million at September 30, 2017, compared to $0.4 million and $0.3 million at September 30, 2016 and June 30, 2017, respectively.

Net charge-offs in the third quarter of 2017 totaled $1.5 million, compared to net charge-offs of $0.6 million in the year-ago quarter, and net charge-offs of $0.3 million in the previous quarter. Net charge-offs increased in the current quarter primarily due to fewer recoveries than the year-ago and previous quarters.

In the third quarter of 2017, the Company recorded a credit to the provision for loan and lease losses of $0.1 million, compared to a credit of $0.7 million in the year-ago quarter and a credit of $2.3 million in the previous quarter. The allowance for loan and lease losses, as a percentage of total loans and leases at September 30, 2017 was 1.41%, compared to 1.73% at September 30, 2016 and 1.47% at June 30, 2017.

Capital

Total shareholders' equity was $509.8 million at September 30, 2017, compared to $519.5 million and $512.9 million at September 30, 2016 and June 30, 2017, respectively.

The Company maintained its strong capital position and its capital ratios continue to exceed the levels required to be considered a "well-capitalized" institution for regulatory purposes under Basel III. At September 30, 2017, the Company's leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ratios were 10.6%, 15.1%, 16.3%, and 12.8%, respectively, compared to 10.7%, 15.2%, 16.4%, and 12.9%, respectively, at June 30, 2017.

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

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 November 25, 2017 by dialing 1-877-344-7529 (passcode: 10113140) and on the Company's website. Information which may be discussed in the conference call regarding non-GAAP financial performance and reconciliation to GAAP financial performance is provided on the Company's website at http://ir.centralpacificbank.com.

About Central Pacific Financial Corp.

Central Pacific Financial Corp. is a Hawaii-based bank holding company with approximately $5.6 billion in assets.  Central Pacific Bank, its primary subsidiary, operates 35 branches and 81 ATMs in the state of Hawaii, as of September 30, 2017.  For additional information, please visit the Company's website at http://www.centralpacificbank.com.

Central Pacific Financial Corp. Reports $11.8 Million Third Quarter 2017 Earnings

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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 or actions 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;  the impact of regulatory action on the Company and Central Pacific Bank and legislation affecting the financial services 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, including fintech businesses; 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 Board and other accounting standard setters; changes in our capital position; our ability to attract and retain skilled directors, 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																				Nine Months Ended
(Dollars in thousands,		Sep 30,				Jun 30,				Mar 31,				Dec 31,				Sep 30,				Sep 30,
except for per share amounts)		2017				2017				2017				2016				2016				2017				2016
CONDENSED INCOME STATEMENT
Net interest income		$	41,995			$	41,629			$	41,255			$	39,704			$	39,426			$	124,879			$	118,246
Provision (credit) for loan and lease losses		(126		)		(2,282		)		(80		)		(2,645		)		(743		)		(2,488		)		(2,872		)
Net interest income after provision (credit) for loan and lease losses		42,121				43,911				41,335				42,349				40,169				127,367				121,118
Total other operating income (1)		9,569				7,870				10,014				13,769				9,954				27,453				28,547
Total other operating expense (1)		33,511				32,335				31,460				37,472				32,265				97,306				96,091
Income before taxes		18,179				19,446				19,889				18,646				17,858				57,514				53,574
Income tax expense		6,367				7,421				6,810				6,438				6,392				20,598				18,790
Net income		11,812				12,025				13,079				12,208				11,466				36,916				34,784
Basic earnings per common share		$	0.39			$	0.39			$	0.43			$	0.40			$	0.37			$	1.21			$	1.12
Diluted earnings per common share		0.39				0.39				0.42				0.39				0.37				1.20				1.11
Dividends declared per common share		0.18				0.18				0.16				0.16				0.16				0.52				0.44
PERFORMANCE RATIOS
Return on average assets (2)		0.85		%		0.88		%		0.96		%		0.92		%		0.87		%		0.90		%		0.89		%
Return on average shareholders’ equity (2)		9.16				9.32				10.24				9.46				8.81				9.57				9.05
Return on average tangible shareholders’ equity (2)		9.22				9.39				10.33				9.56				8.91				9.64				9.17
Average shareholders’ equity to average assets		9.30				9.44				9.42				9.67				9.89				9.38				9.81
Efficiency ratio (3)		64.99				65.32				61.36				70.08				65.34				63.88				65.46
Net interest margin (2)		3.25				3.29				3.30				3.22				3.25				3.28				3.29
Dividend payout ratio (4)		46.15				46.15				38.10				41.03				43.24				43.33				39.64
SELECTED AVERAGE BALANCES
Average loans and leases, including loans held for sale		$	3,625,455			$	3,593,347			$	3,547,718			$	3,489,757			$	3,415,505			$	3,589,124			$	3,350,817
Average interest-earning assets		5,216,089				5,138,038				5,095,455				4,981,766				4,902,151				5,150,302				4,859,757
Average assets		5,545,909				5,467,461				5,422,529				5,335,909				5,266,588				5,479,085				5,221,306
Average deposits		4,893,778				4,800,815				4,762,874				4,558,589				4,486,064				4,819,635				4,471,106
Average interest-bearing liabilities		3,613,872				3,600,761				3,626,229				3,568,767				3,532,334				3,613,575				3,530,212
Average shareholders’ equity		515,580				515,974				510,804				516,067				520,757				514,137				512,311
Average tangible shareholders' equity		512,554				512,254				506,366				511,004				515,020				510,414				505,919

		Sep 30,				Jun 30,				Mar 31,				Dec 31,				Sep 30,
(dollars in thousands)		2017				2017				2017				2016				2016
REGULATORY CAPITAL
Central Pacific Financial Corp.
Leverage capital		$	585,950			$	584,441			$	577,081			$	562,460			$	567,891
Tier 1 risk-based capital		585,950				584,441				577,081				562,460				567,891
Total risk-based capital		634,677				632,780				624,735				612,202				616,858
Common equity tier 1 capital		497,828				497,172				491,538				485,268				487,097
Central Pacific Bank
Leverage capital		569,990				564,765				560,921				541,577				545,578
Tier 1 risk-based capital		569,990				564,765				560,921				541,577				545,578
Total risk-based capital		618,576				612,968				608,450				591,185				594,407
Common equity tier 1 capital		569,990				564,765				560,921				541,577				545,578
REGULATORY CAPITAL RATIOS
Central Pacific Financial Corp.
Leverage capital ratio		10.6		%		10.7		%		10.7		%		10.6		%		10.9		%
Tier 1 risk-based capital ratio		15.1				15.2				15.2				14.2				14.6
Total risk-based capital ratio		16.3				16.4				16.5				15.5				15.9
Common equity tier 1 capital ratio		12.8				12.9				13.0				12.3				12.5
Central Pacific Bank
Leverage capital ratio		10.3				10.4				10.4				10.2				10.6
Tier 1 risk-based capital ratio		14.7				14.7				14.8				13.7				14.1
Total risk-based capital ratio		16.0				15.9				16.1				15.0				15.3
Common equity tier 1 capital ratio		14.7				14.7				14.8				13.7				14.1

		Sep 30,				Jun 30,				Mar 31,				Dec 31,				Sep 30,
(dollars in thousands, except for per share amounts)		2017				2017				2017				2016				2016
BALANCE SHEET
Loans and leases		$	3,636,370			$	3,591,735			$	3,545,718			$	3,524,890			$	3,439,654
Total assets		5,569,230				5,533,135				5,443,181				5,384,236				5,319,947
Total deposits		4,927,497				4,886,382				4,777,444				4,608,201				4,518,578
Long-term debt		92,785				92,785				92,785				92,785				92,785
Total shareholders’ equity		509,846				512,930				511,536				504,650				519,466
Total shareholders’ equity to total assets		9.15		%		9.27		%		9.40		%		9.37		%		9.76		%
Tangible common equity to tangible assets (5)		9.11		%		9.22		%		9.33		%		9.29		%		9.67		%
ASSET QUALITY
Allowance for loan and lease losses		$	51,217			$	52,828			$	55,369			$	56,631			$	59,384
Non-performing assets		5,970				9,042				8,834				9,187				11,666
Allowance to loans and leases outstanding		1.41		%		1.47		%		1.56		%		1.61		%		1.73		%
Allowance to non-performing assets		857.91				584.25				626.77				616.43				509.03
PER SHARE OF COMMON STOCK OUTSTANDING
Book value per common share		$	16.89			$	16.81			$	16.66			$	16.39			$	16.79
Tangible book value per common share		16.80				16.70				16.53				16.23				16.62
Closing market price per common share		32.18				31.47				30.54				31.42				25.19
(1) Loan servicing fees, amortization of mortgage servicing rights, net gain on sale of residential mortgage loans, and unrealized gain (loss) on interest rate locks have been reclassified into mortgage banking income in the consolidated statements of income. Prior period amounts in the consolidated statements of income have been reclassified to conform to the current period presentation.
(2) Annualized.
(3) Efficiency ratio is defined as total operating expense divided by total revenue (net interest income and total other operating income). Prior period amounts have been revised to conform to current period which reflects reclassifications referred to in note (1).
(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 in Table 2.

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

		September 30,				June 30,				March 31,				December 31,				September 30,
(Dollars in thousands)		2017				2017				2017				2016				2016
Tangible Common Equity Ratio:
Total shareholders’ equity		$	509,846			$	512,930			$	511,536			$	504,650			$	519,466
Less: Other intangible assets		(2,674		)		(3,343		)		(4,012		)		(4,680		)		(5,349		)
Tangible common equity		$	507,172			$	509,587			$	507,524			$	499,970			$	514,117
Total assets		$	5,569,230			$	5,533,135			$	5,443,181			$	5,384,236			$	5,319,947
Less: Other intangible assets		(2,674		)		(3,343		)		(4,012		)		(4,680		)		(5,349		)
Tangible assets		$	5,566,556			$	5,529,792			$	5,439,169			$	5,379,556			$	5,314,598
Tangible common equity to tangible assets		9.11		%		9.22		%		9.33		%		9.29		%		9.67		%

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

		September 30,				June 30,				March 31,				December 31,				September 30,
(Dollars in thousands, except share data)		2017				2017				2017				2016				2016
ASSETS
Cash and due from banks		$	90,080			$	85,975			$	83,670			$	75,272			$	79,647
Interest-bearing deposits in other banks		18,195				54,576				22,363				9,069				23,727
Investment securities:
Available for sale		1,350,105				1,315,895				1,302,889				1,243,847				1,262,224
Held to maturity, fair value of: $195,714 at September 30, 2017, $203,334 at June 30, 2017, $208,181 at March 31, 2017, $214,366 at December 31, 2016, and $230,529 at September 30, 2016		197,672				204,588				211,426				217,668				226,573
Total investment securities		1,547,777				1,520,483				1,514,315				1,461,515				1,488,797
Loans held for sale		10,828				13,288				9,905				31,881				12,755
Loans and leases		3,636,370				3,591,735				3,545,718				3,524,890				3,439,654
Less allowance for loan and lease losses		51,217				52,828				55,369				56,631				59,384
Net loans and leases		3,585,153				3,538,907				3,490,349				3,468,259				3,380,270
Premises and equipment, net		48,339				49,252				48,303				48,258				48,242
Accrued interest receivable		15,434				15,636				14,819				15,675				14,554
Investment in unconsolidated subsidiaries		7,101				6,189				6,279				6,889				7,011
Other real estate owned		851				1,008				851				791				791
Mortgage servicing rights		16,093				15,932				15,847				15,779				15,638
Other intangible assets		2,674				3,343				4,012				4,680				5,349
Bank-owned life insurance		155,928				156,053				155,019				155,593				155,233
Federal Home Loan Bank stock		6,484				6,492				7,333				11,572				12,173
Other assets		64,293				66,001				70,116				79,003				75,760
Total assets		$	5,569,230			$	5,533,135			$	5,443,181			$	5,384,236			$	5,319,947
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand		$	1,383,548			$	1,383,754			$	1,290,632			$	1,265,246			$	1,194,557
Interest-bearing demand		911,273				917,956				898,306				862,991				849,128
Savings and money market		1,476,017				1,453,108				1,430,399				1,390,600				1,379,484
Time		1,156,659				1,131,564				1,158,107				1,089,364				1,095,409
Total deposits		4,927,497				4,886,382				4,777,444				4,608,201				4,518,578
Short-term borrowings		—				—				21,000				135,000				150,000
Long-term debt		92,785				92,785				92,785				92,785				92,785
Other liabilities		39,078				41,013				40,391				43,575				39,092
Total liabilities		5,059,360				5,020,180				4,931,620				4,879,561				4,800,455
Equity:
Preferred stock, no par value, authorized 1,000,000 shares; issued and outstanding none at: September 30, 2017, June 30, 2017, March 31, 2017, December 31, 2016, and September 30, 2016		—				—				—				—				—
Common stock, no par value, authorized 185,000,000 shares; issued and outstanding: 30,188,748 at September 30, 2017, 30,514,799 at June 30, 2017, 30,701,219 at March 31, 2017, 30,796,243 at December 31, 2016, and 30,930,598 at September 30, 2016		509,243				519,383				527,403				530,932				534,856
Surplus		85,300				84,592				84,678				84,180				84,207
Accumulated deficit		(87,913		)		(94,269		)		(100,784		)		(108,941		)		(116,225		)
Accumulated other comprehensive income (loss)		3,216				3,224				239				(1,521		)		16,628
Total shareholders' equity		509,846				512,930				511,536				504,650				519,466
Non-controlling interest		24				25				25				25				26
Total equity		509,870				512,955				511,561				504,675				519,492
Total liabilities and equity		$	5,569,230			$	5,533,135			$	5,443,181			$	5,384,236			$	5,319,947

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

		Three Months Ended																				Nine Months Ended
		Sep 30,				Jun 30,				Mar 31,				Dec 31,				Sep 30,				Sep 30,
(Dollars in thousands, except per share data)		2017				2017				2017				2016				2016				2017				2016
Interest income:
Interest and fees on loans and leases		$	36,289			$	35,531			$	34,957			$	33,973			$	33,384			$	106,777			$	98,055
Interest and dividends on investment securities:
Taxable interest		8,540				8,481				8,135				7,203				7,296				25,156				23,645
Tax-exempt interest		966				974				979				989				995				2,919				2,986
Dividends		12				12				12				12				10				36				30
Interest on deposits in other banks		163				61				74				22				17				298				45
Dividends on Federal Home Loan Bank stock		23				21				56				56				63				100				123
Total interest income		45,993				45,080				44,213				42,255				41,765				135,286				124,884
Interest expense:
Interest on deposits:
Demand		177				154				140				129				126				471				360
Savings and money market		281				259				257				257				254				797				786
Time		2,637				2,136				1,717				1,175				1,044				6,490				2,899
Interest on short-term borrowings		9				46				31				191				160				86				387
Interest on long-term debt		894				856				813				799				755				2,563				2,206
Total interest expense		3,998				3,451				2,958				2,551				2,339				10,407				6,638
Net interest income		41,995				41,629				41,255				39,704				39,426				124,879				118,246
Provision (credit) for loan and lease losses		(126		)		(2,282		)		(80		)		(2,645		)		(743		)		(2,488		)		(2,872		)
Net interest income after provision for loan and lease losses		42,121				43,911				41,335				42,349				40,169				127,367				121,118
Other operating income:
Mortgage banking income (refer to Table 5)		1,531				1,957				1,943				2,845				2,561				5,431				5,224
Service charges on deposit accounts		2,182				2,120				2,036				2,065				1,954				6,338				5,826
Other service charges and fees		3,185				3,053				2,748				2,833				2,821				8,986				8,616
Income from fiduciary activities		911				964				864				858				880				2,739				2,577
Equity in earnings of unconsolidated subsidiaries		176				151				61				267				182				388				456
Fees on foreign exchange		101				130				163				116				129				394				403
Investment securities gains (losses)		—				(1,640		)		—				—				—				(1,640		)		—
Income from bank-owned life insurance		1,074				583				1,117				273				555				2,774				2,412
Loan placement fees		86				146				134				175				140				366				319
Net gains on sales of foreclosed assets		19				84				102				1				57				205				606
Gain on sale of premises and equipment		—				—				—				3,537				—				—				—
Other (refer to Table 5)		304				322				846				799				675				1,472				2,108
Total other operating income		9,569				7,870				10,014				13,769				9,954				27,453				28,547
Other operating expense:
Salaries and employee benefits		18,157				17,983				17,387				21,254				17,459				53,527				52,246
Net occupancy		3,404				3,335				3,414				3,606				3,588				10,153				10,459
Equipment		969				967				842				967				852				2,778				2,432
Amortization of core deposit premium		669				669				668				669				669				2,006				2,006
Communication expense		944				891				900				868				948				2,735				2,826
Legal and professional services		1,854				1,987				1,792				1,821				1,699				5,633				5,035
Computer software expense		2,346				2,190				2,252				2,332				2,217				6,788				7,143
Advertising expense		626				390				392				562				772				1,408				1,839
Foreclosed asset expense		24				63				36				16				72				123				136
Other (refer to Table 5)		4,518				3,860				3,777				5,377				3,989				12,155				11,969
Total other operating expense		33,511				32,335				31,460				37,472				32,265				97,306				96,091
Income before income taxes		18,179				19,446				19,889				18,646				17,858				57,514				53,574
Income tax expense		6,367				7,421				6,810				6,438				6,392				20,598				18,790
Net income		$	11,812			$	12,025			$	13,079			$	12,208			$	11,466			$	36,916			$	34,784
Per common share data:
Basic earnings per share		$	0.39			$	0.39			$	0.43			$	0.40			$	0.37			$	1.21			$	1.12
Diluted earnings per share		0.39				0.39				0.42				0.39				0.37				1.20				1.11
Cash dividends declared		0.18				0.18				0.16				0.16				0.16				0.52				0.44
Basic weighted average shares outstanding		30,300,195				30,568,247				30,714,895				30,770,528				30,943,756				30,526,260				31,088,729
Diluted weighted average shares outstanding		30,514,459				30,803,725				31,001,238				31,001,246				31,142,128				30,758,989				31,277,402

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

The following table sets forth the components of mortgage banking income for the periods indicated:

		Three Months Ended																				Nine Months Ended
		Sep 30,				Jun 30,				Mar 31,				Dec 31,				Sep 30,				September 30,
(Dollars in thousands)		2017				2017				2017				2016				2016				2017				2016
Mortgage banking income:
Loan servicing fees		$	1,323			$	1,340			$	1,358			$	1,340			$	1,357			$	4,021			$	4,081
Amortization of mortgage servicing rights		(476		)		(547		)		(520		)		(781		)		(1,021		)		(1,543		)		(4,285		)
Net gains on sales of residential mortgage loans		705				1,084				1,312				2,108				2,212				3,101				5,523
Unrealized gains (losses) on loans-held-for-sale and interest rate locks		(21		)		80				(207		)		178				13				(148		)		(95		)
Total mortgage banking income		$	1,531			$	1,957			$	1,943			$	2,845			$	2,561			$	5,431			$	5,224

The following table sets forth the components of other operating income - other for the periods indicated:

		Three Months Ended																				Nine Months Ended
		Sep 30,				Jun 30,				Mar 31,				Dec 31,				Sep 30,				September 30,
(Dollars in thousands)		2017				2017				2017				2016				2016				2017				2016
Other operating income - other:
Income recovered on nonaccrual loans previously charged-off		$	25			$	25			$	561			$	444			$	423			$	611			$	881
Other recoveries		32				54				37				19				24				123				294
Commissions on sale of checks		86				85				87				84				84				258				256
Other		161				158				161				252				144				480				677
Total other operating income - other		$	304			$	322			$	846			$	799			$	675			$	1,472			$	2,108

The following table sets forth the components of other operating expense - other for the periods indicated:

		Three Months Ended																				Nine Months Ended
		Sep 30,				Jun 30,				Mar 31,				Dec 31,				Sep 30,				September 30,
(Dollars in thousands)		2017				2017				2017				2016				2016				2017				2016
Other operating expense - other:
Charitable contributions		$	141			$	136			$	151			$	102			$	156			$	428			$	558
FDIC insurance assessment		433				429				424				420				430				1,286				1,632
Miscellaneous loan expenses		302				293				261				271				358				856				918
ATM and debit card expenses		548				468				450				444				451				1,466				1,327
Amortization of investments in low-income housing tax credit partnerships		174				223				233				271				259				630				774
Armored car expenses		176				198				258				219				258				632				660
Entertainment and promotions		818				246				158				449				198				1,222				652
Stationery and supplies		204				230				178				221				242				612				681
Directors’ fees and expenses		208				250				207				208				215				665				619
Provision (credit) for residential mortgage loan repurchase losses		—				—				—				—				—				—				(387		)
Increase (decrease) to the reserve for unfunded commitments		72				53				70				40				37				195				101
Branch consolidation and relocation costs		—				—				—				737				—				—				—
Other		1,442				1,334				1,387				1,995				1,385				4,163				4,434
Total other operating expense - other		$	4,518			$	3,860			$	3,777			$	5,377			$	3,989			$	12,155			$	11,969

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
		September 30, 2017											June 30, 2017											September 30, 2016
		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		$	51,392			1.26	%		$	163			$	22,840			1.07	%		$	61			$	14,140			0.49	%		$	17
Investment securities, excluding valuation allowance:
Taxable		1,363,289				2.51			8,552				1,344,467				2.53			8,493				1,288,569				2.27			7,306
Tax-exempt		169,347				3.51			1,486				170,169				3.52			1,499				172,743				3.54			1,531
Total investment securities		1,532,636				2.62			10,038				1,514,636				2.64			9,992				1,461,312				2.42			8,837
Loans and leases, incl. loans held for sale		3,625,455				3.98			36,289				3,593,347				3.96			35,531				3,415,505				3.90			33,384
Federal Home Loan Bank stock		6,606				1.38			23				7,215				1.17			21				11,194				2.25			63
Total interest-earning assets		5,216,089				3.55			46,513				5,138,038				3.55			45,605				4,902,151				3.44			42,301
Noninterest-earning assets		329,820											329,423											364,437
Total assets		$	5,545,909										$	5,467,461										$	5,266,588
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits		$	916,885			0.08	%		$	177			$	890,827			0.07	%		$	154			$	851,775			0.06	%		$	126
Savings and money market deposits		1,458,393				0.08			281				1,426,092				0.07			259				1,367,459				0.07			254
Time deposits under $100,000		187,231				0.41			192				191,833				0.39			188				202,719				0.37			190
Time deposits $100,000 and over		955,644				1.02			2,445				981,174				0.80			1,948				892,188				0.38			854
Total interest-bearing deposits		3,518,153				0.35			3,095				3,489,926				0.29			2,549				3,314,141				0.17			1,424
Short-term borrowings		2,934				1.27			9				18,050				1.03			46				125,408				0.50			160
Long-term debt		92,785				3.82			894				92,785				3.70			856				92,785				3.24			755
Total interest-bearing liabilities		3,613,872				0.44			3,998				3,600,761				0.38			3,451				3,532,334				0.26			2,339
Noninterest-bearing deposits		1,375,625											1,310,889											1,171,923
Other liabilities		40,808											39,812											41,558
Total liabilities		5,030,305											4,951,462											4,745,815
Shareholders’ equity		515,580											515,974											520,757
Non-controlling interest		24											25											16
Total equity		515,604											515,999											520,773
Total liabilities and equity		$	5,545,909										$	5,467,461										$	5,266,588
Net interest income									$	42,515										$	42,154										$	39,962
Interest rate spread						3.11	%										3.17	%										3.18	%
Net interest margin						3.25	%										3.29	%										3.25	%

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Average Balances, Interest Income & Expense, Yields and Rates (Taxable Equivalent)
(Unaudited)	TABLE 7

		Nine Months Ended											Nine Months Ended
		September 30, 2017											September 30, 2016
		Average				Average							Average				Average
(Dollars in thousands)		Balance				Yield/Rate			Interest				Balance				Yield/Rate			Interest
ASSETS
Interest-earning assets:
Interest-bearing deposits in other banks		$	38,089			1.05	%		$	298			$	12,365			0.48	%		$	45
Investment securities, excluding valuation allowance:
Taxable		1,346,013				2.50			25,192				1,312,866				2.40			23,675
Tax-exempt		170,211				3.52			4,491				173,392				3.53			4,593
Total investment securities		1,516,224				2.61			29,683				1,486,258				2.54			28,268
Loans and leases, including loans held for sale		3,589,124				3.97			106,777				3,350,817				3.91			98,055
Federal Home Loan Bank stock		6,865				1.94			100				10,317				1.59			123
Total interest earning assets		5,150,302				3.55			136,858				4,859,757				3.47			126,491
Noninterest-earning assets		328,783											361,549
Total assets		$	5,479,085										$	5,221,306
LIABILITIES AND EQUITY
Interest-bearing liabilities:
Interest-bearing demand deposits		$	895,850			0.07	%		$	471			$	841,002			0.06	%		$	360
Savings and money market deposits		1,434,778				0.07			797				1,410,159				0.07			786
Time deposits under $100,000		190,877				0.39			560				207,222				0.38			582
Time deposits $100,000 and over		987,408				0.80			5,930				872,900				0.35			2,317
Total interest-bearing deposits		3,508,913				0.30			7,758				3,331,283				0.16			4,045
Short-term borrowings		11,877				0.97			86				106,144				0.49			387
Long-term debt		92,785				3.69			2,563				92,785				3.18			2,206
Total interest-bearing liabilities		3,613,575				0.39			10,407				3,530,212				0.25			6,638
Noninterest-bearing deposits		1,310,722											1,139,823
Other liabilities		40,626											38,942
Total liabilities		4,964,923											4,708,977
Shareholders’ equity		514,137											512,311
Non-controlling interest		25											18
Total equity		514,162											512,329
Total liabilities and equity		$	5,479,085										$	5,221,306
Net interest income									$	126,451										$	119,853
Interest rate spread						3.16	%										3.22	%
Net interest margin						3.28	%										3.29	%

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Loans and Leases by Geographic Distribution
(Unaudited)	TABLE 8

		September 30,				June 30,				March 31,				December 31,				September 30,
(Dollars in thousands)		2017				2017				2017				2016				2016
HAWAII:
Commercial, financial and agricultural		$	398,619			$	395,512			$	395,915			$	373,006			$	367,527
Real estate:
Construction		95,309				91,080				89,970				97,873				105,234
Residential mortgage		1,267,144				1,249,617				1,237,150				1,217,234				1,160,741
Home equity		396,812				394,720				370,856				361,209				351,256
Commercial mortgage		801,113				767,661				776,098				767,586				742,584
Consumer:
Automobiles		151,487				146,223				137,252				131,037				125,556
Other consumer		162,219				159,685				162,987				177,122				163,703
Leases		448				523				598				677				756
Total loans and leases		3,273,151				3,205,021				3,170,826				3,125,744				3,017,357
Allowance for loan and lease losses		(46,337		)		(47,185		)		(49,146		)		(49,350		)		(50,948		)
Net loans and leases		$	3,226,814			$	3,157,836			$	3,121,680			$	3,076,394			$	2,966,409
U.S. MAINLAND:
Commercial, financial and agricultural		$	88,566			$	104,380			$	107,133			$	137,434			$	140,457
Real estate:
Construction		2,677				2,757				4,137				3,665				2,994
Residential mortgage		—				—				—				—				—
Home equity		—				—				—				—				—
Commercial mortgage		139,079				127,351				117,690				117,853				120,133
Consumer:
Automobiles		98,310				110,635				96,663				81,889				91,970
Other consumer		34,587				41,591				49,269				58,305				66,743
Leases		—				—				—				—				—
Total loans and leases		363,219				386,714				374,892				399,146				422,297
Allowance for loan and lease losses		(4,880		)		(5,643		)		(6,223		)		(7,281		)		(8,436		)
Net loans and leases		$	358,339			$	381,071			$	368,669			$	391,865			$	413,861
TOTAL:
Commercial, financial and agricultural		$	487,185			$	499,892			$	503,048			$	510,440			$	507,984
Real estate:
Construction		97,986				93,837				94,107				101,538				108,228
Residential mortgage		1,267,144				1,249,617				1,237,150				1,217,234				1,160,741
Home equity		396,812				394,720				370,856				361,209				351,256
Commercial mortgage		940,192				895,012				893,788				885,439				862,717
Consumer:
Automobiles		249,797				256,858				233,915				212,926				217,526
Other consumer		196,806				201,276				212,256				235,427				230,446
Leases		448				523				598				677				756
Total loans and leases		3,636,370				3,591,735				3,545,718				3,524,890				3,439,654
Allowance for loan and lease losses		(51,217		)		(52,828		)		(55,369		)		(56,631		)		(59,384		)
Net loans and leases		$	3,585,153			$	3,538,907			$	3,490,349			$	3,468,259			$	3,380,270

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Deposits
(Unaudited)	TABLE 9

		September 30,				June 30,				March 31,				December 31,				September 30,
(Dollars in thousands)		2017				2017				2017				2016				2016
Noninterest-bearing demand		$	1,383,548			$	1,383,754			$	1,290,632			$	1,265,246			$	1,194,557
Interest-bearing demand		911,273				917,956				898,306				862,991				849,128
Savings and money market		1,476,017				1,453,108				1,430,399				1,390,600				1,379,484
Time deposits less than $100,000		184,459				188,782				191,611				194,730				198,055
Core deposits		3,955,297				3,943,600				3,810,948				3,713,567				3,621,224
Government time deposits		710,658				700,284				720,333				701,417				708,034
Other time deposits $100,000 and over		261,542				242,498				246,163				193,217				189,320
Total time deposits $100,000 and over		972,200				942,782				966,496				894,634				897,354
Total deposits		$	4,927,497			$	4,886,382			$	4,777,444			$	4,608,201			$	4,518,578

CENTRAL PACIFIC FINANCIAL CORP AND SUBSIDIARIES
Nonperforming Assets, Past Due and Restructured Loans
(Unaudited)	TABLE 10

		September 30,				June 30,				March 31,				December 31,				September 30,
(Dollars in thousands)		2017				2017				2017				2016				2016
Nonaccrual loans (including loans held for sale):
Commercial, financial and agricultural		$	956			$	1,000			$	1,030			$	1,877			$	2,005
Real estate:
Residential mortgage		2,633				4,691				4,621				5,322				5,424
Home equity		1,449				1,509				1,490				333				479
Commercial mortgage		81				834				842				864				2,967
Total nonaccrual loans		5,119				8,034				7,983				8,396				10,875
Other real estate owned ("OREO"):
Real estate:
Residential mortgage		851				1,008				851				791				791
Total OREO		851				1,008				851				791				791
Total nonperforming assets ("NPAs")		5,970				9,042				8,834				9,187				11,666
Loans delinquent for 90 days or more still accruing interest:
Real estate:
Residential mortgage		50				—				—				—				200
Home equity		108				—				—				1,120				—
Consumer:
Automobiles		149				130				133				208				131
Other consumer		67				123				107				63				106
Total loans delinquent for 90 days or more still accruing interest		374				253				240				1,391				437
Restructured loans still accruing interest:
Commercial, financial and agricultural		217				265				306				—				—
Real estate:
Construction		—				—				—				21				51
Residential mortgage		12,373				12,230				13,292				14,292				15,818
Commercial mortgage		1,571				1,675				1,777				1,879				1,979
Total restructured loans still accruing interest		14,161				14,170				15,375				16,192				17,848
Total NPAs and loans delinquent for 90 days or more and restructured loans still accruing interest		$	20,505			$	23,465			$	24,449			$	26,770			$	29,951
Total nonaccrual loans as a percentage of loans and leases		0.14		%		0.22		%		0.23		%		0.24		%		0.32		%
Total NPAs as a percentage of loans and leases and OREO		0.16		%		0.25		%		0.25		%		0.26		%		0.34		%
Total NPAs and loans delinquent for 90 days or more still accruing interest as a percentage of loans and leases and OREO		0.17		%		0.26		%		0.26		%		0.30		%		0.35		%
Total NPAs and loans delinquent for 90 days or more and restructured loans still accruing interest as a percentage of loans and leases and OREO		0.56		%		0.65		%		0.69		%		0.76		%		0.87		%
Quarter-to-quarter changes in NPAs:
Balance at beginning of quarter		$	9,042			$	8,834			$	9,187			$	11,666			$	14,907
Additions		160				1,530				1,881				39				650
Reductions:
Payments		(2,614		)		(401		)		(447		)		(2,400		)		(2,309		)
Return to accrual status		(453		)		(1,014		)		(1,787		)		(118		)		(578		)
Sales of NPAs		(165		)		—				—				—				(1,032		)
Charge-offs/valuation adjustments		—				93				—				—				28
Total reductions		(3,232		)		(1,322		)		(2,234		)		(2,518		)		(3,891		)
Balance at end of quarter		$	5,970			$	9,042			$	8,834			$	9,187			$	11,666

CENTRAL PACIFIC FINANCIAL CORP AND SUBSIDIARIES
Allowance for Loan and Lease Losses
(Unaudited)	TABLE 11

		Three Months Ended																				Nine Months Ended
		Sep 30,				Jun 30,				Mar 31,				Dec 31,				Sep 30,				September 30,
(Dollars in thousands)		2017				2017				2017				2016				2016				2017				2016
Allowance for loan and lease losses:
Balance at beginning of period		$	52,828			$	55,369			$	56,631			$	59,384			$	60,764			$	56,631			$	63,314
Provision (credit) for loan and lease losses		(126		)		(2,282		)		(80		)		(2,645		)		(743		)		(2,488		)		(2,872		)
Charge-offs:
Commercial, financial and agricultural		429				337				500				510				465				1,266				1,089
Real estate:
Commercial mortgage		—				—				—				209				—				—				—
Consumer:
Automobiles		333				352				520				381				409				1,205				1,182
Other consumer		1,376				1,118				977				1,077				940				3,471				2,414
Total charge-offs		2,138				1,807				1,997				2,177				1,814				5,942				4,685
Recoveries:
Commercial, financial and agricultural		165				236				275				490				555				676				1,624
Real estate:
Construction		40				56				21				24				91				117				109
Residential mortgage		124				637				96				315				173				857				380
Home equity		6				27				2				4				4				35				11
Commercial mortgage		7				128				11				869				128				146				155
Consumer:
Automobiles		65				284				194				214				115				543				674
Other consumer		246				180				216				153				111				642				674
Total recoveries		653				1,548				815				2,069				1,177				3,016				3,627
Net charge-offs		1,485				259				1,182				108				637				2,926				1,058
Balance at end of period		$	51,217			$	52,828			$	55,369			$	56,631			$	59,384			$	51,217			$	59,384
Average loans and leases, net of unearned		$	3,625,455			$	3,593,347			$	3,547,718			$	3,489,757			$	3,415,505			$	3,589,124			$	3,350,817
Annualized ratio of net charge-offs to average loans and leases		0.16		%		0.03		%		0.13		%		0.01		%		0.07		%		0.11		%		0.04		%
Ratio of allowance for loan and lease losses to loans and leases		1.41		%		1.47		%		1.56		%		1.61		%		1.73		%		1.41		%		1.73		%