EX-99.1 2 exhibit99-1erq22018.htm EXHIBIT 99.1

Exhibit

Central Pacific Financial Corp. Reports $14.2 Million Second Quarter Earnings

Page 1

Exhibit 99.1

			FOR IMMEDIATE RELEASE
Investor Contact:	Ian Tanaka	Media Contact:	Wayne Kirihara
	VP, Treasury Manager		EVP, Chief Marketing Officer
	(808) 544-3646		(808) 544-3687
	ian.tanaka@centralpacificbank.com		wayne.kirihara@centralpacificbank.com

NEWS RELEASE

CENTRAL PACIFIC FINANCIAL CORP. REPORTS $14.2 MILLION

SECOND QUARTER EARNINGS

• Net income of $14.2 million, or fully diluted EPS of $0.48 for the second quarter, representing an increase of 18.3% and 23.1%, respectively, from the year-ago quarter.

• ROA of 1.00% and ROE of 11.83% for the second quarter.

• Total loans increased by $65.4 million in the second quarter, or 1.7% sequentially and 8.1% year-over-year.

HONOLULU, HI, July 25, 2018 – Central Pacific Financial Corp. (NYSE: CPF), (the "Company"), today reported net income in the second quarter of 2018 of $14.2 million, or diluted earnings per share ("EPS") of $0.48, compared to net income in the second quarter of 2017 of $12.0 million, or EPS of $0.39, and net income in the first quarter of 2018 of $14.3 million, or EPS of $0.48.

"Our second quarter results reflect another solid quarter highlighted by strong loan growth and improving efficiency," said Catherine Ngo, President & Chief Executive Officer. "We continue to execute on our business plan and expect further performance improvement during the remainder of 2018."

In July 2018, the Company's Board of Directors declared a quarterly cash dividend of $0.21 per share on its outstanding common shares. The dividend will be payable on September 17, 2018 to shareholders of record at the close of business on August 31, 2018.

During the second quarter of 2018, the Company repurchased 269,885 shares of common stock, at a total cost of $8.0 million, or an average cost per share of $29.54. During the six months ended June 30, 2018, the Company repurchased 614,247 shares of common stock, or approximately 2.0% of its common stock outstanding as of December 31, 2017. Total cost of the shares repurchased during the six months ended June 30, 2018 was $18.1 million, or an average cost per share of $29.44. The Company's remaining repurchase authority under its common stock repurchase program at June 30, 2018 is $35.4 million. During the six months ended June 30, 2018, the Company returned $30.0 million in capital to its shareholders through cash dividends and share repurchases.

Earnings Highlights

Net interest income for the second quarter of 2018 was $42.7 million, compared to $41.6 million in the year-ago quarter and $42.3 million in the previous quarter. Net interest margin for the second quarter of 2018 was 3.20%, compared to 3.29% in the year-ago

Central Pacific Financial Corp. Reports $14.2 Million Second Quarter Earnings

Page 2

quarter and 3.21% in the previous quarter. The increase in net interest income from the year-ago and sequential quarters were primarily due to growth in the loan portfolio, combined with an increase in the yield earned on the loan portfolio. These increases were partially offset by higher deposit and borrowing costs attributable to the recent increases in the federal funds rate, which also resulted in the decline in the net interest margin from the year-ago and sequential quarters.

Other operating income for the second quarter of 2018 totaled $9.6 million, compared to $7.9 million in the year-ago quarter and $9.0 million in the previous quarter. The increase from the year-ago quarter was primarily due to investment securities losses of $1.6 million related to an investment portfolio repositioning completed in the year-ago quarter. The sequential quarter increase was primarily due to higher income from bank-owned life insurance of $0.2 million and higher commissions on investment services of $0.2 million (included in other service charges and fees).

Other operating expense for the second quarter of 2018 totaled $33.7 million, which increased from $32.3 million in the year-ago quarter and increased from $33.5 million in the previous quarter. The increase from the year-ago quarter was primarily due to higher salaries and employee benefits of $0.8 million. The higher salaries and employee benefits expense was primarily attributable to the increase in the Company's starting pay rate effective January 1, 2018. The sequential quarter increase was primarily due to higher salaries and employee benefits of $0.3 million. The higher salaries and employee benefits from the previous quarter was primarily attributable to annual merit increases effective in the second quarter of 2018.

The efficiency ratio for the second quarter of 2018 was 64.48%, compared to 65.32% in the year-ago quarter and 65.37% in the previous quarter. The improvements in the efficiency ratio from the year-ago and sequential quarters were primarily due to the aforementioned improvements in net interest income and other operating income, partially offset by higher other operating expenses in the current quarter compared to the year-ago and sequential quarters.

In the second quarter of 2018, the Company recorded income tax expense of $3.8 million, compared to $7.4 million in the year-ago quarter and $3.7 million in the previous quarter. Income tax expense in the current quarter included a one-time estimated benefit of $0.6 million to income tax expense due to a tax accounting method change strategy that allows the deduction for certain expenses to be accelerated for income tax purposes. The effective tax rate for the second quarter of 2018 was 21.2%, compared to 38.2% in the year-ago quarter and 20.5% in the previous quarter. The decline in income tax expense and effective tax rate in the current quarter compared to the year-ago quarter was primarily due to the enactment of H.R.1, commonly referred to as the Tax Cuts and Jobs Act.

Balance Sheet Highlights

Total assets at June 30, 2018 of $5.68 billion increased by $148.4 million, or 2.7% from June 30, 2017, and increased by $30.2 million, or 0.5% from March 31, 2018.

Total loans and leases at June 30, 2018 of $3.88 billion increased by $289.8 million, or 8.1% and $65.4 million, or 1.7% from June 30, 2017 and March 31, 2018, respectively. The increase in total loans and leases from June 30, 2017 was primarily attributable to strong organic growth in the Hawaii loan portfolios, combined with an increase in the U.S. mainland commercial mortgage portfolio, partially offset by reductions in the Hawaii construction loan portfolio and the U.S. mainland consumer loan portfolio. The increase in total loans and leases from the first quarter of 2018 was primarily due to strong organic growth in the Hawaii loan portfolios, combined with increases in the U.S. mainland commercial, financial and agricultural and consumer loan portfolios. During the second quarter of 2018, the Company purchased a U.S. mainland automobile portfolio totaling $20.6 million.

Total deposits at June 30, 2018 of $4.98 billion increased by $92.7 million, or 1.9% from June 30, 2017, and remained relatively unchanged from March 31, 2018.  Core deposits, which include demand deposits, savings and money market deposits, and time deposits less than $100,000, totaled $4.00 billion at June 30, 2018.  This represents an increase of $52.4 million, or 1.3% from June 30, 2017, and a decrease of $11.0 million, or 0.3% from March 31, 2018. The Company's loan-to-deposit ratio was 78.0% at June 30, 2018, compared to 73.5% at June 30, 2017 and 76.6% at March 31, 2018.

Asset Quality

Nonperforming assets at June 30, 2018 totaled $3.5 million, or 0.06% of total assets, compared to $9.0 million, or 0.16% of total assets at June 30, 2017, and $3.4 million, or 0.06% of total assets at March 31, 2018.

Loans delinquent for 90 days or more still accruing interest totaled $0.6 million at June 30, 2018, compared to $0.3 million and $0.4 million at June 30, 2017 and March 31, 2018, respectively.

Central Pacific Financial Corp. Reports $14.2 Million Second Quarter Earnings

Page 3

Net charge-offs in the second quarter of 2018 totaled $1.6 million, compared to net charge-offs of $0.3 million in the year-ago quarter, and net charge-offs of $0.6 million in the previous quarter.

In the second quarter of 2018, the Company recorded a provision for loan and lease losses of $0.5 million, compared to a credit of $2.3 million in the year-ago quarter and a credit of $0.2 million in the previous quarter. The allowance for loan and lease losses, as a percentage of total loans and leases at June 30, 2018 was 1.24%, compared to 1.47% at June 30, 2017 and 1.29% at March 31, 2018.

Capital

Total shareholders' equity was $480.7 million at June 30, 2018, compared to $512.9 million and $484.1 million at June 30, 2017 and March 31, 2018, 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 June 30, 2018, the Company's leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ratios were 10.3%, 14.4%, 15.7%, and 12.2%, respectively, compared to 10.3%, 14.5%, 15.8%, and 12.3%, respectively, at March 31, 2018.

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 August 25, 2018 by dialing 1-877-344-7529 (passcode: 10122325) and on the Company's website.

About Central Pacific Financial Corp.

Central Pacific Financial Corp. is a Hawaii-based bank holding company with approximately $5.7 billion in assets.  Central Pacific Bank, its primary subsidiary, operates 35 branches and 78 ATMs in the state of Hawaii, as of June 30, 2018.  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,

Central Pacific Financial Corp. Reports $14.2 Million Second Quarter Earnings

Page 4

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, volcanoes, 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; failure to maintain effective internal control over financial reporting or disclosure controls and procedures; 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 the Tax Cuts and Jobs Act; 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 and 10-K/A 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																				Six Months Ended
(Dollars in thousands,		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,				Jun 30,
except for per share amounts)		2018				2018				2017				2017				2017				2018				2017
CONDENSED INCOME STATEMENT
Net interest income		$	42,672			$	42,322			$	42,824			$	41,995			$	41,629			$	84,994			$	82,884
Provision (credit) for loan and lease losses		532				(211		)		(186		)		(126		)		(2,282		)		321				(2,362		)
Net interest income after provision (credit) for loan and lease losses		42,140				42,533				43,010				42,121				43,911				84,673				85,246
Total other operating income		9,630				8,954				9,043				9,569				7,870				18,584				17,884
Total other operating expense		33,724				33,518				34,511				33,511				32,335				67,242				63,795
Income before taxes		18,046				17,969				17,542				18,179				19,446				36,015				39,335
Income tax expense		3,822				3,692				13,254				6,367				7,421				7,514				14,231
Net income		14,224				14,277				4,288				11,812				12,025				28,501				25,104
Basic earnings per common share		$	0.48			$	0.48			$	0.14			$	0.39			$	0.39			$	0.96			$	0.82
Diluted earnings per common share		0.48				0.48				0.14				0.39				0.39				0.95				0.81
Dividends declared per common share		0.21				0.19				0.18				0.18				0.18				0.40				0.34
PERFORMANCE RATIOS
Return on average assets (1)		1.00		%		1.01		%		0.31		%		0.85		%		0.88		%		1.01		%		0.92		%
Return on average shareholders’ equity (1)		11.83				11.60				3.35				9.16				9.32				11.72				9.78
Return on average tangible shareholders’ equity (1)		11.85				11.64				3.37				9.22				9.39				11.75				9.86
Average shareholders’ equity to average assets		8.49				8.73				9.12				9.30				9.44				8.61				9.43
Efficiency ratio (2)		64.48				65.37				66.54				64.99				65.32				64.92				63.31
Net interest margin (1)		3.20				3.21				3.27				3.25				3.29				3.20				3.29
Dividend payout ratio (3)		43.75				39.58				128.57				46.15				46.15				42.11				41.98
SELECTED AVERAGE BALANCES
Average loans and leases, including loans held for sale		$	3,836,739			$	3,789,338			$	3,719,684			$	3,625,455			$	3,593,347			$	3,813,169			$	3,570,658
Average interest-earning assets		5,376,115				5,334,276				5,279,360				5,216,089				5,138,038				5,355,311				5,116,864
Average assets		5,663,697				5,638,205				5,605,728				5,545,909				5,467,461				5,651,021				5,445,119
Average deposits		5,041,164				5,000,108				4,936,743				4,893,778				4,800,815				5,020,750				4,781,950
Average interest-bearing liabilities		3,776,053				3,746,012				3,686,222				3,613,872				3,600,761				3,761,115				3,613,425
Average shareholders’ equity		480,985				492,184				511,277				515,580				515,974				486,554				513,403
Average tangible shareholders' equity		479,959				490,453				508,886				512,554				512,254				485,177				509,327

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Financial Highlights
(Unaudited)	TABLE 1 (CONTINUED)

		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,
(dollars in thousands)		2018				2018				2017				2017				2017
REGULATORY CAPITAL
Central Pacific Financial Corp.
Leverage capital		$	586,799			$	579,221			$	578,607			$	585,950			$	584,441
Tier 1 risk-based capital		586,799				579,221				578,607				585,950				584,441
Total risk-based capital		636,755				629,179				628,068				634,677				632,780
Common equity tier 1 capital		496,799				489,221				490,861				497,828				497,172
Central Pacific Bank
Leverage capital		569,128				568,409				565,412				569,990				564,765
Tier 1 risk-based capital		569,128				568,409				565,412				569,990				564,765
Total risk-based capital		619,084				618,240				614,732				618,576				612,968
Common equity tier 1 capital		569,128				568,409				565,412				569,990				564,765
REGULATORY CAPITAL RATIOS
Central Pacific Financial Corp.
Leverage capital ratio		10.3		%		10.3		%		10.4		%		10.6		%		10.7		%
Tier 1 risk-based capital ratio		14.4				14.5				14.7				15.1				15.2
Total risk-based capital ratio		15.7				15.8				15.9				16.3				16.4
Common equity tier 1 capital ratio		12.2				12.3				12.4				12.8				12.9
Central Pacific Bank
Leverage capital ratio		10.0				10.1				10.1				10.3				10.4
Tier 1 risk-based capital ratio		14.0				14.3				14.4				14.7				14.7
Total risk-based capital ratio		15.3				15.5				15.6				16.0				15.9
Common equity tier 1 capital ratio		14.0				14.3				14.4				14.7				14.7

		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,
(dollars in thousands, except for per share amounts)		2018				2018				2017				2017				2017
BALANCE SHEET
Loans and leases		$	3,881,581			$	3,816,146			$	3,770,615			$	3,636,370			$	3,591,735
Total assets		5,681,519				5,651,287				5,623,708				5,569,230				5,533,135
Total deposits		4,979,099				4,980,431				4,956,354				4,927,497				4,886,382
Long-term debt		92,785				92,785				92,785				92,785				92,785
Total shareholders’ equity		480,668				484,108				500,011				509,846				512,930
Total shareholders’ equity to total assets		8.46		%		8.57		%		8.89		%		9.15		%		9.27		%
Tangible common equity to tangible assets (4)		8.45		%		8.54		%		8.86		%		9.11		%		9.22		%
ASSET QUALITY
Allowance for loan and lease losses		$	48,181			$	49,217			$	50,001			$	51,217			$	52,828
Non-performing assets		3,509				3,438				3,626				5,970				9,042
Allowance to loans and leases outstanding		1.24		%		1.29		%		1.33		%		1.41		%		1.47		%
Allowance to non-performing assets		1,373.07		%		1,431.56		%		1,378.96		%		857.91		%		584.25		%
PER SHARE OF COMMON STOCK OUTSTANDING
Book value per common share		$	16.30			$	16.30			$	16.65			$	16.89			$	16.81
Tangible book value per common share		16.28				16.25				16.59				16.80				16.70
Closing market price per common share		28.65				28.46				29.83				32.18				31.47
(1) Annualized.
(2) Efficiency ratio is defined as total operating expense divided by total revenue (net interest income and total other operating income).
(3) Dividend payout ratio is defined as dividends declared per share divided by diluted earnings per share.
(4) 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

The following table sets forth a reconciliation of our tangible common equity ratio for each of the dates indicated:

		June 30,				March 31,				December 31,				September 30,				June 30,
(Dollars in thousands)		2018				2018				2017				2017				2017
Tangible Common Equity Ratio:
Total shareholders’ equity		$	480,668			$	484,108			$	500,011			$	509,846			$	512,930
Less: Other intangible assets		(669		)		(1,337		)		(2,006		)		(2,674		)		(3,343		)
Tangible common equity		$	479,999			$	482,771			$	498,005			$	507,172			$	509,587
Total assets		$	5,681,519			$	5,651,287			$	5,623,708			$	5,569,230			$	5,533,135
Less: Other intangible assets		(669		)		(1,337		)		(2,006		)		(2,674		)		(3,343		)
Tangible assets		$	5,680,850			$	5,649,950			$	5,621,702			$	5,566,556			$	5,529,792
Tangible common equity to tangible assets		8.45		%		8.54		%		8.86		%		9.11		%		9.22		%

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

			June 30,				March 31,				December 31,				September 30,				June 30,
	(Dollars in thousands, except share data)		2018				2018				2017				2017				2017
	ASSETS
	Cash and due from financial institutions		$	75,547			$	59,905			$	75,318			$	90,080			$	85,975
	Interest-bearing deposits in other financial institutions		13,948				5,875				6,975				18,195				54,576
	Investment securities:
	Available-for-sale debt securities, at fair value (1)		1,279,969				1,326,092				1,304,066				1,349,311				1,315,086
	Held-to-maturity debt securities, at fair value of: $152,330 at June 30, 2018, $171,399 at March 31, 2018, $189,201 at December 31, 2017, $195,714 at September 30, 2017, and $203,334 at June 30, 2017		158,156				177,078				191,753				197,672				204,588
	Equity securities, at fair value (1)		844				753				825				794				809
	Total investment securities		1,438,969				1,503,923				1,496,644				1,547,777				1,520,483
	Loans held for sale		9,096				7,492				16,336				10,828				13,288
	Loans and leases		3,881,581				3,816,146				3,770,615				3,636,370				3,591,735
	Less allowance for loan and lease losses		48,181				49,217				50,001				51,217				52,828
	Loans and leases, net of allowance for loan and lease losses		3,833,400				3,766,929				3,720,614				3,585,153				3,538,907
	Premises and equipment, net		47,004				47,436				48,348				48,339				49,252
	Accrued interest receivable		16,606				16,070				16,581				15,434				15,636
	Investment in unconsolidated subsidiaries		9,362				6,478				7,088				7,101				6,189
	Other real estate owned		595				595				851				851				1,008
	Mortgage servicing rights		15,756				15,821				15,843				16,093				15,932
	Core deposit premium		669				1,337				2,006				2,674				3,343
	Bank-owned life insurance		156,945				156,611				156,293				155,928				156,053
	Federal Home Loan Bank stock		10,246				9,007				7,761				6,484				6,492
	Other assets		53,376				53,808				53,050				64,293				66,001
	Total assets		$	5,681,519			$	5,651,287			$	5,623,708			$	5,569,230			$	5,533,135
	LIABILITIES AND EQUITY
	Deposits:
	Noninterest-bearing demand		$	1,365,010			$	1,349,029			$	1,395,556			$	1,383,548			$	1,383,754
	Interest-bearing demand		952,991				946,464				933,054				911,273				917,956
	Savings and money market		1,502,284				1,533,483				1,481,876				1,476,017				1,453,108
	Time		1,158,814				1,151,455				1,145,868				1,156,659				1,131,564
	Total deposits		4,979,099				4,980,431				4,956,354				4,927,497				4,886,382
	Federal Home Loan Bank advances and other short-term borrowings		87,000				56,000				32,000				—				—
	Long-term debt		92,785				92,785				92,785				92,785				92,785
	Other liabilities		41,967				37,963				42,534				39,078				41,013
	Total liabilities		5,200,851				5,167,179				5,123,673				5,059,360				5,020,180
	Equity:
	Preferred stock, no par value, authorized 1,000,000 shares; issued and outstanding none at: June 30, 2018, March 31, 2018, December 31, 2017, September 30, 2017, and June 30, 2017		—				—				—				—				—
	Common stock, no par value, authorized 185,000,000 shares; issued and outstanding: 29,489,954 at June 30, 2018, 29,707,122 at March 31, 2018, 30,024,222 at December 31, 2017, 30,188,748 at September 30, 2017, and 30,514,799 at June 30, 2017		485,402				493,794				503,988				509,243				519,383
	Surplus		86,949				86,497				86,098				85,300				84,592
	Accumulated deficit		(70,435		)		(78,454		)		(89,036		)		(87,913		)		(94,269		)
	Accumulated other comprehensive income (loss)		(21,248		)		(17,729		)		(1,039		)		3,216				3,224
	Total shareholders' equity		480,668				484,108				500,011				509,846				512,930
	Non-controlling interest		—				—				24				24				25
	Total equity		480,668				484,108				500,035				509,870				512,955
	Total liabilities and equity		$	5,681,519			$	5,651,287			$	5,623,708			$	5,569,230			$	5,533,135
	(1) Financial information for prior quarters has been revised to reflect the impact of the adoption of ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.

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

		Three Months Ended																				Six Months Ended
		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,				Jun 30,
(Dollars in thousands, except per share data)		2018				2018				2017				2017				2017				2018				2017
Interest income:
Interest and fees on loans and leases		$	38,699			$	37,390			$	37,447			$	36,289			$	35,531			$	76,089			$	70,488
Interest and dividends on investment securities:
Taxable investment securities		8,717				8,843				8,777				8,540				8,481				17,560				16,616
Tax-exempt investment securities		933				933				955				966				974				1,866				1,953
Dividend income on investment securities		3				15				13				12				12				18				24
Interest on deposits in other financial institutions		117				84				58				163				61				201				135
Dividend income on Federal Home Loan Bank stock		40				45				26				23				21				85				77
Total interest income		48,509				47,310				47,276				45,993				45,080				95,819				89,293
Interest expense:
Interest on deposits:
Demand		193				180				170				177				154				373				294
Savings and money market		459				369				302				281				259				828				516
Time		4,034				3,425				2,967				2,637				2,136				7,459				3,853
Interest on short-term borrowings		48				43				97				9				46				91				77
Interest on long-term debt		1,103				971				916				894				856				2,074				1,669
Total interest expense		5,837				4,988				4,452				3,998				3,451				10,825				6,409
Net interest income		42,672				42,322				42,824				41,995				41,629				84,994				82,884
Provision (credit) for loan and lease losses		532				(211		)		(186		)		(126		)		(2,282		)		321				(2,362		)
Net interest income after provision for loan and lease losses		42,140				42,533				43,010				42,121				43,911				84,673				85,246
Other operating income:
Mortgage banking income (refer to Table 5)		1,775				1,847				1,531				1,531				1,957				3,622				3,900
Service charges on deposit accounts		1,977				2,003				2,130				2,182				2,120				3,980				4,156
Other service charges and fees		3,377				3,034				2,532				3,185				3,053				6,411				5,801
Income from fiduciary activities		1,017				956				935				911				964				1,973				1,828
Equity in earnings of unconsolidated subsidiaries		37				43				214				176				151				80				212
Fees on foreign exchange		277				211				135				101				130				488				293
Net gains (losses) on sales of investment securities		—				—				230				—				(1,640		)		—				(1,640		)
Income from bank-owned life insurance		501				318				614				1,074				583				819				1,700
Loan placement fees		220				197				170				86				146				417				280
Net gains on sales of foreclosed assets		—				—				—				19				84				—				186
Other (refer to Table 5)		449				345				552				304				322				794				1,168
Total other operating income		9,630				8,954				9,043				9,569				7,870				18,584				17,884
Other operating expense:
Salaries and employee benefits		18,783				18,505				18,759				18,157				17,983				37,288				35,370
Net occupancy		3,360				3,266				3,418				3,404				3,335				6,626				6,749
Equipment		1,044				1,068				1,007				969				967				2,112				1,809
Amortization of core deposit premium		668				669				668				669				669				1,337				1,337
Communication expense		746				898				924				944				891				1,644				1,791
Legal and professional services		1,769				1,821				2,091				1,854				1,987				3,590				3,779
Computer software expense		2,305				2,267				2,404				2,346				2,190				4,572				4,442
Advertising expense		617				612				1,000				626				390				1,229				782
Foreclosed asset expense		31				294				28				24				63				325				99
Other (refer to Table 5)		4,401				4,118				4,212				4,518				3,860				8,519				7,637
Total other operating expense		33,724				33,518				34,511				33,511				32,335				67,242				63,795
Income before income taxes		18,046				17,969				17,542				18,179				19,446				36,015				39,335
Income tax expense		3,822				3,692				13,254				6,367				7,421				7,514				14,231
Net income		$	14,224			$	14,277			$	4,288			$	11,812			$	12,025			$	28,501			$	25,104
Per common share data:
Basic earnings per share		$	0.48			$	0.48			$	0.14			$	0.39			$	0.39			$	0.96			$	0.82
Diluted earnings per share		0.48				0.48				0.14				0.39				0.39				0.95				0.81
Cash dividends declared		0.21				0.19				0.18				0.18				0.18				0.40				0.34
Basic weighted average shares outstanding		29,510,175				29,807,572				30,027,366				30,300,195				30,568,247				29,658,051				30,641,165
Diluted weighted average shares outstanding		29,714,942				30,041,351				30,271,910				30,514,459				30,803,725				29,881,534				30,879,923

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																				Six Months Ended
		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,				June 30,
(Dollars in thousands)		2018				2018				2017				2017				2017				2018				2017
Mortgage banking income:
Loan servicing fees		$	1,289			$	1,311			$	1,316			$	1,323			$	1,340			$	2,600			$	2,698
Amortization of mortgage servicing rights		(437		)		(457		)		(745		)		(476		)		(547		)		(894		)		(1,067		)
Net gains on sales of residential mortgage loans		959				972				968				705				1,084				1,931				2,396
Unrealized gains (losses) on loans-held-for-sale and interest rate locks		(36		)		21				(8		)		(21		)		80				(15		)		(127		)
Total mortgage banking income		$	1,775			$	1,847			$	1,531			$	1,531			$	1,957			$	3,622			$	3,900

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

		Three Months Ended																				Six Months Ended
		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,				June 30,
(Dollars in thousands)		2018				2018				2017				2017				2017				2018				2017
Other operating income - other:
Income recovered on nonaccrual loans previously charged-off		$	130			$	96			$	156			$	25			$	25			$	226			$	586
Other recoveries		49				46				26				32				54				95				91
Commissions on sale of checks		84				86				83				86				85				170				172
Other		186				117				287				161				158				303				319
Total other operating income - other		$	449			$	345			$	552			$	304			$	322			$	794			$	1,168

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

		Three Months Ended																				Six Months Ended
		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,				June 30,
(Dollars in thousands)		2018				2018				2017				2017				2017				2018				2017
Other operating expense - other:
Charitable contributions		$	131			$	200			$	165			$	141			$	136			$	331			$	287
FDIC insurance assessment		434				434				438				433				429				868				853
Miscellaneous loan expenses		324				299				288				302				293				623				554
ATM and debit card expenses		698				648				495				548				468				1,346				918
Amortization of investments in low-income housing tax credit partnerships		113				114				114				174				223				227				456
Armored car expenses		233				166				241				176				198				399				456
Entertainment and promotions		273				159				438				818				246				432				404
Stationery and supplies		236				201				202				204				230				437				408
Directors’ fees and expenses		283				231				209				208				250				514				457
Provision (credit) for residential mortgage loan repurchase losses		—				—				209				—				—				—				—
Increase (decrease) to the reserve for unfunded commitments		66				41				(101		)		72				53				107				123
Other		1,610				1,625				1,514				1,442				1,334				3,235				2,721
Total other operating expense - other		$	4,401			$	4,118			$	4,212			$	4,518			$	3,860			$	8,519			$	7,637

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
			June 30, 2018											March 31, 2018											June 30, 2017
			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 financial institutions		$	26,300			1.78	%		$	117			$	22,790			1.50	%		$	84			$	22,840			1.07	%		$	61
	Investment securities, excluding valuation allowance:
	Taxable		1,341,717				2.60			8,720				1,350,135				2.62			8,858				1,344,467				2.53			8,493
	Tax-exempt (1)		164,196				2.87			1,181				165,176				2.86			1,181				170,169				3.52			1,499
	Total investment securities		1,505,913				2.63			9,901				1,515,311				2.65			10,039				1,514,636				2.64			9,992
	Loans and leases, including loans held for sale		3,836,739				4.04			38,699				3,789,338				3.98			37,390				3,593,347				3.96			35,531
	Federal Home Loan Bank stock		7,163				2.24			40				6,837				2.61			45				7,215				1.17			21
	Total interest-earning assets		5,376,115				3.63			48,757				5,334,276				3.59			47,558				5,138,038				3.55			45,605
	Noninterest-earning assets		287,582											303,929											329,423
	Total assets		$	5,663,697										$	5,638,205										$	5,467,461
	LIABILITIES AND EQUITY
	Interest-bearing liabilities:
	Interest-bearing demand deposits		$	951,597			0.08	%		$	193			$	935,483			0.08	%		$	180			$	890,827			0.07	%		$	154
	Savings and money market deposits		1,495,884				0.12			459				1,499,419				0.10			369				1,426,092				0.07			259
	Time deposits under $100,000		178,459				0.48			214				179,547				0.44			195				191,833				0.39			188
	Time deposits $100,000 and over		1,047,428				1.46			3,820				1,029,972				1.27			3,230				981,174				0.80			1,948
	Total interest-bearing deposits		3,673,368				0.51			4,686				3,644,421				0.44			3,974				3,489,926				0.29			2,549
	Federal Home Loan Bank advances and other short-term borrowings		9,900				1.96			48				8,806				1.97			43				18,050				1.03			46
	Long-term debt		92,785				4.77			1,103				92,785				4.25			971				92,785				3.70			856
	Total interest-bearing liabilities		3,776,053				0.62			5,837				3,746,012				0.54			4,988				3,600,761				0.38			3,451
	Noninterest-bearing deposits		1,367,796											1,355,687											1,310,889
	Other liabilities		38,863											44,306											39,812
	Total liabilities		5,182,712											5,146,005											4,951,462
	Shareholders’ equity		480,985											492,184											515,974
	Non-controlling interest		—											16											25
	Total equity		480,985											492,200											515,999
	Total liabilities and equity		$	5,663,697										$	5,638,205										$	5,467,461
	Net interest income									$	42,920										$	42,570										$	42,154
	Interest rate spread						3.01	%										3.05	%										3.17	%
	Net interest margin						3.20	%										3.21	%										3.29	%
	(1) Interest income and resultant yield information for tax-exempt investment securities is expressed on a taxable-equivalent basis using a federal statutory tax rate of 21% effective January 1, 2018 and 35% for all prior periods.

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

			Six Months Ended											Six Months Ended
			June 30, 2018											June 30, 2017
			Average				Average							Average				Average
	(Dollars in thousands)		Balance				Yield/Rate			Interest				Balance				Yield/Rate			Interest
	ASSETS
	Interest-earning assets:
	Interest-bearing deposits in other financial institutions		$	24,555			1.65	%		$	201			$	31,328			0.87	%		$	135
	Investment securities, excluding valuation allowance:
	Taxable		1,345,902				2.61			17,578				1,337,232				2.49			16,640
	Tax-exempt (1)		164,684				2.87			2,362				170,651				3.52			3,005
	Total investment securities		1,510,586				2.64			19,940				1,507,883				2.61			19,645
	Loans and leases, including loans held for sale		3,813,169				4.01			76,089				3,570,658				3.97			70,488
	Federal Home Loan Bank stock		7,001				2.42			85				6,995				2.20			77
	Total interest-earning assets		5,355,311				3.61			96,315				5,116,864				3.55			90,345
	Noninterest-earning assets		295,710											328,255
	Total assets		$	5,651,021										$	5,445,119
	LIABILITIES AND EQUITY
	Interest-bearing liabilities:
	Interest-bearing demand deposits		$	943,584			0.08	%		$	373			$	885,159			0.07	%		$	294
	Savings and money market deposits		1,497,642				0.11			828				1,422,775				0.07			516
	Time deposits under $100,000		179,000				0.46			409				192,730				0.39			368
	Time deposits $100,000 and over		1,038,748				1.37			7,050				1,003,553				0.70			3,485
	Total interest-bearing deposits		3,658,974				0.48			8,660				3,504,217				0.27			4,663
	Federal Home Loan Bank advances and other short-term borrowings		9,356				1.97			91				16,423				0.94			77
	Long-term debt		92,785				4.51			2,074				92,785				3.63			1,669
	Total interest-bearing liabilities		3,761,115				0.58			10,825				3,613,425				0.36			6,409
	Noninterest-bearing deposits		1,361,776											1,277,733
	Other liabilities		41,568											40,533
	Total liabilities		5,164,459											4,931,691
	Shareholders’ equity		486,554											513,403
	Non-controlling interest		8											25
	Total equity		486,562											513,428
	Total liabilities and equity		$	5,651,021										$	5,445,119
	Net interest income									$	85,490										$	83,936
	Interest rate spread						3.03	%										3.19	%
	Net interest margin						3.20	%										3.29	%
	(1) Interest income and resultant yield information for tax-exempt investment securities is expressed on a taxable-equivalent basis using a federal statutory tax rate of 21% effective January 1, 2018 and 35% for all prior periods.

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

		June 30,				March 31,				December 31,				September 30,				June 30,
(Dollars in thousands)		2018				2018				2017				2017				2017
HAWAII:
Commercial, financial and agricultural		$	411,687			$	413,181			$	400,529			$	398,619			$	395,512
Real estate:
Construction		64,457				59,136				61,643				95,309				91,080
Residential mortgage		1,377,219				1,351,488				1,341,221				1,267,144				1,249,617
Home equity		430,870				425,509				412,230				396,812				394,720
Commercial mortgage		829,647				816,160				807,009				801,113				767,661
Consumer		332,040				325,452				322,713				313,706				305,908
Leases		223				285				362				448				523
Total loans and leases		3,446,143				3,391,211				3,345,707				3,273,151				3,205,021
Allowance for loan and lease losses		(43,513		)		(43,939		)		(44,779		)		(46,337		)		(47,185		)
Net loans and leases		$	3,402,630			$	3,347,272			$	3,300,928			$	3,226,814			$	3,157,836
U.S. MAINLAND:
Commercial, financial and agricultural		$	111,608			$	103,299			$	103,490			$	88,566			$	104,380
Real estate:
Construction		2,437				2,517				2,597				2,677				2,757
Residential mortgage		—				—				—				—				—
Home equity		—				—				—				—				—
Commercial mortgage		188,543				189,668				170,788				139,079				127,351
Consumer		132,850				129,451				148,033				132,897				152,226
Leases		—				—				—				—				—
Total loans and leases		435,438				424,935				424,908				363,219				386,714
Allowance for loan and lease losses		(4,668		)		(5,278		)		(5,222		)		(4,880		)		(5,643		)
Net loans and leases		$	430,770			$	419,657			$	419,686			$	358,339			$	381,071
TOTAL:
Commercial, financial and agricultural		$	523,295			$	516,480			$	504,019			$	487,185			$	499,892
Real estate:
Construction		66,894				61,653				64,240				97,986				93,837
Residential mortgage		1,377,219				1,351,488				1,341,221				1,267,144				1,249,617
Home equity		430,870				425,509				412,230				396,812				394,720
Commercial mortgage		1,018,190				1,005,828				977,797				940,192				895,012
Consumer		464,890				454,903				470,746				446,603				458,134
Leases		223				285				362				448				523
Total loans and leases		3,881,581				3,816,146				3,770,615				3,636,370				3,591,735
Allowance for loan and lease losses		(48,181		)		(49,217		)		(50,001		)		(51,217		)		(52,828		)
Net loans and leases		$	3,833,400			$	3,766,929			$	3,720,614			$	3,585,153			$	3,538,907

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

		June 30,				March 31,				December 31,				September 30,				June 30,
(Dollars in thousands)		2018				2018				2017				2017				2017
Noninterest-bearing demand		$	1,365,010			$	1,349,029			$	1,395,556			$	1,383,548			$	1,383,754
Interest-bearing demand		952,991				946,464				933,054				911,273				917,956
Savings and money market		1,502,284				1,533,483				1,481,876				1,476,017				1,453,108
Time deposits less than $100,000		175,695				177,999				180,748				184,459				188,782
Core deposits		3,995,980				4,006,975				3,991,234				3,955,297				3,943,600
Government time deposits		727,087				703,467				687,052				710,658				700,284
Other time deposits $100,000 to $250,000		100,971				97,800				101,560				101,955				100,780
Other time deposits greater than $250,000		155,061				172,189				176,508				159,587				141,718
Total time deposits $100,000 and over		983,119				973,456				965,120				972,200				942,782
Total deposits		$	4,979,099			$	4,980,431			$	4,956,354			$	4,927,497			$	4,886,382

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

		June 30,				March 31,				December 31,				September 30,				June 30,
(Dollars in thousands)		2018				2018				2017				2017				2017
Nonaccrual loans (including loans held for sale):
Commercial, financial and agricultural		$	—			$	—			$	—			$	956			$	1,000
Real estate:
Residential mortgage		2,400				2,184				2,280				2,633				4,691
Home equity		514				659				416				1,449				1,509
Commercial mortgage		—				—				79				81				834
Total nonaccrual loans		2,914				2,843				2,775				5,119				8,034
Other real estate owned ("OREO"):
Real estate:
Residential mortgage		595				595				851				851				1,008
Total OREO		595				595				851				851				1,008
Total nonperforming assets ("NPAs")		3,509				3,438				3,626				5,970				9,042
Loans delinquent for 90 days or more still accruing interest:
Real estate:
Residential mortgage		279				—				49				50				—
Home equity		—				—				—				108				—
Consumer		362				417				515				216				253
Total loans delinquent for 90 days or more still accruing interest		641				417				564				374				253
Restructured loans still accruing interest:
Commercial, financial and agricultural		423				457				491				217				265
Real estate:
Residential mortgage		9,621				10,555				10,677				12,373				12,230
Commercial mortgage		1,253				1,360				1,466				1,571				1,675
Total restructured loans still accruing interest		11,297				12,372				12,634				14,161				14,170
Total NPAs and loans delinquent for 90 days or more and restructured loans still accruing interest		$	15,447			$	16,227			$	16,824			$	20,505			$	23,465
Total nonaccrual loans as a percentage of loans and leases		0.08		%		0.07		%		0.07		%		0.14		%		0.22		%
Total NPAs as a percentage of loans and leases and OREO		0.09		%		0.09		%		0.10		%		0.16		%		0.25		%
Total NPAs and loans delinquent for 90 days or more still accruing interest as a percentage of loans and leases and OREO		0.11		%		0.10		%		0.11		%		0.17		%		0.26		%
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		0.40		%		0.43		%		0.45		%		0.56		%		0.65		%
Quarter-to-quarter changes in NPAs:
Balance at beginning of quarter		$	3,438			$	3,626			$	5,970			$	9,042			$	8,834
Additions		330				263				107				160				1,530
Reductions:
Payments		(37		)		(155		)		(2,060		)		(2,614		)		(401		)
Return to accrual status		(222		)		—				(391		)		(453		)		(1,014		)
Sales of NPAs		—				(40		)		—				(165		)		—
Charge-offs/valuation adjustments		—				(256		)		—				—				93
Total reductions		(259		)		(451		)		(2,451		)		(3,232		)		(1,322		)
Balance at end of quarter		$	3,509			$	3,438			$	3,626			$	5,970			$	9,042

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

		Three Months Ended																				Six Months Ended
		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,				June 30,
(Dollars in thousands)		2018				2018				2017				2017				2017				2018				2017
Allowance for loan and lease losses:
Balance at beginning of period		$	49,217			$	50,001			$	51,217			$	52,828			$	55,369			$	50,001			$	56,631
Provision (credit) for loan and lease losses		532				(211		)		(186		)		(126		)		(2,282		)		321				(2,362		)
Charge-offs:
Commercial, financial and agricultural		742				498				438				429				337				1,240				837
Real estate:
Residential mortgage		—				—				73				—				—				—				—
Consumer		1,729				1,933				1,618				1,709				1,470				3,662				2,967
Total charge-offs		2,471				2,431				2,129				2,138				1,807				4,902				3,804
Recoveries:
Commercial, financial and agricultural		295				144				690				165				236				439				511
Real estate:
Construction		6				1,193				52				40				56				1,199				77
Residential mortgage		21				26				22				124				637				47				733
Home equity		9				3				9				6				27				12				29
Commercial mortgage		29				15				11				7				128				44				139
Consumer		543				477				315				311				464				1,020				874
Total recoveries		903				1,858				1,099				653				1,548				2,761				2,363
Net charge-offs		1,568				573				1,030				1,485				259				2,141				1,441
Balance at end of period		$	48,181			$	49,217			$	50,001			$	51,217			$	52,828			$	48,181			$	52,828
Average loans and leases, net of deferred costs		$	3,836,739			$	3,789,338			$	3,719,684			$	3,625,455			$	3,593,347			$	3,813,169			$	3,570,658
Annualized ratio of net charge-offs to average loans and leases		0.16		%		0.06		%		0.11		%		0.16		%		0.03		%		0.11		%		0.08		%
Ratio of allowance for loan and lease losses to loans and leases		1.24		%		1.29		%		1.33		%		1.41		%		1.47		%		1.24		%		1.47		%