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PARENT COMPANY AND REGULATORY RESTRICTIONS | 12 Months Ended
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Dec. 31, 2018
Condensed Financial Information of Parent Company Only Disclosure [Abstract] |
PARENT COMPANY AND REGULATORY RESTRICTIONS | 27. PARENT COMPANY AND REGULATORY RESTRICTIONS At December 31, 2018, the accumulated deficit of the parent company, Central Pacific Financial Corp., included $435.0 million of equity in undistributed losses of Central Pacific Bank. Central Pacific Bank, as a Hawaii state-chartered bank, may only pay dividends to the extent it has retained earnings as defined under Hawaii banking law ("Statutory Retained Earnings"), which differs from GAAP retained earnings. As of December 31, 2018, the bank had Statutory Retained Earnings of $46.6 million. For further information, see Note 13 - Equity. The Company and the Bank are subject to various regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. banks ("Basel III rules") became effective for the Company on January 1, 2015, with full compliance with all of the requirements being phased in over a multi-year schedule, and fully phased in by January 1, 2019. Under the Basel III rules, the Company must hold a "capital conservation buffer" above the adequately capitalized risk-based capital ratios. The capital conservation buffer is being phased in at the rate of 0.625% per year from 0.625% in 2016 to 2.50% on January 1, 2019. The capital conservation buffer for 2018 is 1.875% and for 2017 is 1.25%. The net unrealized gain or loss on available for sale securities is not included in computing regulatory capital. Management believes as of December 31, 2018, the Company and Bank meet all capital adequacy requirements to which they are subject. Prompt corrective action regulations provide five classifications: well-capitalized, adequately capitalized, under-capitalized, significantly under-capitalized, and critically under-capitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If under-capitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At year-end 2018 and 2017, the most recent regulatory notifications categorized the Bank as "well-capitalized" under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution’s category. The following table sets forth actual and required capital and capital ratios for the Company and the bank, as well as the minimum capital adequacy requirements applicable generally to all financial institutions as of the dates indicated.
| Actual |  | Minimum required for capital adequacy purposes |  | Minimum required to be well-capitalized
| Amount |  | Ratio |  | Amount |  | Ratio (1) |  | Amount |  | Ratio
| (Dollars in thousands)
Company |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
As of December 31, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Tier 1 capital to avg. assets (leverage ratio) | $ | 570,260 |  |  | 9.9 | % |  | $ | 230,847 |  |  | 4.0 | % |  |  |  |  | N/A
Tier 1 capital to risk-weighted assets | 570,260 |  |  | 13.5 |  |  | 252,921 |  |  | 6.0 |  |  |  |  |  | N/A
Total capital to risk-weighted assets | 619,419 |  |  | 14.7 |  |  | 337,228 |  |  | 8.0 |  |  |  |  |  | N/A
Common equity tier 1 ("CET1") capital to risk-weighted assets | 500,260 |  |  | 11.9 |  |  | 189,691 |  |  | 4.5 |  |  |  |  |  | N/A
As of December 31, 2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Tier 1 capital to avg. assets (leverage ratio) | 578,607 |  |  | 10.4 |  |  | 223,646 |  |  | 4.0 |  |  |  |  |  | N/A
Tier 1 capital to risk-weighted assets | 578,607 |  |  | 14.7 |  |  | 236,721 |  |  | 6.0 |  |  |  |  |  | N/A
Total capital to risk-weighted assets | 628,068 |  |  | 15.9 |  |  | 315,628 |  |  | 8.0 |  |  |  |  |  | N/A
CET1 capital to risk-weighted assets | 490,861 |  |  | 12.4 |  |  | 177,541 |  |  | 4.5 |  |  |  |  |  | N/A
Central Pacific Bank |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
As of December 31, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Tier 1 capital to avg. assets (leverage ratio) | $ | 533,166 |  |  | 9.3 | % |  | $ | 230,638 |  |  | 4.0 | % |  | $ | 288,298 |  |  | 5.0 | %
Tier 1 capital to risk-weighted assets | 533,166 |  |  | 12.7 |  |  | 252,667 |  |  | 6.0 |  |  | 336,889 |  |  | 8.0 |
Total capital to risk-weighted assets | 582,325 |  |  | 13.8 |  |  | 336,889 |  |  | 8.0 |  |  | 421,111 |  |  | 10.0 |
CET1 capital to risk-weighted assets | 533,166 |  |  | 12.7 |  |  | 189,500 |  |  | 4.5 |  |  | 273,722 |  |  | 6.5 |
As of December 31, 2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Tier 1 capital to avg. assets (leverage ratio) | 565,412 |  |  | 10.1 |  |  | 223,431 |  |  | 4.0 |  |  | 279,289 |  |  | 5.0 |
Tier 1 capital to risk-weighted assets | 565,412 |  |  | 14.4 |  |  | 236,401 |  |  | 6.0 |  |  | 315,201 |  |  | 8.0 |
Total capital to risk-weighted assets | 614,732 |  |  | 15.6 |  |  | 315,201 |  |  | 8.0 |  |  | 394,002 |  |  | 10.0 |
CET1 capital to risk-weighted assets | 565,412 |  |  | 14.4 |  |  | 177,301 |  |  | 4.5 |  |  | 256,101 |  |  | 6.5 |
(1) Ratios exclude the capital conservation buffer ("CCB"). When fully phased-in on January 1, 2019, the Basel III rules will include a CCB of 2.5% that is added on top of each of the minimum risk-based capital ratios noted above (excluding the leverage ratio). The CCB is being phased in at the rate of 0.625% per year from 0.625% in 2016 to 2.50% on January 1, 2019.
Condensed financial statements of the parent company are as follows: CENTRAL PACIFIC FINANCIAL CORP. CONDENSED BALANCE SHEETS
| December 31,
| 2018 |  | 2017
| (Dollars in thousands)
Assets |  |  |  |  |
Cash and cash equivalents | $ | 16,743 |  |  | $ | 13,931 |
Equity investment securities | 826 |  |  | 825 |
Investment in subsidiary bank, at equity in underlying net assets | 519,978 |  |  | 572,101 |
Other assets | 30,312 |  |  | 9,577 |
Total assets | $ | 567,859 |  |  | $ | 596,434 |
Liabilities and Equity |  |  |  |  |
Long-term debt | $ | 72,166 |  |  | $ | 92,785 |
Other liabilities | 3,968 |  |  | 3,614 |
Total liabilities | 76,134 |  |  | 96,399 |
Total shareholders’ equity | 491,725 |  |  | 500,011 |
Non-controlling interest | — |  |  | 24 |
Total equity | 491,725 |  |  | 500,035 |
Total liabilities and equity | $ | 567,859 |  |  | $ | 596,434 |
CENTRAL PACIFIC FINANCIAL CORP. CONDENSED STATEMENTS OF INCOME
| Year Ended December 31,
| 2018 |  | 2017 |  | 2016
| (Dollars in thousands)
Income: |  |  |  |  |  |  |  |
Dividends from subsidiary bank | $ | 103,001 |  |  | $ | 43,000 |  |  | $ | 29,965 |
Interest income from subsidiary bank | 5 |  |  | 6 |  |  | 6 |
Other income | 160 |  |  | 150 |  |  | 100 |
Total income | 103,166 |  |  | 43,156 |  |  | 30,071 |
Expense: |  |  |  |  |  |  |  |
Interest expense on long-term debt | 4,338 |  |  | 3,479 |  |  | 3,005 |
Other expenses | 1,617 |  |  | 2,002 |  |  | 2,739 |
Total expenses | 5,955 |  |  | 5,481 |  |  | 5,744 |
Income before income taxes and equity in undistributed income of subsidiaries | 97,211 |  |  | 37,675 |  |  | 24,327 |
Income tax expense (benefit) | (1,261 | ) |  | (1,781 | ) |  | (2,467 | )
Income before equity in undistributed income of subsidiaries | 98,472 |  |  | 39,456 |  |  | 26,794 |
Equity in undistributed income (loss) of subsidiary bank | (38,986 | ) |  | 1,748 |  |  | 20,198 |
Net income | $ | 59,486 |  |  | $ | 41,204 |  |  | $ | 46,992 |
CENTRAL PACIFIC FINANCIAL CORP. CONDENSED STATEMENTS OF CASH FLOWS
| Year Ended December 31,
| 2018 |  | 2017 |  | 2016
| (Dollars in thousands)
Cash flows from operating activities: |  |  |  |  |  |  |  |
Net income | $ | 59,486 |  |  | $ | 41,204 |  |  | $ | 46,992 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |  |  |  |  |
Deferred income tax expense (benefit) | 450 |  |  | (442 | ) |  | 15,683 |
Dividends receivable from subsidiary bank | (21,004 | ) |  | — |  |  | — |
Equity in undistributed loss (income) of subsidiary bank | 38,986 |  |  | (1,748 | ) |  | (20,198 | )
Share-based compensation | 2,778 |  |  | 1,918 |  |  | 1,045 |
Other, net | (920 | ) |  | 1,357 |  |  | (697 | )
Net cash provided by operating activities | 79,776 |  |  | 42,289 |  |  | 42,825 |
Cash flows from investing activities: |  |  |  |  |  |  |  |
Distributions from unconsolidated subsidiaries | 622 |  |  | — |  |  | — |
Net cash provided by investing activities | 622 |  |  | — |  |  | — |
Cash flows from financing activities: |  |  |  |  |  |  |  |
Net proceeds from issuance of common stock and stock option exercises | — |  |  | — |  |  | 941 |
Repayments of long-term debt | (20,619 | ) |  | — |  |  | — |
Repurchases of common stock | (32,824 | ) |  | (26,559 | ) |  | (18,206 | )
Dividends paid | (24,143 | ) |  | (21,299 | ) |  | (18,619 | )
Net cash used in financing activities | (77,586 | ) |  | (47,858 | ) |  | (35,884 | )
Net increase (decrease) in cash and cash equivalents | 2,812 |  |  | (5,569 | ) |  | 6,941 |
Cash and cash equivalents at beginning of year | 13,931 |  |  | 19,500 |  |  | 12,559 |
Cash and cash equivalents at end of year | $ | 16,743 |  |  | $ | 13,931 |  |  | $ | 19,500 |

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- Definition The entire disclosure for condensed financial information, including the financial position, cash flows, and the results of operations of the registrant (parent company) as of the same dates or for the same periods for which audited consolidated financial statements are being presented. Alternatively, the details of this disclosure can be reported by the specific parent company taxonomy elements, indicating the appropriate date and period contexts in an instance document. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 10 -Section S99 -Paragraph 3 -Subparagraph (SX 210.7-05(c)(Schedule II)) -URI http://asc.fasb.org/extlink&oid=6879921&loc=d3e569147-122900 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -SubTopic 10 -Section 45 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=96868048&loc=d3e5283-111683 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 235 -Section S99 -Paragraph 2 -Subparagraph (SX 210.9-06) -URI http://asc.fasb.org/extlink&oid=6882215&loc=d3e537971-122884 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 10 -Section S99 -Paragraph 6 -Subparagraph (SX 210.5-04(c)(Schedule I)) -URI http://asc.fasb.org/extlink&oid=27047687&loc=d3e5864-122674 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 3 -Subparagraph (SX 210.12-04) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e24072-122690 + Details
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