0 0 0 0 0 0 2850 14100 14600 0 0 false--12-31 Q3 2019 0000701347 0 0 0.19 0.21 0.21 0.21 0.23 0.23 0 0 185000000 185000000 28967715 28441341 28967715 28441341 0 0 0 0 0 0 0 0 0 0 0 0 0 50000000 55900000 18300000 31000000 0 0 1000000 1000000 0 0 0 0 344362 269885 235043(1) Represents the impact of the adoption of Accounting Standards Update ("ASU") ASU 2017-12. See Note 2 to the consolidated financial statements for additional information. 0000701347 2019-01-01 2019-09-30 0000701347 2019-10-31 0000701347 2019-09-30 0000701347 2018-12-31 0000701347 2018-01-01 2018-09-30 0000701347 2018-07-01 2018-09-30 0000701347 2019-07-01 2019-09-30 0000701347 2018-03-31 0000701347 us-gaap:RetainedEarningsMember 2018-01-01 0000701347 cpf:CommonSharesOutstandingMember 2018-09-30 0000701347 us-gaap:RetainedEarningsMember 2018-06-30 0000701347 2018-01-01 2018-03-31 0000701347 us-gaap:NoncontrollingInterestMember 2018-06-30 0000701347 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-06-30 0000701347 us-gaap:RetainedEarningsMember 2018-07-01 2018-09-30 0000701347 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-04-01 2018-06-30 0000701347 us-gaap:NoncontrollingInterestMember 2018-01-01 0000701347 us-gaap:AdditionalPaidInCapitalMember 2018-04-01 2018-06-30 0000701347 cpf:CommonSharesOutstandingMember 2018-01-01 2018-03-31 0000701347 us-gaap:CommonStockMember 2018-06-30 0000701347 cpf:CommonSharesOutstandingMember 2018-04-01 2018-06-30 0000701347 us-gaap:AccountingStandardsUpdate201601Member us-gaap:RetainedEarningsMember 2018-01-01 0000701347 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 0000701347 cpf:CommonSharesOutstandingMember 2017-12-31 0000701347 2018-01-01 0000701347 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-09-30 0000701347 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-31 0000701347 us-gaap:CommonStockMember 2018-09-30 0000701347 us-gaap:NoncontrollingInterestMember 2018-04-01 2018-06-30 0000701347 cpf:CommonSharesOutstandingMember 2018-01-01 0000701347 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-07-01 2018-09-30 0000701347 us-gaap:RetainedEarningsMember 2017-12-31 0000701347 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-03-31 0000701347 us-gaap:AdditionalPaidInCapitalMember 2018-06-30 0000701347 us-gaap:RetainedEarningsMember 2018-04-01 2018-06-30 0000701347 us-gaap:NoncontrollingInterestMember 2017-12-31 0000701347 cpf:CommonSharesOutstandingMember 2018-07-01 2018-09-30 0000701347 us-gaap:AdditionalPaidInCapitalMember 2018-07-01 2018-09-30 0000701347 us-gaap:AccountingStandardsUpdate201802Member us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 0000701347 2018-09-30 0000701347 us-gaap:CommonStockMember 2018-01-01 2018-03-31 0000701347 us-gaap:CommonStockMember 2018-07-01 2018-09-30 0000701347 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-03-31 0000701347 us-gaap:CommonStockMember 2018-01-01 0000701347 2018-04-01 2018-06-30 0000701347 us-gaap:CommonStockMember 2017-12-31 0000701347 us-gaap:NoncontrollingInterestMember 2018-01-01 2018-03-31 0000701347 us-gaap:AdditionalPaidInCapitalMember 2018-01-01 2018-03-31 0000701347 us-gaap:NoncontrollingInterestMember 2018-03-31 0000701347 us-gaap:AccountingStandardsUpdate201802Member us-gaap:RetainedEarningsMember 2018-01-01 0000701347 2017-12-31 0000701347 us-gaap:AdditionalPaidInCapitalMember 2018-09-30 0000701347 cpf:CommonSharesOutstandingMember 2018-06-30 0000701347 us-gaap:AdditionalPaidInCapitalMember 2018-03-31 0000701347 us-gaap:CommonStockMember 2018-04-01 2018-06-30 0000701347 us-gaap:AccountingStandardsUpdate201601Member 2018-01-01 0000701347 us-gaap:RetainedEarningsMember 2018-01-01 2018-03-31 0000701347 us-gaap:AdditionalPaidInCapitalMember 2018-01-01 0000701347 us-gaap:RetainedEarningsMember 2018-03-31 0000701347 us-gaap:RetainedEarningsMember 2018-09-30 0000701347 us-gaap:AccountingStandardsUpdate201802Member 2018-01-01 0000701347 us-gaap:AdditionalPaidInCapitalMember 2017-12-31 0000701347 2018-06-30 0000701347 cpf:CommonSharesOutstandingMember 2018-03-31 0000701347 us-gaap:AccountingStandardsUpdate201601Member us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 0000701347 us-gaap:CommonStockMember 2018-03-31 0000701347 2019-01-01 2019-03-31 0000701347 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-09-30 0000701347 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 0000701347 us-gaap:NoncontrollingInterestMember 2019-01-01 2019-03-31 0000701347 us-gaap:AdditionalPaidInCapitalMember 2019-07-01 2019-09-30 0000701347 cpf:AccountingStandardsUpdate201702Member 2019-01-01 0000701347 us-gaap:RetainedEarningsMember 2019-07-01 2019-09-30 0000701347 us-gaap:NoncontrollingInterestMember 2019-03-31 0000701347 cpf:AccountingStandardsUpdate201702Member us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 0000701347 2019-04-01 2019-06-30 0000701347 us-gaap:RetainedEarningsMember 2019-04-01 2019-06-30 0000701347 us-gaap:RetainedEarningsMember 2019-06-30 0000701347 us-gaap:NoncontrollingInterestMember 2019-01-01 0000701347 us-gaap:RetainedEarningsMember 2019-03-31 0000701347 us-gaap:CommonStockMember 2019-09-30 0000701347 2019-03-31 0000701347 cpf:CommonSharesOutstandingMember 2019-01-01 2019-03-31 0000701347 cpf:CommonSharesOutstandingMember 2019-03-31 0000701347 cpf:CommonSharesOutstandingMember 2019-04-01 2019-06-30 0000701347 us-gaap:CommonStockMember 2019-01-01 2019-03-31 0000701347 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-03-31 0000701347 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 0000701347 us-gaap:CommonStockMember 2019-04-01 2019-06-30 0000701347 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0000701347 us-gaap:CommonStockMember 2019-06-30 0000701347 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0000701347 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-07-01 2019-09-30 0000701347 us-gaap:RetainedEarningsMember 2018-12-31 0000701347 cpf:CommonSharesOutstandingMember 2018-12-31 0000701347 cpf:CommonSharesOutstandingMember 2019-09-30 0000701347 us-gaap:RetainedEarningsMember 2019-01-01 2019-03-31 0000701347 us-gaap:AdditionalPaidInCapitalMember 2019-04-01 2019-06-30 0000701347 us-gaap:NoncontrollingInterestMember 2018-12-31 0000701347 us-gaap:CommonStockMember 2019-03-31 0000701347 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 0000701347 us-gaap:CommonStockMember 2019-07-01 2019-09-30 0000701347 cpf:CommonSharesOutstandingMember 2019-07-01 2019-09-30 0000701347 us-gaap:AdditionalPaidInCapitalMember 2019-09-30 0000701347 2019-01-01 0000701347 us-gaap:CommonStockMember 2019-01-01 0000701347 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-03-31 0000701347 us-gaap:RetainedEarningsMember 2019-09-30 0000701347 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0000701347 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-06-30 0000701347 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0000701347 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-04-01 2019-06-30 0000701347 2019-06-30 0000701347 us-gaap:RetainedEarningsMember 2019-01-01 0000701347 us-gaap:CommonStockMember 2018-12-31 0000701347 cpf:CommonSharesOutstandingMember 2019-06-30 0000701347 cpf:CommonSharesOutstandingMember 2019-01-01 0000701347 us-gaap:AccountingStandardsUpdate201602Member 2019-01-01 0000701347 us-gaap:AccountingStandardsUpdate201712Member 2019-01-01 0000701347 us-gaap:AccountingStandardsUpdate201712Member us-gaap:AvailableforsaleSecuritiesMember 2019-01-01 0000701347 us-gaap:AccountingStandardsUpdate201712Member us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 0000701347 us-gaap:AccountingStandardsUpdate201712Member cpf:DeferredTaxAssetsMember 2019-01-01 0000701347 us-gaap:EquitySecuritiesMember 2019-09-30 0000701347 us-gaap:EquitySecuritiesMember 2018-12-31 0000701347 us-gaap:USTreasurySecuritiesMember 2019-09-30 0000701347 us-gaap:CorporateDebtSecuritiesMember 2019-09-30 0000701347 us-gaap:USStatesAndPoliticalSubdivisionsMember 2019-09-30 0000701347 cpf:MortgageBackedSecuritiesResidentialNonGovernmentAgenciesMember 2019-09-30 0000701347 cpf:MortgageBackedSecuritiesResidentialUSGovernmentSponsoredEntitiesMember 2019-09-30 0000701347 cpf:MortgageBackedSecuritiesCommercialNonGovernmentAgenciesMember 2019-09-30 0000701347 us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2019-09-30 0000701347 us-gaap:USStatesAndPoliticalSubdivisionsMember 2018-12-31 0000701347 cpf:MortgageBackedSecuritiesCommercialNonGovernmentAgenciesMember 2018-12-31 0000701347 cpf:MortgageBackedSecuritiesResidentialNonGovernmentAgenciesMember 2018-12-31 0000701347 cpf:MortgageBackedSecuritiesCommercialUSGovernmentSponsoredEntitiesMember 2018-12-31 0000701347 us-gaap:CorporateDebtSecuritiesMember 2018-12-31 0000701347 us-gaap:USTreasurySecuritiesMember 2018-12-31 0000701347 cpf:MortgageBackedSecuritiesResidentialUSGovernmentSponsoredEntitiesMember 2018-12-31 0000701347 cpf:MortgageBackedSecuritiesCommercialUSGovernmentSponsoredEntitiesMember 2019-09-30 0000701347 cpf:MastercardMember us-gaap:CommonClassBMember 2019-03-31 0000701347 cpf:VisaMember us-gaap:CommonClassBMember 2019-09-30 0000701347 cpf:MastercardMember us-gaap:CommonClassBMember 2019-01-01 2019-03-31 0000701347 us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2018-12-31 0000701347 us-gaap:ConsumerPortfolioSegmentMember cpf:OtherLoanMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:CommercialRealEstateLoanMember 2018-12-31 0000701347 us-gaap:FinanceLeasesPortfolioSegmentMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:HomeEquityLoanMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:ResidentialRealEstateLoanMember 2018-12-31 0000701347 cpf:CommercialFinancialAndAgriculturalPortfolioSegmentMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:ConstructionLoansMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:HomeEquityLoanMember 2019-09-30 0000701347 cpf:CommercialFinancialAndAgriculturalPortfolioSegmentMember us-gaap:FinancingReceivables60To89DaysPastDueMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:HomeEquityLoanMember us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2019-09-30 0000701347 us-gaap:ConsumerPortfolioSegmentMember cpf:OtherLoanMember us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2019-09-30 0000701347 us-gaap:FinanceLeasesPortfolioSegmentMember us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2019-09-30 0000701347 cpf:CommercialFinancialAndAgriculturalPortfolioSegmentMember 2019-09-30 0000701347 us-gaap:FinanceLeasesPortfolioSegmentMember us-gaap:FinancingReceivables60To89DaysPastDueMember 2019-09-30 0000701347 us-gaap:ConsumerPortfolioSegmentMember cpf:OtherLoanMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:CommercialRealEstateLoanMember us-gaap:FinancingReceivables60To89DaysPastDueMember 2019-09-30 0000701347 cpf:CommercialFinancialAndAgriculturalPortfolioSegmentMember us-gaap:FinancingReceivables30To59DaysPastDueMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:HomeEquityLoanMember us-gaap:FinancingReceivables30To59DaysPastDueMember 2019-09-30 0000701347 cpf:CommercialFinancialAndAgriculturalPortfolioSegmentMember us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:ConstructionLoansMember 2019-09-30 0000701347 us-gaap:ConsumerPortfolioSegmentMember cpf:OtherLoanMember us-gaap:FinancingReceivables30To59DaysPastDueMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:ResidentialRealEstateLoanMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:ConstructionLoansMember us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:CommercialRealEstateLoanMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:CommercialRealEstateLoanMember us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2019-09-30 0000701347 us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2019-09-30 0000701347 us-gaap:FinanceLeasesPortfolioSegmentMember us-gaap:FinancingReceivables30To59DaysPastDueMember 2019-09-30 0000701347 us-gaap:FinancingReceivables60To89DaysPastDueMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:ResidentialRealEstateLoanMember us-gaap:FinancingReceivables60To89DaysPastDueMember 2019-09-30 0000701347 us-gaap:ConsumerPortfolioSegmentMember cpf:OtherLoanMember us-gaap:FinancingReceivables60To89DaysPastDueMember 2019-09-30 0000701347 us-gaap:FinanceLeasesPortfolioSegmentMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:ResidentialRealEstateLoanMember us-gaap:FinancingReceivables30To59DaysPastDueMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:CommercialRealEstateLoanMember us-gaap:FinancingReceivables30To59DaysPastDueMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:HomeEquityLoanMember us-gaap:FinancingReceivables60To89DaysPastDueMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:ConstructionLoansMember us-gaap:FinancingReceivables60To89DaysPastDueMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:ResidentialRealEstateLoanMember us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:ConstructionLoansMember us-gaap:FinancingReceivables30To59DaysPastDueMember 2019-09-30 0000701347 us-gaap:FinancingReceivables30To59DaysPastDueMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:HomeEquityLoanMember us-gaap:SubstandardMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:ConstructionLoansMember us-gaap:UnlikelyToBeCollectedFinancingReceivableMember 2019-09-30 0000701347 us-gaap:ConsumerPortfolioSegmentMember cpf:OtherLoanMember us-gaap:PassMember 2019-09-30 0000701347 us-gaap:ConsumerPortfolioSegmentMember cpf:OtherLoanMember us-gaap:SpecialMentionMember 2019-09-30 0000701347 us-gaap:FinanceLeasesPortfolioSegmentMember us-gaap:SpecialMentionMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:ResidentialRealEstateLoanMember us-gaap:UnlikelyToBeCollectedFinancingReceivableMember 2019-09-30 0000701347 us-gaap:FinanceLeasesPortfolioSegmentMember us-gaap:UnlikelyToBeCollectedFinancingReceivableMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:CommercialRealEstateLoanMember us-gaap:UnlikelyToBeCollectedFinancingReceivableMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:ConstructionLoansMember us-gaap:SubstandardMember 2019-09-30 0000701347 cpf:CommercialFinancialAndAgriculturalPortfolioSegmentMember us-gaap:UnlikelyToBeCollectedFinancingReceivableMember 2019-09-30 0000701347 cpf:CommercialFinancialAndAgriculturalPortfolioSegmentMember us-gaap:SpecialMentionMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:CommercialRealEstateLoanMember us-gaap:PassMember 2019-09-30 0000701347 us-gaap:FinanceLeasesPortfolioSegmentMember us-gaap:PassMember 2019-09-30 0000701347 us-gaap:PassMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:ResidentialRealEstateLoanMember us-gaap:SpecialMentionMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:HomeEquityLoanMember us-gaap:SpecialMentionMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:ResidentialRealEstateLoanMember us-gaap:PassMember 2019-09-30 0000701347 cpf:CommercialFinancialAndAgriculturalPortfolioSegmentMember us-gaap:PassMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:CommercialRealEstateLoanMember us-gaap:SpecialMentionMember 2019-09-30 0000701347 us-gaap:ConsumerPortfolioSegmentMember cpf:OtherLoanMember us-gaap:SubstandardMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:ConstructionLoansMember us-gaap:SpecialMentionMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:ConstructionLoansMember us-gaap:PassMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:HomeEquityLoanMember us-gaap:PassMember 2019-09-30 0000701347 us-gaap:SubstandardMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:ResidentialRealEstateLoanMember us-gaap:SubstandardMember 2019-09-30 0000701347 cpf:CommercialFinancialAndAgriculturalPortfolioSegmentMember us-gaap:SubstandardMember 2019-09-30 0000701347 us-gaap:FinanceLeasesPortfolioSegmentMember us-gaap:SubstandardMember 2019-09-30 0000701347 us-gaap:UnlikelyToBeCollectedFinancingReceivableMember 2019-09-30 0000701347 us-gaap:SpecialMentionMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:CommercialRealEstateLoanMember us-gaap:SubstandardMember 2019-09-30 0000701347 us-gaap:ConsumerPortfolioSegmentMember cpf:OtherLoanMember us-gaap:UnlikelyToBeCollectedFinancingReceivableMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:HomeEquityLoanMember us-gaap:UnlikelyToBeCollectedFinancingReceivableMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:ConstructionLoansMember us-gaap:UnlikelyToBeCollectedFinancingReceivableMember 2018-12-31 0000701347 us-gaap:ConsumerPortfolioSegmentMember cpf:OtherLoanMember us-gaap:PassMember 2018-12-31 0000701347 us-gaap:FinanceLeasesPortfolioSegmentMember us-gaap:SpecialMentionMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:ConstructionLoansMember us-gaap:SubstandardMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:CommercialRealEstateLoanMember us-gaap:UnlikelyToBeCollectedFinancingReceivableMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:ConstructionLoansMember us-gaap:PassMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:HomeEquityLoanMember us-gaap:UnlikelyToBeCollectedFinancingReceivableMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:CommercialRealEstateLoanMember us-gaap:SubstandardMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:HomeEquityLoanMember us-gaap:SpecialMentionMember 2018-12-31 0000701347 us-gaap:PassMember 2018-12-31 0000701347 us-gaap:FinanceLeasesPortfolioSegmentMember us-gaap:PassMember 2018-12-31 0000701347 cpf:CommercialFinancialAndAgriculturalPortfolioSegmentMember us-gaap:SpecialMentionMember 2018-12-31 0000701347 us-gaap:UnlikelyToBeCollectedFinancingReceivableMember 2018-12-31 0000701347 us-gaap:ConsumerPortfolioSegmentMember cpf:OtherLoanMember us-gaap:SubstandardMember 2018-12-31 0000701347 us-gaap:FinanceLeasesPortfolioSegmentMember us-gaap:UnlikelyToBeCollectedFinancingReceivableMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:ResidentialRealEstateLoanMember us-gaap:SubstandardMember 2018-12-31 0000701347 us-gaap:SubstandardMember 2018-12-31 0000701347 cpf:CommercialFinancialAndAgriculturalPortfolioSegmentMember us-gaap:SubstandardMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:ResidentialRealEstateLoanMember us-gaap:SpecialMentionMember 2018-12-31 0000701347 us-gaap:SpecialMentionMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:CommercialRealEstateLoanMember us-gaap:PassMember 2018-12-31 0000701347 cpf:CommercialFinancialAndAgriculturalPortfolioSegmentMember us-gaap:UnlikelyToBeCollectedFinancingReceivableMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:HomeEquityLoanMember us-gaap:SubstandardMember 2018-12-31 0000701347 us-gaap:FinanceLeasesPortfolioSegmentMember us-gaap:SubstandardMember 2018-12-31 0000701347 us-gaap:ConsumerPortfolioSegmentMember cpf:OtherLoanMember us-gaap:SpecialMentionMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:CommercialRealEstateLoanMember us-gaap:SpecialMentionMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:ConstructionLoansMember us-gaap:SpecialMentionMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:ResidentialRealEstateLoanMember us-gaap:UnlikelyToBeCollectedFinancingReceivableMember 2018-12-31 0000701347 us-gaap:ConsumerPortfolioSegmentMember cpf:OtherLoanMember us-gaap:UnlikelyToBeCollectedFinancingReceivableMember 2018-12-31 0000701347 cpf:CommercialFinancialAndAgriculturalPortfolioSegmentMember us-gaap:PassMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:HomeEquityLoanMember us-gaap:PassMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:ResidentialRealEstateLoanMember us-gaap:PassMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:CommercialRealEstateLoanMember 2019-01-01 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:HomeEquityLoanMember 2018-01-01 2018-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:ResidentialRealEstateLoanMember 2019-07-01 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:HomeEquityLoanMember 2018-07-01 2018-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:ConstructionLoansMember 2019-01-01 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:ConstructionLoansMember 2018-07-01 2018-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:CommercialRealEstateLoanMember 2018-07-01 2018-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:ResidentialRealEstateLoanMember 2018-07-01 2018-09-30 0000701347 cpf:CommercialFinancialAndAgriculturalPortfolioSegmentMember 2019-07-01 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:ConstructionLoansMember 2019-07-01 2019-09-30 0000701347 cpf:CommercialFinancialAndAgriculturalPortfolioSegmentMember 2018-01-01 2018-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:CommercialRealEstateLoanMember 2018-01-01 2018-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:CommercialRealEstateLoanMember 2019-07-01 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:ResidentialRealEstateLoanMember 2019-01-01 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:ResidentialRealEstateLoanMember 2018-01-01 2018-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:ConstructionLoansMember 2018-01-01 2018-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:HomeEquityLoanMember 2019-07-01 2019-09-30 0000701347 cpf:CommercialFinancialAndAgriculturalPortfolioSegmentMember 2019-01-01 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:HomeEquityLoanMember 2019-01-01 2019-09-30 0000701347 cpf:CommercialFinancialAndAgriculturalPortfolioSegmentMember 2018-07-01 2018-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:HomeEquityLoanMember us-gaap:FinancingReceivables60To89DaysPastDueMember 2018-12-31 0000701347 us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2018-12-31 0000701347 cpf:CommercialFinancialAndAgriculturalPortfolioSegmentMember us-gaap:FinancingReceivables60To89DaysPastDueMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:ResidentialRealEstateLoanMember us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:ConstructionLoansMember us-gaap:FinancingReceivables30To59DaysPastDueMember 2018-12-31 0000701347 us-gaap:FinancingReceivables30To59DaysPastDueMember 2018-12-31 0000701347 us-gaap:ConsumerPortfolioSegmentMember cpf:OtherLoanMember us-gaap:FinancingReceivables60To89DaysPastDueMember 2018-12-31 0000701347 us-gaap:FinancingReceivables60To89DaysPastDueMember 2018-12-31 0000701347 us-gaap:FinanceLeasesPortfolioSegmentMember us-gaap:FinancingReceivables60To89DaysPastDueMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:ConstructionLoansMember us-gaap:FinancingReceivables60To89DaysPastDueMember 2018-12-31 0000701347 us-gaap:ConsumerPortfolioSegmentMember cpf:OtherLoanMember us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:ConstructionLoansMember us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2018-12-31 0000701347 us-gaap:FinanceLeasesPortfolioSegmentMember us-gaap:FinancingReceivables30To59DaysPastDueMember 2018-12-31 0000701347 us-gaap:ConsumerPortfolioSegmentMember cpf:OtherLoanMember us-gaap:FinancingReceivables30To59DaysPastDueMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:CommercialRealEstateLoanMember us-gaap:FinancingReceivables30To59DaysPastDueMember 2018-12-31 0000701347 cpf:CommercialFinancialAndAgriculturalPortfolioSegmentMember us-gaap:FinancingReceivables30To59DaysPastDueMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:CommercialRealEstateLoanMember us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2018-12-31 0000701347 us-gaap:FinanceLeasesPortfolioSegmentMember us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:ResidentialRealEstateLoanMember us-gaap:FinancingReceivables30To59DaysPastDueMember 2018-12-31 0000701347 cpf:CommercialFinancialAndAgriculturalPortfolioSegmentMember us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:HomeEquityLoanMember us-gaap:FinancingReceivables30To59DaysPastDueMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:CommercialRealEstateLoanMember us-gaap:FinancingReceivables60To89DaysPastDueMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:ResidentialRealEstateLoanMember us-gaap:FinancingReceivables60To89DaysPastDueMember 2018-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:HomeEquityLoanMember us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember 2018-12-31 0000701347 us-gaap:NonperformingFinancingReceivableMember 2018-01-01 2018-12-31 0000701347 us-gaap:NonperformingFinancingReceivableMember 2018-12-31 0000701347 stpr:HI us-gaap:NonperformingFinancingReceivableMember us-gaap:ResidentialPortfolioSegmentMember 2019-01-01 2019-09-30 0000701347 us-gaap:UncollateralizedMember us-gaap:ConsumerPortfolioSegmentMember 2018-12-31 0000701347 us-gaap:UncollateralizedMember us-gaap:ConsumerPortfolioSegmentMember 2019-09-30 0000701347 stpr:HI us-gaap:NonperformingFinancingReceivableMember us-gaap:ResidentialPortfolioSegmentMember 2019-09-30 0000701347 us-gaap:ConsumerPortfolioSegmentMember 2018-01-01 2018-12-31 0000701347 us-gaap:ConsumerPortfolioSegmentMember 2019-07-01 2019-09-30 0000701347 us-gaap:ConsumerPortfolioSegmentMember 2019-01-01 2019-09-30 0000701347 us-gaap:ConsumerPortfolioSegmentMember 2019-09-30 0000701347 us-gaap:ConsumerPortfolioSegmentMember 2018-12-31 0000701347 us-gaap:ConsumerPortfolioSegmentMember 2019-01-01 2019-03-31 0000701347 us-gaap:NonperformingFinancingReceivableMember 2019-01-01 2019-09-30 0000701347 us-gaap:NonperformingFinancingReceivableMember 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:ConstructionLoansMember 2018-09-30 0000701347 us-gaap:FinanceLeasesPortfolioSegmentMember 2019-07-01 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:HomeEquityLoanMember 2019-06-30 0000701347 cpf:CommercialFinancialAndAgriculturalPortfolioSegmentMember 2019-06-30 0000701347 us-gaap:FinanceLeasesPortfolioSegmentMember 2018-07-01 2018-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:CommercialRealEstateLoanMember 2019-06-30 0000701347 us-gaap:ConsumerPortfolioSegmentMember cpf:OtherLoanMember 2019-07-01 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:ResidentialRealEstateLoanMember 2019-06-30 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:ResidentialRealEstateLoanMember 2018-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:ConstructionLoansMember 2019-06-30 0000701347 us-gaap:ConsumerPortfolioSegmentMember cpf:OtherLoanMember 2018-07-01 2018-09-30 0000701347 us-gaap:FinanceLeasesPortfolioSegmentMember 2018-06-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:ConstructionLoansMember 2018-06-30 0000701347 cpf:CommercialFinancialAndAgriculturalPortfolioSegmentMember 2018-09-30 0000701347 us-gaap:ConsumerPortfolioSegmentMember cpf:OtherLoanMember 2019-06-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:HomeEquityLoanMember 2018-06-30 0000701347 us-gaap:ConsumerPortfolioSegmentMember cpf:OtherLoanMember 2018-06-30 0000701347 cpf:CommercialFinancialAndAgriculturalPortfolioSegmentMember 2018-06-30 0000701347 us-gaap:FinanceLeasesPortfolioSegmentMember 2019-06-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:HomeEquityLoanMember 2018-09-30 0000701347 us-gaap:FinanceLeasesPortfolioSegmentMember 2018-09-30 0000701347 us-gaap:ConsumerPortfolioSegmentMember cpf:OtherLoanMember 2018-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:CommercialRealEstateLoanMember 2018-06-30 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:ResidentialRealEstateLoanMember 2018-06-30 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:CommercialRealEstateLoanMember 2018-09-30 0000701347 us-gaap:ConsumerPortfolioSegmentMember cpf:OtherLoanMember 2019-01-01 2019-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:HomeEquityLoanMember 2017-12-31 0000701347 us-gaap:ConsumerPortfolioSegmentMember cpf:OtherLoanMember 2018-01-01 2018-09-30 0000701347 cpf:RealEstatePortfolioSegmentMember us-gaap:ConstructionLoansMember 2017-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:ResidentialRealEstateLoanMember 2017-12-31 0000701347 us-gaap:FinanceLeasesPortfolioSegmentMember 2019-01-01 2019-09-30 0000701347 us-gaap:FinanceLeasesPortfolioSegmentMember 2018-01-01 2018-09-30 0000701347 us-gaap:FinanceLeasesPortfolioSegmentMember 2017-12-31 0000701347 cpf:RealEstatePortfolioSegmentMember cpf:CommercialRealEstateLoanMember 2017-12-31 0000701347 us-gaap:ConsumerPortfolioSegmentMember cpf:OtherLoanMember 2017-12-31 0000701347 cpf:CommercialFinancialAndAgriculturalPortfolioSegmentMember 2017-12-31 0000701347 cpf:MortgageServicingRightsMember 2019-09-30 0000701347 cpf:MortgageServicingRightsMember 2018-09-30 0000701347 us-gaap:CoreDepositsMember 2018-01-01 2018-09-30 0000701347 cpf:MortgageServicingRightsMember 2019-01-01 2019-09-30 0000701347 cpf:MortgageServicingRightsMember 2018-01-01 2018-09-30 0000701347 us-gaap:CoreDepositsMember 2018-09-30 0000701347 cpf:MortgageServicingRightsMember 2018-12-31 0000701347 us-gaap:CoreDepositsMember 2019-01-01 2019-09-30 0000701347 us-gaap:CoreDepositsMember 2017-12-31 0000701347 cpf:MortgageServicingRightsMember 2017-12-31 0000701347 us-gaap:CoreDepositsMember 2019-09-30 0000701347 us-gaap:CoreDepositsMember 2018-12-31 0000701347 cpf:MortgageServicingRightsMember us-gaap:MeasurementInputConstantPrepaymentRateMember 2019-09-30 0000701347 cpf:MortgageServicingRightsMember us-gaap:MeasurementInputDiscountRateMember 2018-09-30 0000701347 cpf:MortgageServicingRightsMember us-gaap:MeasurementInputDiscountRateMember 2019-09-30 0000701347 cpf:MortgageServicingRightsMember us-gaap:MeasurementInputConstantPrepaymentRateMember 2018-09-30 0000701347 cpf:MortgageServicingRightsMember 2019-07-01 2019-09-30 0000701347 cpf:MortgageServicingRightsMember 2018-07-01 2018-09-30 0000701347 us-gaap:ForwardContractsMember us-gaap:NondesignatedMember 2019-09-30 0000701347 us-gaap:InterestRateLockCommitmentsMember us-gaap:NondesignatedMember 2019-09-30 0000701347 cpf:LoansHeldforsaleMember us-gaap:CashFlowHedgingMember us-gaap:NondesignatedMember us-gaap:OtherIncomeMember 2019-01-01 2019-09-30 0000701347 cpf:LoansHeldforsaleMember us-gaap:CashFlowHedgingMember us-gaap:NondesignatedMember us-gaap:OtherIncomeMember 2018-07-01 2018-09-30 0000701347 cpf:InterestRateLockandForwardSaleCommitmentMember us-gaap:CashFlowHedgingMember us-gaap:NondesignatedMember cpf:MortgageBankingIncomeMember 2019-01-01 2019-09-30 0000701347 cpf:InterestRateLockandForwardSaleCommitmentMember us-gaap:CashFlowHedgingMember us-gaap:NondesignatedMember cpf:MortgageBankingIncomeMember 2018-01-01 2018-09-30 0000701347 cpf:InterestRateLockandForwardSaleCommitmentMember us-gaap:CashFlowHedgingMember us-gaap:NondesignatedMember cpf:MortgageBankingIncomeMember 2019-07-01 2019-09-30 0000701347 cpf:LoansHeldforsaleMember us-gaap:CashFlowHedgingMember us-gaap:NondesignatedMember us-gaap:OtherIncomeMember 2019-07-01 2019-09-30 0000701347 cpf:LoansHeldforsaleMember us-gaap:CashFlowHedgingMember us-gaap:NondesignatedMember us-gaap:OtherIncomeMember 2018-01-01 2018-09-30 0000701347 cpf:InterestRateLockandForwardSaleCommitmentMember us-gaap:CashFlowHedgingMember us-gaap:NondesignatedMember cpf:MortgageBankingIncomeMember 2018-07-01 2018-09-30 0000701347 cpf:InterestRateLockandForwardSaleCommitmentMember us-gaap:NondesignatedMember 2019-09-30 0000701347 cpf:InterestRateLockandForwardSaleCommitmentMember us-gaap:NondesignatedMember 2018-12-31 0000701347 us-gaap:SubordinatedDebtMember 2019-01-01 2019-09-30 0000701347 srt:MaximumMember us-gaap:SubordinatedDebtMember 2019-01-01 2019-09-30 0000701347 cpf:CPBCapitalTrustIIIMember 2003-10-01 2003-10-31 0000701347 cpf:CPBCapitalTrustIIMember 2003-10-01 2003-10-31 0000701347 us-gaap:FederalReserveBankAdvancesMember 2018-12-31 0000701347 us-gaap:FederalHomeLoanBankAdvancesMember 2019-09-30 0000701347 cpf:CPBCapitalTrustIVMember 2004-09-01 2004-09-30 0000701347 cpf:CPBCapitalTrustIIMember 2019-01-07 2019-01-07 0000701347 cpf:CPBCapitalTrustIIIMember 2018-12-17 2018-12-17 0000701347 us-gaap:FederalHomeLoanBankBorrowingsMember 2019-09-30 0000701347 cpf:CPBCapitalTrustIIIMember us-gaap:SubordinatedDebtMember 2018-12-17 0000701347 us-gaap:FederalReserveBankAdvancesMember 2019-09-30 0000701347 cpf:CPBCapitalTrustVMember 2004-12-01 2004-12-31 0000701347 cpf:CPBCapitalTrustIIIMember us-gaap:SubordinatedDebtMember 2019-09-30 0000701347 us-gaap:FederalHomeLoanBankBorrowingsMember 2018-12-31 0000701347 cpf:CPBCapitalTrustIIMember us-gaap:SubordinatedDebtMember 2019-01-07 0000701347 cpf:CPBCapitalTrustIIMember us-gaap:SubordinatedDebtMember 2019-09-30 0000701347 cpf:CPBCapitalTrustIVMember us-gaap:SubordinatedDebtMember 2019-09-30 0000701347 cpf:CPBCapitalTrustVMember us-gaap:SubordinatedDebtMember 2019-09-30 0000701347 2003-10-01 2003-10-31 0000701347 us-gaap:JuniorSubordinatedDebtMember 2019-09-30 0000701347 cpf:TrustIIMember us-gaap:JuniorSubordinatedDebtMember 2018-12-31 0000701347 cpf:TrustIVMember us-gaap:JuniorSubordinatedDebtMember 2019-09-30 0000701347 cpf:TrustVMember us-gaap:JuniorSubordinatedDebtMember 2018-12-31 0000701347 us-gaap:JuniorSubordinatedDebtMember 2018-12-31 0000701347 cpf:TrustVMember us-gaap:JuniorSubordinatedDebtMember 2019-09-30 0000701347 cpf:TrustIVMember us-gaap:JuniorSubordinatedDebtMember 2018-12-31 0000701347 us-gaap:FederalHomeLoanBankAdvancesMember 2018-12-31 0000701347 cpf:OtherServiceChargesandFeesMember 2019-01-01 2019-09-30 0000701347 cpf:LoanPlacementFeesMember 2019-01-01 2019-09-30 0000701347 cpf:ServiceChargesonDepositAccountsMember 2018-07-01 2018-09-30 0000701347 cpf:IncomefromFiduciaryActivitiesMember 2019-01-01 2019-09-30 0000701347 cpf:NetGainLossonSaleofForeclosedAssetsMember 2018-01-01 2018-09-30 0000701347 cpf:IncomefromFiduciaryActivitiesMember 2019-07-01 2019-09-30 0000701347 cpf:NetGainLossonSaleofForeclosedAssetsMember 2019-01-01 2019-09-30 0000701347 cpf:FeesonForeignExchangeMember 2018-07-01 2018-09-30 0000701347 cpf:ServiceChargesonDepositAccountsMember 2019-07-01 2019-09-30 0000701347 cpf:ServiceChargesonDepositAccountsMember 2019-01-01 2019-09-30 0000701347 cpf:OtherServiceChargesandFeesMember 2018-01-01 2018-09-30 0000701347 cpf:LoanPlacementFeesMember 2019-07-01 2019-09-30 0000701347 cpf:OtherServiceChargesandFeesMember 2019-07-01 2019-09-30 0000701347 cpf:OtherServiceChargesandFeesMember 2018-07-01 2018-09-30 0000701347 cpf:FeesonForeignExchangeMember 2019-07-01 2019-09-30 0000701347 cpf:ServiceChargesonDepositAccountsMember 2018-01-01 2018-09-30 0000701347 cpf:FeesonForeignExchangeMember 2018-01-01 2018-09-30 0000701347 cpf:IncomefromFiduciaryActivitiesMember 2018-07-01 2018-09-30 0000701347 cpf:LoanPlacementFeesMember 2018-01-01 2018-09-30 0000701347 cpf:LoanPlacementFeesMember 2018-07-01 2018-09-30 0000701347 cpf:FeesonForeignExchangeMember 2019-01-01 2019-09-30 0000701347 cpf:NetGainLossonSaleofForeclosedAssetsMember 2018-07-01 2018-09-30 0000701347 cpf:IncomefromFiduciaryActivitiesMember 2018-01-01 2018-09-30 0000701347 cpf:NetGainLossonSaleofForeclosedAssetsMember 2019-07-01 2019-09-30 0000701347 cpf:RestrictedStockAndRestrictedStockUnitsRSUMember 2019-01-01 2019-09-30 0000701347 cpf:RestrictedStockAndRestrictedStockUnitsRSUMember 2018-12-31 0000701347 cpf:RestrictedStockAndRestrictedStockUnitsRSUMember 2019-09-30 0000701347 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-09-30 0000701347 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-01-01 2019-09-30 0000701347 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-01-01 2019-09-30 0000701347 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-01-01 0000701347 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2018-12-31 0000701347 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-09-30 0000701347 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-01-01 0000701347 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-12-31 0000701347 cpf:AccountingStandardsUpdate201802andAccountingStandardsUpdate201601Member us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 0000701347 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-09-30 0000701347 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-07-01 2018-09-30 0000701347 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2018-07-01 2018-09-30 0000701347 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-09-30 0000701347 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2018-06-30 0000701347 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-06-30 0000701347 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2018-09-30 0000701347 us-gaap:AccumulatedNetInvestmentGainLossAttributableToNoncontrollingInterestMember 2019-01-01 2019-09-30 0000701347 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember 2019-01-01 2019-09-30 0000701347 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2019-01-01 2019-09-30 0000701347 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetTransitionAssetObligationMember 2019-01-01 2019-09-30 0000701347 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-01-01 2019-09-30 0000701347 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember 2019-01-01 2019-09-30 0000701347 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-01-01 2018-09-30 0000701347 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2019-01-01 2019-09-30 0000701347 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2018-01-01 2018-09-30 0000701347 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetTransitionAssetObligationMember 2019-01-01 2019-09-30 0000701347 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2018-01-01 2018-09-30 0000701347 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-01-01 2019-09-30 0000701347 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-09-30 0000701347 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetTransitionAssetObligationMember 2018-01-01 2018-09-30 0000701347 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-09-30 0000701347 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember 2018-01-01 2018-09-30 0000701347 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2018-01-01 2018-09-30 0000701347 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2017-12-31 0000701347 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-09-30 0000701347 cpf:AccountingStandardsUpdate201802andAccountingStandardsUpdate201601Member us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 0000701347 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-01-01 0000701347 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-01-01 2018-09-30 0000701347 cpf:AccountingStandardsUpdate201802andAccountingStandardsUpdate201601Member us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-09-30 0000701347 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2018-01-01 0000701347 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2017-12-31 0000701347 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember 2018-07-01 2018-09-30 0000701347 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2018-07-01 2018-09-30 0000701347 us-gaap:AccumulatedNetInvestmentGainLossAttributableToNoncontrollingInterestMember 2018-07-01 2018-09-30 0000701347 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetTransitionAssetObligationMember 2018-07-01 2018-09-30 0000701347 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-07-01 2019-09-30 0000701347 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-07-01 2019-09-30 0000701347 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-06-30 0000701347 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-06-30 0000701347 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-07-01 2019-09-30 0000701347 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember 2019-07-01 2019-09-30 0000701347 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-07-01 2019-09-30 0000701347 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetTransitionAssetObligationMember 2019-07-01 2019-09-30 0000701347 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-07-01 2018-09-30 0000701347 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2019-07-01 2019-09-30 0000701347 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2018-07-01 2018-09-30 0000701347 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember 2019-07-01 2019-09-30 0000701347 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetTransitionAssetObligationMember 2018-07-01 2018-09-30 0000701347 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2018-07-01 2018-09-30 0000701347 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember 2018-07-01 2018-09-30 0000701347 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember 2018-07-01 2018-09-30 0000701347 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetTransitionAssetObligationMember 2018-01-01 2018-09-30 0000701347 us-gaap:AccumulatedNetInvestmentGainLossAttributableToNoncontrollingInterestMember 2018-01-01 2018-09-30 0000701347 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2018-01-01 2018-09-30 0000701347 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember 2018-01-01 2018-09-30 0000701347 us-gaap:AccumulatedNetInvestmentGainLossAttributableToNoncontrollingInterestMember 2019-07-01 2019-09-30 0000701347 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember 2019-07-01 2019-09-30 0000701347 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2019-07-01 2019-09-30 0000701347 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetTransitionAssetObligationMember 2019-07-01 2019-09-30 0000701347 us-gaap:EmployeeStockOptionMember 2018-01-01 2018-09-30 0000701347 us-gaap:EmployeeStockOptionMember 2019-01-01 2019-09-30 0000701347 us-gaap:EmployeeStockOptionMember 2019-07-01 2019-09-30 0000701347 us-gaap:EmployeeStockOptionMember 2018-07-01 2018-09-30 0000701347 us-gaap:FairValueInputsLevel2Member us-gaap:CommitmentsToExtendCreditMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel3Member us-gaap:CommitmentsToExtendCreditMember 2018-12-31 0000701347 cpf:InterestRateForwardsMember 2018-12-31 0000701347 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember cpf:InterestRateForwardsMember 2018-12-31 0000701347 us-gaap:EstimateOfFairValueFairValueDisclosureMember cpf:InterestRateOptionsMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel1Member cpf:InterestRateOptionsMember 2018-12-31 0000701347 cpf:StandbyLettersOfCreditAndFinancialGuaranteesMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember cpf:InterestRateForwardsMember 2018-12-31 0000701347 us-gaap:CarryingReportedAmountFairValueDisclosureMember cpf:StandbyLettersOfCreditAndFinancialGuaranteesMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel2Member cpf:InterestRateOptionsMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel3Member cpf:InterestRateOptionsMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel1Member us-gaap:CommitmentsToExtendCreditMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel1Member cpf:StandbyLettersOfCreditAndFinancialGuaranteesMember 2018-12-31 0000701347 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:CommitmentsToExtendCreditMember 2018-12-31 0000701347 us-gaap:CarryingReportedAmountFairValueDisclosureMember cpf:InterestRateOptionsMember 2018-12-31 0000701347 us-gaap:EstimateOfFairValueFairValueDisclosureMember cpf:StandbyLettersOfCreditAndFinancialGuaranteesMember 2018-12-31 0000701347 us-gaap:CommitmentsToExtendCreditMember 2018-12-31 0000701347 cpf:InterestRateOptionsMember 2018-12-31 0000701347 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember cpf:InterestRateForwardsMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember cpf:InterestRateForwardsMember 2018-12-31 0000701347 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:CommitmentsToExtendCreditMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel2Member cpf:StandbyLettersOfCreditAndFinancialGuaranteesMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel3Member cpf:StandbyLettersOfCreditAndFinancialGuaranteesMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember cpf:InterestRateForwardsMember 2018-12-31 0000701347 cpf:MortgageRevenueBondsMember 2019-09-30 0000701347 srt:WeightedAverageMember cpf:MortgageRevenueBondsMember us-gaap:MeasurementInputDiscountRateMember 2018-12-31 0000701347 srt:WeightedAverageMember cpf:MortgageRevenueBondsMember us-gaap:MeasurementInputDiscountRateMember 2019-09-30 0000701347 cpf:MortgageRevenueBondsMember 2018-09-30 0000701347 srt:WeightedAverageMember cpf:MortgageRevenueBondsMember us-gaap:MeasurementInputDiscountRateMember 2018-09-30 0000701347 us-gaap:FairValueInputsLevel2Member cpf:StandbyLettersOfCreditAndFinancialGuaranteesMember 2019-09-30 0000701347 us-gaap:EstimateOfFairValueFairValueDisclosureMember cpf:StandbyLettersOfCreditAndFinancialGuaranteesMember 2019-09-30 0000701347 us-gaap:CommitmentsToExtendCreditMember 2019-09-30 0000701347 cpf:InterestRateOptionsMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel3Member cpf:StandbyLettersOfCreditAndFinancialGuaranteesMember 2019-09-30 0000701347 us-gaap:CarryingReportedAmountFairValueDisclosureMember cpf:InterestRateOptionsMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel1Member cpf:StandbyLettersOfCreditAndFinancialGuaranteesMember 2019-09-30 0000701347 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember cpf:InterestRateForwardsMember 2019-09-30 0000701347 us-gaap:EstimateOfFairValueFairValueDisclosureMember cpf:InterestRateOptionsMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember cpf:InterestRateForwardsMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel1Member us-gaap:CommitmentsToExtendCreditMember 2019-09-30 0000701347 cpf:InterestRateForwardsMember 2019-09-30 0000701347 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:FairValueMeasurementsRecurringMember cpf:InterestRateForwardsMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel1Member cpf:InterestRateOptionsMember 2019-09-30 0000701347 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:CommitmentsToExtendCreditMember 2019-09-30 0000701347 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:CommitmentsToExtendCreditMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember cpf:InterestRateForwardsMember 2019-09-30 0000701347 cpf:StandbyLettersOfCreditAndFinancialGuaranteesMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel2Member cpf:InterestRateOptionsMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel3Member cpf:InterestRateOptionsMember 2019-09-30 0000701347 us-gaap:CarryingReportedAmountFairValueDisclosureMember cpf:StandbyLettersOfCreditAndFinancialGuaranteesMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel2Member us-gaap:CommitmentsToExtendCreditMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember cpf:InterestRateForwardsMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel3Member us-gaap:CommitmentsToExtendCreditMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel1Member 2018-12-31 0000701347 us-gaap:FairValueInputsLevel3Member 2018-12-31 0000701347 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel2Member 2018-12-31 0000701347 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasurySecuritiesMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember cpf:MortgageBackedSecuritiesCommercialNonGovernmentAgenciesMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember cpf:MortgageBackedSecuritiesResidentialNonGovernmentAgenciesMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:EquitySecuritiesMember 2019-09-30 0000701347 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasurySecuritiesMember 2019-09-30 0000701347 us-gaap:FairValueMeasurementsRecurringMember 2019-09-30 0000701347 us-gaap:FairValueMeasurementsRecurringMember us-gaap:EquitySecuritiesMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember cpf:MortgageBackedSecuritiesResidentialUSGovernmentSponsoredEntitiesMember 2019-09-30 0000701347 us-gaap:FairValueMeasurementsRecurringMember cpf:MortgageBackedSecuritiesResidentialUSGovernmentSponsoredEntitiesMember 2019-09-30 0000701347 us-gaap:InterestRateContractMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember cpf:MortgageBackedSecuritiesCommercialNonGovernmentAgenciesMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasurySecuritiesMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember cpf:MortgageBackedSecuritiesResidentialUSGovernmentSponsoredEntitiesMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:EquitySecuritiesMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember cpf:MortgageBackedSecuritiesResidentialNonGovernmentAgenciesMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember 2019-09-30 0000701347 us-gaap:InterestRateContractMember us-gaap:FairValueMeasurementsRecurringMember 2019-09-30 0000701347 us-gaap:FairValueMeasurementsRecurringMember cpf:MortgageBackedSecuritiesCommercialNonGovernmentAgenciesMember 2019-09-30 0000701347 us-gaap:InterestRateContractMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-09-30 0000701347 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember 2019-09-30 0000701347 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember cpf:MortgageBackedSecuritiesResidentialUSGovernmentSponsoredEntitiesMember 2019-09-30 0000701347 us-gaap:FairValueMeasurementsRecurringMember us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2019-09-30 0000701347 us-gaap:InterestRateContractMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasurySecuritiesMember 2019-09-30 0000701347 us-gaap:FairValueMeasurementsRecurringMember cpf:MortgageBackedSecuritiesResidentialNonGovernmentAgenciesMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember cpf:MortgageBackedSecuritiesCommercialNonGovernmentAgenciesMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:EquitySecuritiesMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember cpf:MortgageBackedSecuritiesResidentialNonGovernmentAgenciesMember 2019-09-30 0000701347 us-gaap:USStatesAndPoliticalSubdivisionsMember 2017-12-31 0000701347 us-gaap:USStatesAndPoliticalSubdivisionsMember 2019-01-01 2019-09-30 0000701347 us-gaap:USStatesAndPoliticalSubdivisionsMember 2018-12-31 0000701347 us-gaap:USStatesAndPoliticalSubdivisionsMember 2018-01-01 2018-09-30 0000701347 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsNonrecurringMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsNonrecurringMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsNonrecurringMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsNonrecurringMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000701347 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasurySecuritiesMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000701347 us-gaap:FairValueMeasurementsRecurringMember cpf:MortgageBackedSecuritiesResidentialUSGovernmentSponsoredEntitiesMember 2018-12-31 0000701347 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2018-12-31 0000701347 us-gaap:InterestRateContractMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember cpf:MortgageBackedSecuritiesCommercialNonGovernmentAgenciesMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2018-12-31 0000701347 us-gaap:FairValueMeasurementsRecurringMember cpf:MortgageBackedSecuritiesResidentialNonGovernmentAgenciesMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2018-12-31 0000701347 us-gaap:FairValueMeasurementsRecurringMember cpf:MortgageBackedSecuritiesCommercialNonGovernmentAgenciesMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember cpf:MortgageBackedSecuritiesResidentialNonGovernmentAgenciesMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2018-12-31 0000701347 us-gaap:InterestRateContractMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember cpf:MortgageBackedSecuritiesCommercialNonGovernmentAgenciesMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:EquitySecuritiesMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember cpf:MortgageBackedSecuritiesCommercialNonGovernmentAgenciesMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember cpf:MortgageBackedSecuritiesResidentialNonGovernmentAgenciesMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember cpf:MortgageBackedSecuritiesResidentialUSGovernmentSponsoredEntitiesMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasurySecuritiesMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasurySecuritiesMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:EquitySecuritiesMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:EquitySecuritiesMember 2018-12-31 0000701347 us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember cpf:MortgageBackedSecuritiesResidentialUSGovernmentSponsoredEntitiesMember 2018-12-31 0000701347 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember 2018-12-31 0000701347 us-gaap:InterestRateContractMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000701347 us-gaap:FairValueMeasurementsRecurringMember us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember cpf:MortgageBackedSecuritiesResidentialNonGovernmentAgenciesMember 2018-12-31 0000701347 us-gaap:FairValueMeasurementsRecurringMember us-gaap:EquitySecuritiesMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember cpf:MortgageBackedSecuritiesResidentialUSGovernmentSponsoredEntitiesMember 2018-12-31 0000701347 us-gaap:InterestRateContractMember us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2018-12-31 0000701347 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasurySecuritiesMember 2018-12-31 0000701347 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-09-30 0000701347 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2019-09-30 0000701347 us-gaap:FairValueInputsLevel2Member 2019-09-30 0000701347 us-gaap:FairValueInputsLevel1Member 2019-09-30 0000701347 us-gaap:FairValueInputsLevel3Member 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherMember cpf:TreasuryMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:BankingOperationsMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:TreasuryMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:MortgageBankingIncomeMember cpf:BankingOperationsMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:InvestmentSecuritiesGainsLossesMember cpf:BankingOperationsMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember 2019-01-01 2019-09-30 0000701347 cpf:TreasuryMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember us-gaap:CorporateAndOtherMember 2019-01-01 2019-09-30 0000701347 us-gaap:IntersegmentEliminationMember cpf:TreasuryMember 2019-01-01 2019-09-30 0000701347 us-gaap:IntersegmentEliminationMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:NetGainLossonSaleofForeclosedAssetsMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:ServiceChargesonDepositAccountsMember cpf:TreasuryMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromFiduciaryActivitiesMember cpf:TreasuryMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:MortgageBankingIncomeMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherServiceChargesandFeesMember cpf:TreasuryMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromBankownedLifeInsuranceMember us-gaap:CorporateAndOtherMember 2019-01-01 2019-09-30 0000701347 us-gaap:IntersegmentEliminationMember cpf:BankingOperationsMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:LoanPlacementFeesMember cpf:BankingOperationsMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromFiduciaryActivitiesMember cpf:BankingOperationsMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:FeesonForeignExchangeMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromBankownedLifeInsuranceMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:FeesonForeignExchangeMember cpf:TreasuryMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:NetGainLossonSaleofForeclosedAssetsMember cpf:BankingOperationsMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:FeesonForeignExchangeMember cpf:BankingOperationsMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherServiceChargesandFeesMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:MortgageBankingIncomeMember cpf:TreasuryMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:EquityinEarningsofUnconsolidatedSubsidiariesMember cpf:BankingOperationsMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:ServiceChargesonDepositAccountsMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:LoanPlacementFeesMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherMember cpf:BankingOperationsMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:InvestmentSecuritiesGainsLossesMember cpf:TreasuryMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:LoanPlacementFeesMember cpf:TreasuryMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:EquityinEarningsofUnconsolidatedSubsidiariesMember cpf:TreasuryMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:ServiceChargesonDepositAccountsMember cpf:BankingOperationsMember 2019-01-01 2019-09-30 0000701347 us-gaap:CorporateAndOtherMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:EquityinEarningsofUnconsolidatedSubsidiariesMember us-gaap:CorporateAndOtherMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherMember us-gaap:CorporateAndOtherMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:InvestmentSecuritiesGainsLossesMember us-gaap:CorporateAndOtherMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromBankownedLifeInsuranceMember cpf:BankingOperationsMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromFiduciaryActivitiesMember us-gaap:CorporateAndOtherMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:InvestmentSecuritiesGainsLossesMember 2019-01-01 2019-09-30 0000701347 us-gaap:IntersegmentEliminationMember us-gaap:CorporateAndOtherMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:MortgageBankingIncomeMember us-gaap:CorporateAndOtherMember 2019-01-01 2019-09-30 0000701347 cpf:BankingOperationsMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherServiceChargesandFeesMember cpf:BankingOperationsMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:NetGainLossonSaleofForeclosedAssetsMember us-gaap:CorporateAndOtherMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherServiceChargesandFeesMember us-gaap:CorporateAndOtherMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:ServiceChargesonDepositAccountsMember us-gaap:CorporateAndOtherMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:EquityinEarningsofUnconsolidatedSubsidiariesMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:LoanPlacementFeesMember us-gaap:CorporateAndOtherMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:FeesonForeignExchangeMember us-gaap:CorporateAndOtherMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromFiduciaryActivitiesMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromBankownedLifeInsuranceMember cpf:TreasuryMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:NetGainLossonSaleofForeclosedAssetsMember cpf:TreasuryMember 2019-01-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember us-gaap:CorporateAndOtherMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:LoanPlacementFeesMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:ServiceChargesonDepositAccountsMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromFiduciaryActivitiesMember cpf:TreasuryMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:ServiceChargesonDepositAccountsMember us-gaap:CorporateAndOtherMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:LoanPlacementFeesMember cpf:BankingOperationsMember 2018-01-01 2018-09-30 0000701347 us-gaap:IntersegmentEliminationMember cpf:BankingOperationsMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:BankingOperationsMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:LoanPlacementFeesMember us-gaap:CorporateAndOtherMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromFiduciaryActivitiesMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherServiceChargesandFeesMember cpf:BankingOperationsMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:FeesonForeignExchangeMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromBankownedLifeInsuranceMember cpf:TreasuryMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromFiduciaryActivitiesMember us-gaap:CorporateAndOtherMember 2018-01-01 2018-09-30 0000701347 us-gaap:IntersegmentEliminationMember us-gaap:CorporateAndOtherMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherServiceChargesandFeesMember us-gaap:CorporateAndOtherMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:EquityinEarningsofUnconsolidatedSubsidiariesMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:FeesonForeignExchangeMember cpf:TreasuryMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherServiceChargesandFeesMember cpf:TreasuryMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:TreasuryMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromBankownedLifeInsuranceMember cpf:BankingOperationsMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:EquityinEarningsofUnconsolidatedSubsidiariesMember cpf:BankingOperationsMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:MortgageBankingIncomeMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherMember cpf:BankingOperationsMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:LoanPlacementFeesMember cpf:TreasuryMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromBankownedLifeInsuranceMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromBankownedLifeInsuranceMember us-gaap:CorporateAndOtherMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:FeesonForeignExchangeMember cpf:BankingOperationsMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:FeesonForeignExchangeMember us-gaap:CorporateAndOtherMember 2018-01-01 2018-09-30 0000701347 cpf:TreasuryMember 2018-01-01 2018-09-30 0000701347 us-gaap:CorporateAndOtherMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherMember us-gaap:CorporateAndOtherMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromFiduciaryActivitiesMember cpf:BankingOperationsMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:ServiceChargesonDepositAccountsMember cpf:BankingOperationsMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:EquityinEarningsofUnconsolidatedSubsidiariesMember us-gaap:CorporateAndOtherMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:EquityinEarningsofUnconsolidatedSubsidiariesMember cpf:TreasuryMember 2018-01-01 2018-09-30 0000701347 us-gaap:IntersegmentEliminationMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherMember cpf:TreasuryMember 2018-01-01 2018-09-30 0000701347 cpf:BankingOperationsMember 2018-01-01 2018-09-30 0000701347 us-gaap:IntersegmentEliminationMember cpf:TreasuryMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherServiceChargesandFeesMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:MortgageBankingIncomeMember us-gaap:CorporateAndOtherMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:MortgageBankingIncomeMember cpf:TreasuryMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:ServiceChargesonDepositAccountsMember cpf:TreasuryMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:MortgageBankingIncomeMember cpf:BankingOperationsMember 2018-01-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:MortgageBankingIncomeMember us-gaap:CorporateAndOtherMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:BankingOperationsMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember us-gaap:CorporateAndOtherMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:TreasuryMember 2019-07-01 2019-09-30 0000701347 us-gaap:CorporateAndOtherMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromFiduciaryActivitiesMember cpf:TreasuryMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:InvestmentSecuritiesGainsLossesMember cpf:TreasuryMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherMember cpf:TreasuryMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:FeesonForeignExchangeMember cpf:BankingOperationsMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherServiceChargesandFeesMember cpf:BankingOperationsMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:NetGainLossonSaleofForeclosedAssetsMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:ServiceChargesonDepositAccountsMember us-gaap:CorporateAndOtherMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromBankownedLifeInsuranceMember cpf:TreasuryMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:EquityinEarningsofUnconsolidatedSubsidiariesMember cpf:BankingOperationsMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherMember 2019-07-01 2019-09-30 0000701347 cpf:TreasuryMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:LoanPlacementFeesMember cpf:BankingOperationsMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherServiceChargesandFeesMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromFiduciaryActivitiesMember us-gaap:CorporateAndOtherMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:FeesonForeignExchangeMember cpf:TreasuryMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromFiduciaryActivitiesMember cpf:BankingOperationsMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:EquityinEarningsofUnconsolidatedSubsidiariesMember cpf:TreasuryMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:ServiceChargesonDepositAccountsMember cpf:BankingOperationsMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:NetGainLossonSaleofForeclosedAssetsMember cpf:BankingOperationsMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:FeesonForeignExchangeMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:FeesonForeignExchangeMember us-gaap:CorporateAndOtherMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromBankownedLifeInsuranceMember cpf:BankingOperationsMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:NetGainLossonSaleofForeclosedAssetsMember us-gaap:CorporateAndOtherMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromBankownedLifeInsuranceMember us-gaap:CorporateAndOtherMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherMember us-gaap:CorporateAndOtherMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:NetGainLossonSaleofForeclosedAssetsMember cpf:TreasuryMember 2019-07-01 2019-09-30 0000701347 us-gaap:IntersegmentEliminationMember cpf:BankingOperationsMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:EquityinEarningsofUnconsolidatedSubsidiariesMember us-gaap:CorporateAndOtherMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherServiceChargesandFeesMember us-gaap:CorporateAndOtherMember 2019-07-01 2019-09-30 0000701347 us-gaap:IntersegmentEliminationMember us-gaap:CorporateAndOtherMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:EquityinEarningsofUnconsolidatedSubsidiariesMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:InvestmentSecuritiesGainsLossesMember us-gaap:CorporateAndOtherMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:LoanPlacementFeesMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:MortgageBankingIncomeMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromFiduciaryActivitiesMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:ServiceChargesonDepositAccountsMember cpf:TreasuryMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:InvestmentSecuritiesGainsLossesMember cpf:BankingOperationsMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:LoanPlacementFeesMember us-gaap:CorporateAndOtherMember 2019-07-01 2019-09-30 0000701347 us-gaap:IntersegmentEliminationMember cpf:TreasuryMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherServiceChargesandFeesMember cpf:TreasuryMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherMember cpf:BankingOperationsMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromBankownedLifeInsuranceMember 2019-07-01 2019-09-30 0000701347 us-gaap:IntersegmentEliminationMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:InvestmentSecuritiesGainsLossesMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:LoanPlacementFeesMember cpf:TreasuryMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:MortgageBankingIncomeMember cpf:BankingOperationsMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:ServiceChargesonDepositAccountsMember 2019-07-01 2019-09-30 0000701347 cpf:BankingOperationsMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:MortgageBankingIncomeMember cpf:TreasuryMember 2019-07-01 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:TreasuryMember 2018-12-31 0000701347 us-gaap:OperatingSegmentsMember us-gaap:CorporateAndOtherMember 2018-12-31 0000701347 us-gaap:OperatingSegmentsMember cpf:BankingOperationsMember 2018-12-31 0000701347 cpf:BankingOperationsMember 2018-12-31 0000701347 cpf:TreasuryMember 2018-12-31 0000701347 us-gaap:OperatingSegmentsMember 2018-12-31 0000701347 us-gaap:CorporateAndOtherMember 2018-12-31 0000701347 us-gaap:OperatingSegmentsMember cpf:TreasuryMember 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:BankingOperationsMember 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember us-gaap:CorporateAndOtherMember 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember 2019-09-30 0000701347 us-gaap:CorporateAndOtherMember 2019-09-30 0000701347 cpf:BankingOperationsMember 2019-09-30 0000701347 cpf:TreasuryMember 2019-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:LoanPlacementFeesMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromFiduciaryActivitiesMember us-gaap:CorporateAndOtherMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromFiduciaryActivitiesMember cpf:BankingOperationsMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromFiduciaryActivitiesMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:BankingOperationsMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromBankownedLifeInsuranceMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:ServiceChargesonDepositAccountsMember us-gaap:CorporateAndOtherMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:EquityinEarningsofUnconsolidatedSubsidiariesMember us-gaap:CorporateAndOtherMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherMember us-gaap:CorporateAndOtherMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:FeesonForeignExchangeMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:MortgageBankingIncomeMember cpf:BankingOperationsMember 2018-07-01 2018-09-30 0000701347 us-gaap:IntersegmentEliminationMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:ServiceChargesonDepositAccountsMember cpf:TreasuryMember 2018-07-01 2018-09-30 0000701347 us-gaap:IntersegmentEliminationMember cpf:BankingOperationsMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:TreasuryMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:LoanPlacementFeesMember us-gaap:CorporateAndOtherMember 2018-07-01 2018-09-30 0000701347 us-gaap:IntersegmentEliminationMember us-gaap:CorporateAndOtherMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:MortgageBankingIncomeMember cpf:TreasuryMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:EquityinEarningsofUnconsolidatedSubsidiariesMember cpf:TreasuryMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:ServiceChargesonDepositAccountsMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember us-gaap:CorporateAndOtherMember 2018-07-01 2018-09-30 0000701347 us-gaap:IntersegmentEliminationMember cpf:TreasuryMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:ServiceChargesonDepositAccountsMember cpf:BankingOperationsMember 2018-07-01 2018-09-30 0000701347 us-gaap:CorporateAndOtherMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherServiceChargesandFeesMember us-gaap:CorporateAndOtherMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromBankownedLifeInsuranceMember us-gaap:CorporateAndOtherMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromBankownedLifeInsuranceMember cpf:TreasuryMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherMember cpf:BankingOperationsMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherMember cpf:TreasuryMember 2018-07-01 2018-09-30 0000701347 cpf:TreasuryMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:EquityinEarningsofUnconsolidatedSubsidiariesMember cpf:BankingOperationsMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:FeesonForeignExchangeMember cpf:TreasuryMember 2018-07-01 2018-09-30 0000701347 cpf:BankingOperationsMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:LoanPlacementFeesMember cpf:TreasuryMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:MortgageBankingIncomeMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:FeesonForeignExchangeMember us-gaap:CorporateAndOtherMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:EquityinEarningsofUnconsolidatedSubsidiariesMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromFiduciaryActivitiesMember cpf:TreasuryMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:LoanPlacementFeesMember cpf:BankingOperationsMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:IncomefromBankownedLifeInsuranceMember cpf:BankingOperationsMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherServiceChargesandFeesMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:MortgageBankingIncomeMember us-gaap:CorporateAndOtherMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherServiceChargesandFeesMember cpf:TreasuryMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:OtherServiceChargesandFeesMember cpf:BankingOperationsMember 2018-07-01 2018-09-30 0000701347 us-gaap:OperatingSegmentsMember cpf:FeesonForeignExchangeMember cpf:BankingOperationsMember 2018-07-01 2018-09-30 iso4217:USD xbrli:shares xbrli:shares iso4217:USD cpf:security cpf:loan cpf:contract xbrli:pure cpf:period cpf:trust cpf:segment
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-31567
CENTRAL PACIFIC FINANCIAL CORP.
(Exact name of registrant as specified in its charter)

Hawaii |  | 99-0212597
(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

220 South King Street, Honolulu, Hawaii 96813
(Address of principal executive offices) (Zip Code)
(808) 544-0500
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class |  | Trading Symbol(s) |  | Name of each exchange on which registered
Common stock, No Par Value |  | CPF |  | New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer", "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer | ☒ | Accelerated filer | ☐
Non-accelerated filer | ☐ | Smaller reporting company | ☐
Emerging growth company | ☐ |  |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of shares outstanding of registrant's common stock, no par value, on October 31, 2019 was 28,376,894 shares.

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
Form 10-Q
Table of Contents

| Page
Part I. | Financial Information | 3
Item 1. | Financial Statements (Unaudited) |
| Consolidated Balance Sheets - September 30, 2019 and December 31, 2018 | 4
| Consolidated Statements of Income - Three months and nine months ended September 30, 2019 and 2018 | 5
| Consolidated Statements of Comprehensive Income - Three months and nine months ended September 30, 2019 and 2018 | 6
| Consolidated Statements of Changes in Equity - Three months and nine months ended September 30, 2019 and 2018 | 7
| Consolidated Statements of Cash Flows - Nine months ended September 30, 2019 and 2018 | 9
| Notes to Consolidated Financial Statements (Unaudited) | 10
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 43
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 64
Item 4. | Controls and Procedures | 64
Part II. | Other Information | 65
Item 1A. | Risk Factors | 65
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 65
Item 6. | Exhibits | 66
Signatures |  | 67

2

PART I. FINANCIAL INFORMATION
Forward-Looking Statements and Factors that Could Affect Future Results
This document may contain forward-looking statements concerning: projections of revenues, expenses, income or loss, earnings or loss per share, capital expenditures, the payment or nonpayment of dividends, capital position, net interest margin or other financial items; statements of plans, objectives and expectations of Central Pacific Financial Corp. or its management or Board of Directors, including those relating to business plans, use of capital resources, products or services and regulatory developments and regulatory actions; statements of future economic performance including anticipated performance results from our RISE2020 initiative; or any statements 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," "anticipates," "expects," "intends," "forecasts," "hopes," "targeting," "continue," "remain," "will," "should," "estimates," "may" or words of similar meaning.
While we believe that our forward-looking statements and the assumptions underlying them are reasonably based, such statements and assumptions are by their nature subject to risks and uncertainties, and thus could later prove to be inaccurate or incorrect. Accordingly, actual results could differ materially from those statements or projections for a variety of reasons, including, but not limited to: 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; our ability to successfully implement our RISE2020 initiative; current and projected levels of RISE2020-related expense, which include estimates of expense related to dedicated staff and management time and third-party expense; the impact of local, national, and international economies and events (including natural disasters such as wildfires, volcanic eruptions, hurricanes, tsunamis, storms 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 domestic economic conditions, including any destabilization in the financial industry and deterioration of the real estate market, as well as the impact of declining levels of consumer and business confidence in the state of the economy in general and in financial institutions in particular; 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, changes in capital standards, other regulatory reform, including but not limited to regulations promulgated by the Consumer Financial Protection Bureau, government-sponsored enterprise reform, and any related rules and regulations on our business operations and competitiveness; the costs and effects of legal and regulatory developments, including the resolution of legal proceedings or regulatory or other governmental inquiries and proceedings and the resolution thereof, the results of regulatory examinations or reviews and the effect of, and our ability to comply with, any regulatory orders or actions we are or may become subject to; ability to successfully implement our initiatives to lower our efficiency ratio; 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, including the anticipated replacement of the London Interbank Offered Rate Index and the impact on our loans and debt which are tied to that index; negative trends in our market capitalization and adverse changes in the price of the Company's common stock; political instability; acts of war or terrorism; changes in consumer spending, borrowings and savings habits; failure to maintain effective internal control over financial reporting or disclosure controls and procedures; the ability to address any material weakness in our internal controls over financial reporting or disclosure controls and procedures; technological changes and developments; changes in the competitive environment among financial holding companies and other financial service providers; the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters and the cost and resources required to implement such changes; our ability to attract and retain key personnel; changes in our organization, compensation and benefit plans; and our success at managing the risks involved in the foregoing items.
For further information with respect to factors that could cause actual results to materially differ from the expectations or projections stated in the forward-looking statements, 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. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events except as required by law.
3

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)

(dollars in thousands) | September 30, 2019 |  | December 31, 2018
Assets |  |  |  |  |
Cash and due from banks | $ | 87,395 |  |  | $ | 80,569 |
Interest-bearing deposits in other banks | 7,803 |  |  | 21,617 |
Investment securities: |  |  |
Available-for-sale debt securities, at fair value | 1,186,875 |  |  | 1,205,478 |
Held-to-maturity debt securities, at amortized cost; fair value of: none at September 30, 2019 and $144,272 at December 31, 2018 | — |  |  | 148,508 |
Equity securities, at fair value | 1,058 |  |  | 826 |
Total investment securities | 1,187,933 |  |  | 1,354,812 |
Loans held for sale | 7,016 |  |  | 6,647 |
Loans and leases | 4,367,862 |  |  | 4,078,366 |
Allowance for loan and lease losses | (48,167 | ) |  | (47,916 | )
Net loans and leases | 4,319,695 |  |  | 4,030,450 |
Premises and equipment, net | 44,095 |  |  | 45,285 |
Accrued interest receivable | 16,220 |  |  | 17,000 |
Investment in unconsolidated subsidiaries | 17,001 |  |  | 14,008 |
Other real estate owned | 466 |  |  | 414 |
Mortgage servicing rights | 15,058 |  |  | 15,596 |
Bank-owned life insurance | 158,939 |  |  | 157,440 |
Federal Home Loan Bank stock | 17,183 |  |  | 16,645 |
Right-of-use lease asset | 52,588 |  |  | — |
Other assets | 45,324 |  |  | 46,543 |
Total assets | $ | 5,976,716 |  |  | $ | 5,807,026 |
Liabilities |  |  |  |  |
Deposits: |  |  |  |  |
Noninterest-bearing demand | $ | 1,399,200 |  |  | $ | 1,436,967 |
Interest-bearing demand | 998,037 |  |  | 954,011 |
Savings and money market | 1,593,738 |  |  | 1,448,257 |
Time | 1,046,684 |  |  | 1,107,255 |
Total deposits | 5,037,659 |  |  | 4,946,490 |
Short-term borrowings | 205,000 |  |  | 197,000 |
Long-term debt | 101,547 |  |  | 122,166 |
Lease liability | 52,807 |  |  | — |
Other liabilities | 54,476 |  |  | 49,645 |
Total liabilities | 5,451,489 |  |  | 5,315,301 |
Shareholders' Equity |  |  |  |  |
Preferred stock, no par value, authorized 1,000,000 shares; issued and outstanding: none at September 30, 2019 and December 31, 2018 | — |  |  | — |
Common stock, no par value, authorized 185,000,000 shares; issued and outstanding: 28,441,341 at September 30, 2019 and 28,967,715 at December 31, 2018 | 452,278 |  |  | 470,660 |
Additional paid-in capital | 90,604 |  |  | 88,876 |
Accumulated deficit | (26,782 | ) |  | (51,718 | )
Accumulated other comprehensive income (loss) | 9,127 |  |  | (16,093 | )
Total shareholders' equity | 525,227 |  |  | 491,725 |
Total liabilities and shareholders' equity | $ | 5,976,716 |  |  | $ | 5,807,026 |

See accompanying notes to consolidated financial statements.
4

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

| Three Months Ended September 30, |  | Nine Months Ended September 30,
(dollars in thousands, except per share data) | 2019 |  | 2018 |  | 2019 |  | 2018
Interest income: |  |  |  |  |  |  |  |  |  |  |
Interest and fees on loans and leases | $ | 45,861 |  |  | $ | 40,531 |  |  | $ | 135,169 |  |  | $ | 116,620 |
Interest and dividends on investment securities: |  |  |  |  |  |  |
Taxable interest | 7,178 |  |  | 8,490 |  |  | 22,968 |  |  | 26,050 |
Tax-exempt interest | 708 |  |  | 920 |  |  | 2,388 |  |  | 2,786 |
Dividends | 14 |  |  | 26 |  |  | 46 |  |  | 44 |
Interest on deposits in other banks | 33 |  |  | 109 |  |  | 147 |  |  | 310 |
Dividends on Federal Home Loan Bank stock | 186 |  |  | 60 |  |  | 508 |  |  | 145 |
Total interest income | 53,980 |  |  | 50,136 |  |  | 161,226 |  |  | 145,955 |
Interest expense: |  |  |  |  |  |  |  |  |  |  |
Interest on deposits: |  |  |  |  |  |  |  |  |  |  |
Demand | 207 |  |  | 181 |  |  | 598 |  |  | 554 |
Savings and money market | 1,549 |  |  | 593 |  |  | 3,847 |  |  | 1,421 |
Time | 4,432 |  |  | 4,744 |  |  | 14,391 |  |  | 12,203 |
Interest on short-term borrowings | 1,130 |  |  | 146 |  |  | 3,146 |  |  | 237 |
Interest on long-term debt | 1,013 |  |  | 1,147 |  |  | 3,104 |  |  | 3,221 |
Total interest expense | 8,331 |  |  | 6,811 |  |  | 25,086 |  |  | 17,636 |
Net interest income | 45,649 |  |  | 43,325 |  |  | 136,140 |  |  | 128,319 |
Provision (credit) for loan and lease losses | 1,532 |  |  | (59 | ) |  | 4,219 |  |  | 262 |
Net interest income after provision (credit) for loan and lease losses | 44,117 |  |  | 43,384 |  |  | 131,921 |  |  | 128,057 |
Other operating income: |  |  |  |  |  |  |  |  |  |  |
Mortgage banking income | 1,764 |  |  | 1,923 |  |  | 4,789 |  |  | 5,545 |
Service charges on deposit accounts | 2,125 |  |  | 2,189 |  |  | 6,247 |  |  | 6,169 |
Other service charges and fees | 3,724 |  |  | 3,286 |  |  | 10,479 |  |  | 9,697 |
Income from fiduciary activities | 1,126 |  |  | 1,159 |  |  | 3,220 |  |  | 3,132 |
Equity in earnings of unconsolidated subsidiaries | 86 |  |  | 71 |  |  | 165 |  |  | 151 |
Fees on foreign exchange | 170 |  |  | 220 |  |  | 539 |  |  | 708 |
Investment securities gains | 36 |  |  | — |  |  | 36 |  |  | — |
Income from bank-owned life insurance | 645 |  |  | 1,055 |  |  | 2,511 |  |  | 1,874 |
Loan placement fees | 230 |  |  | 115 |  |  | 486 |  |  | 532 |
Net gain on sales of foreclosed assets | 17 |  |  | — |  |  | 17 |  |  | — |
Other | 343 |  |  | 802 |  |  | 3,544 |  |  | 1,596 |
Total other operating income | 10,266 |  |  | 10,820 |  |  | 32,033 |  |  | 29,404 |
Other operating expense: |  |  |  |  |  |  |  |  |  |  |
Salaries and employee benefits | 20,631 |  |  | 19,011 |  |  | 61,083 |  |  | 56,299 |
Net occupancy | 3,697 |  |  | 3,488 |  |  | 10,680 |  |  | 10,114 |
Equipment | 1,067 |  |  | 1,048 |  |  | 3,211 |  |  | 3,160 |
Amortization of core deposit premium | — |  |  | 669 |  |  | — |  |  | 2,006 |
Communication expense | 1,008 |  |  | 903 |  |  | 2,645 |  |  | 2,547 |
Legal and professional services | 1,933 |  |  | 1,528 |  |  | 5,231 |  |  | 5,118 |
Computer software expense | 2,713 |  |  | 2,672 |  |  | 7,870 |  |  | 7,244 |
Advertising expense | 711 |  |  | 612 |  |  | 2,134 |  |  | 1,841 |
Foreclosed asset expense | 15 |  |  | 212 |  |  | 223 |  |  | 537 |
Other | 3,159 |  |  | 3,882 |  |  | 12,312 |  |  | 12,174 |
Total other operating expense | 34,934 |  |  | 34,025 |  |  | 105,389 |  |  | 101,040 |
Income before income taxes | 19,449 |  |  | 20,179 |  |  | 58,565 |  |  | 56,421 |
Income tax expense | 4,895 |  |  | 4,986 |  |  | 14,440 |  |  | 12,727 |
Net income | $ | 14,554 |  |  | $ | 15,193 |  |  | $ | 44,125 |  |  | $ | 43,694 |
Per common share data: |  |  |  |  |  |  |  |  |  |  |
Basic earnings per common share | $ | 0.51 |  |  | $ | 0.52 |  |  | $ | 1.54 |  |  | $ | 1.48 |
Diluted earnings per common share | $ | 0.51 |  |  | $ | 0.52 |  |  | $ | 1.53 |  |  | $ | 1.47 |
Cash dividends declared | $ | 0.23 |  |  | $ | 0.21 |  |  | $ | 0.67 |  |  | $ | 0.61 |
Weighted average common shares outstanding used in computation: |  |  |  |  |  |  |
Basic shares | 28,424,898 |  |  | 29,297,465 |  |  | 28,575,369 |  |  | 29,536,536 |
Diluted shares | 28,602,338 |  |  | 29,479,812 |  |  | 28,762,057 |  |  | 29,743,238 |

See accompanying notes to consolidated financial statements.
5

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(dollars in thousands) |  | 2019 |  | 2018 |  | 2019 |  | 2018
Net income |  | $ | 14,554 |  |  | $ | 15,193 |  |  | $ | 44,125 |  |  | $ | 43,694 |
Other comprehensive income (loss), net of tax: |  |  |  |  |  |  |  |
Net change in unrealized gain (loss) on investment securities |  | 4,386 |  |  | (6,072 | ) |  | 27,547 |  |  | (24,712 | )
Defined benefit plans |  | 283 |  |  | 217 |  |  | 773 |  |  | 623 |
Total other comprehensive income (loss), net of tax |  | 4,669 |  |  | (5,855 | ) |  | 28,320 |  |  | (24,089 | )
Comprehensive income |  | $ | 19,223 |  |  | $ | 9,338 |  |  | $ | 72,445 |  |  | $ | 19,605 |

See accompanying notes to consolidated financial statements.
6

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)

| Common Shares Outstanding |  | Preferred Stock |  | Common Stock |  | Additional Paid-In Capital |  | Accum. Deficit |  | Accum. Other Comp. Income (Loss) |  | Non- Controlling Interest |  | Total
| (dollars in thousands, except per share data)
Balance at December 31, 2018 | 28,967,715 |  |  | $ | — |  |  | $ | 470,660 |  |  | $ | 88,876 |  |  | $ | (51,718 | ) |  | $ | (16,093 | ) |  | $ | — |  |  | $ | 491,725 |
Impact of the adoption of new accounting standards (1) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (3,100 | ) |  | — |  |  | (3,100 | )
Adjusted balance at January 1, 2019 | 28,967,715 |  |  | — |  |  | 470,660 |  |  | 88,876 |  |  | (51,718 | ) |  | (19,193 | ) |  | — |  |  | 488,625 |
Net income | — |  |  | — |  |  | — |  |  | — |  |  | 16,037 |  |  | — |  |  | — |  |  | 16,037 |
Other comprehensive income | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 11,238 |  |  | — |  |  | 11,238 |
Cash dividends declared ($0.21 p er share) | — |  |  | — |  |  | — |  |  | — |  |  | (6,052 | ) |  | — |  |  | — |  |  | (6,052 | )
Common stock repurchased and retired and other related costs | (277,000 | ) |  | — |  |  | (7,708 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  | (7,708 | )
Share-based compensation expense | 32,326 |  |  | — |  |  | — |  |  | 498 |  |  | — |  |  | — |  |  | — |  |  | 498 |
Balance at March 31, 2019 | 28,723,041 |  |  | $ | — |  |  | $ | 462,952 |  |  | $ | 89,374 |  |  | $ | (41,733 | ) |  | $ | (7,955 | ) |  | $ | — |  |  | $ | 502,638 |
Net income | — |  |  | — |  |  | — |  |  | — |  |  | 13,534 |  |  | — |  |  | — |  |  | 13,534 |
Other comprehensive income | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 12,413 |  |  | — |  |  | 12,413 |
Cash dividends declared ($0.23 per share) | — |  |  | — |  |  | — |  |  | — |  |  | (6,581 | ) |  | — |  |  | — |  |  | (6,581 | )
Common stock purchased by directors' deferred compensation plan (14,600 shares, net) | — |  |  | — |  |  | (416 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  | (416 | )
Common stock repurchased and retired and other related costs | (213,700 | ) |  | — |  |  | (6,243 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  | (6,243 | )
Share-based compensation expense | 58,436 |  |  | — |  |  |  |  | 350 |  |  | — |  |  | — |  |  | — |  |  | 350 |
Balance at June 30, 2019 | 28,567,777 |  |  | $ | — |  |  | $ | 456,293 |  |  | $ | 89,724 |  |  | $ | (34,780 | ) |  | $ | 4,458 |  |  | $ | — |  |  | $ | 515,695 |
Net income | — |  |  | — |  |  | — |  |  | — |  |  | 14,554 |  |  | — |  |  | — |  |  | 14,554 |
Other comprehensive income | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 4,669 |  |  | — |  |  | 4,669 |
Cash dividends declared ($0.23 per share) | — |  |  | — |  |  | — |  |  | — |  |  | (6,556 | ) |  | — |  |  | — |  |  | (6,556 | )
Common stock repurchased and retired and other related costs | (140,600 | ) |  | — |  |  | (4,015 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  | (4,015 | )
Share-based compensation | 14,164 |  |  | — |  |  |  |  | 880 |  |  | — |  |  | — |  |  | — |  |  | 880 |
Balance at September 30, 2019 | 28,441,341 |  |  | $ | — |  |  | $ | 452,278 |  |  | $ | 90,604 |  |  | $ | (26,782 | ) |  | $ | 9,127 |  |  | $ | — |  |  | $ | 525,227 |

7

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)

| Common Shares Outstanding |  | Preferred Stock |  | Common Stock |  | Additional Paid-In Capital |  | Accum. Deficit |  | Accum. Other Comp. Income (Loss) |  | Non- Controlling Interest |  | Total
| (dollars in thousands, except per share data)
Balance at December 31, 2017 | 30,024,222 |  |  | $ | — |  |  | $ | 503,988 |  |  | $ | 86,098 |  |  | $ | (89,036 | ) |  | $ | (1,039 | ) |  | $ | 24 |  |  | $ | 500,035 |
Impact of the adoption of new accounting standards (2) | — |  |  | — |  |  | — |  |  | — |  |  | 139 |  |  | (139 | ) |  | — |  |  | — |
Adjusted balance at January 1, 2018 | 30,024,222 |  |  | — |  |  | 503,988 |  |  | 86,098 |  |  | (88,897 | ) |  | (1,178 | ) |  | 24 |  |  | 500,035 |
Impact of the adoption of new accounting standards (3) | — |  |  | — |  |  | — |  |  | — |  |  | 1,836 |  |  | (1,836 | ) |  | — |  |  | — |
Net income | — |  |  | — |  |  | — |  |  | — |  |  | 14,277 |  |  | — |  |  | — |  |  | 14,277 |
Other comprehensive loss | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (14,715 | ) |  | — |  |  | (14,715 | )
Cash dividends declared ($0.19 per share) | — |  |  | — |  |  | — |  |  | — |  |  | (5,670 | ) |  | — |  |  | — |  |  | (5,670 | )
Common stock purchased by directors' deferred compensation plan (2,850 shares, net) | — |  |  | — |  |  | (83 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  | (83 | )
Common stock repurchased and retired and other related costs (344,362 shares) | (344,362 | ) |  | — |  |  | (10,111 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  | (10,111 | )
Share-based compensation | 27,262 |  |  | — |  |  | — |  |  | 399 |  |  | — |  |  | — |  |  | — |  |  | 399 |
Distribution from variable interest entity | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (24 | ) |  | (24 | )
Balance at March 31, 2018 | 29,707,122 |  |  | $ | — |  |  | $ | 493,794 |  |  | $ | 86,497 |  |  | $ | (78,454 | ) |  | $ | (17,729 | ) |  | $ | — |  |  | $ | 484,108 |
Net income | — |  |  | — |  |  | — |  |  | — |  |  | 14,224 |  |  | — |  |  | — |  |  | 14,224 |
Other comprehensive income | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (3,519 | ) |  | — |  |  | (3,519 | )
Cash dividends declared ($0.21 per share) | — |  |  | — |  |  | — |  |  | — |  |  | (6,205 | ) |  | — |  |  | — |  |  | (6,205 | )
Common stock purchased by directors' deferred compensation plan (14,100 shares, net) | — |  |  | — |  |  | (421 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  | (421 | )
Common stock repurchased and retired and other related costs (269,885 shares) | (269,885 | ) |  | — |  |  | (7,971 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  | (7,971 | )
Share-based compensation | 52,717 |  |  | — |  |  |  |  | 452 |  |  | — |  |  | — |  |  | — |  |  | 452 |
Balance at June 30, 2018 | 29,489,954 |  |  | $ | — |  |  | $ | 485,402 |  |  | $ | 86,949 |  |  | $ | (70,435 | ) |  | $ | (21,248 | ) |  | $ | — |  |  | $ | 480,668 |
Net income | — |  |  | — |  |  | — |  |  | — |  |  | 15,193 |  |  | — |  |  | — |  |  | 15,193 |
Other comprehensive income | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (5,855 | ) |  | — |  |  | (5,855 | )
Cash dividends declared ($0.21 per share) | — |  |  | — |  |  | — |  |  | — |  |  | (6,164 | ) |  | — |  |  | — |  |  | (6,164 | )
Common stock repurchased and retired and other related costs (235,043 shares) | (235,043 | ) |  | — |  |  | (6,681 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  | (6,681 | )
Share-based compensation | 15,487 |  |  | — |  |  |  |  | 990 |  |  | — |  |  | — |  |  | — |  |  | 990 |
Balance at September 30, 2018 | 29,270,398 |  |  | $ | — |  |  | $ | 478,721 |  |  | $ | 87,939 |  |  | $ | (61,406 | ) |  | $ | (27,103 | ) |  | $ | — |  |  | $ | 478,151 |
(1) Represents the impact of the adoption of Accounting Standards Update ("ASU") ASU 2017-12. See Note 2 to the consolidated financial statements for additional information.
(2) Represents the impact of the adoption of ASU 2016-01.
(3) Represents the impact of the adoption of ASU 2018-02.

See accompanying notes to consolidated financial statements.
8

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

| Nine Months Ended September 30,
(dollars in thousands) | 2019 |  | 2018
Cash flows from operating activities: |  |  |  |  |
Net income | $ | 44,125 |  |  | $ | 43,694 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |
Provision for loan and lease losses | 4,219 |  |  | 262 |
Depreciation and amortization of premises and equipment | 4,628 |  |  | 4,700 |
Non-cash lease expense | 220 |  |  | — |
Cash flows from operating leases | (4,663 | ) |  | — |
Loss on sale of other real estate, net of write-downs | 138 |  |  | 431 |
Amortization of core deposit premium and mortgage servicing rights | 1,727 |  |  | 3,419 |
Net amortization and accretion of premium/discounts on investment securities | 6,808 |  |  | 8,465 |
Share-based compensation expense | 1,728 |  |  | 1,841 |
Net (gain) on sales of investment securities | (36 | ) |  | — |
Net gain on sales of residential mortgage loans | (2,836 | ) |  | (3,013 | )
Proceeds from sales of loans held for sale | 152,684 |  |  | 183,967 |
Originations of loans held for sale | (150,217 | ) |  | (169,078 | )
Equity in earnings of unconsolidated subsidiaries | (165 | ) |  | (151 | )
Distributions from unconsolidated subsidiaries | 175 |  |  | 614 |
Net increase in cash surrender value of bank-owned life insurance | (1,499 | ) |  | (792 | )
Deferred income taxes | 7,548 |  |  | 12,542 |
Net tax benefits from share-based compensation | 209 |  |  | 185 |
Net change in other assets and liabilities | (12,309 | ) |  | (8,266 | )
Net cash provided by operating activities | 52,484 |  |  | 78,820 |
Cash flows from investing activities: |  |  |  |  |
Proceeds from maturities of and calls on investment securities available-for-sale | 194,626 |  |  | 114,508 |
Proceeds from sales of investment securities available-for-sale | 53,935 |  |  | — |
Purchases of investment securities available-for-sale | (54,975 | ) |  | (85,334 | )
Proceeds from maturities of and calls on investment securities held-to-maturity | — |  |  | 38,491 |
Proceeds from sale of MasterCard stock | 2,555 |  |  | — |
Net loan proceeds (originations) | (214,834 | ) |  | (190,022 | )
Purchases of loan portfolios | (78,820 | ) |  | (20,867 | )
Proceeds from sale of foreclosed loans/other real estate owned | — |  |  | 46 |
Net purchases of premises and equipment | (3,438 | ) |  | (2,536 | )
Net return of capital from unconsolidated subsidiaries | 622 |  |  | — |
Net (purchases of) proceeds from redemption of FHLB stock | (538 | ) |  | (3,204 | )
Net cash used in investing activities | (100,867 | ) |  | (148,918 | )
Cash flows from financing activities: |  |  |  |  |
Net increase in deposits | 91,169 |  |  | 47,326 |
Repayments of long-term debt | (20,619 | ) |  | — |
Net increase (decrease) in short-term borrowings | 8,000 |  |  | 73,000 |
Cash dividends paid on common stock | (19,189 | ) |  | (18,039 | )
Repurchases of common stock and other related costs | (17,966 | ) |  | (24,763 | )
Net cash provided by financing activities | 41,395 |  |  | 77,524 |
Net (decrease) increase in cash and cash equivalents | (6,988 | ) |  | 7,426 |
Cash and cash equivalents at beginning of period | 102,186 |  |  | 82,293 |
Cash and cash equivalents at end of period | $ | 95,198 |  |  | $ | 89,719 |
Supplemental disclosure of cash flow information: |  |  |  |  |
Cash paid during the period for: |  |  |  |  |
Interest | $ | 24,735 |  |  | $ | 15,969 |
Income taxes | 17,601 |  |  | 23 |
Supplemental disclosure of non-cash information: |  |  |
Net change in common stock held by directors’ deferred compensation plan | 416 |  |  | 504 |
Net reclassification of loans to foreclosed loans/other real estate owned | 190 |  |  | 40 |
Net transfer of investment securities held-to-maturity to available-for-sale | 149,042 |  |  | — |
Right-of-use lease assets obtained in exchange for lease liabilities | 55,887 |  |  | — |

See accompanying notes to consolidated financial statements.
9

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited consolidated financial statements of Central Pacific Financial Corp. and Subsidiaries (herein referred to as the "Company," "we," "us" or "our") have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.
These interim condensed consolidated financial statements and notes should be read in conjunction with the Company's consolidated financial statements and notes thereto filed on Form 10-K for the fiscal year ended December 31, 2018. In the opinion of management, all adjustments necessary for a fair presentation have been made and include all normal recurring adjustments. Interim results of operations are not necessarily indicative of results to be expected for the year.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
We also have non-controlling equity investments in affiliates that are accounted for under the cost method and are included in investment in unconsolidated subsidiaries.
Our investments in unconsolidated subsidiaries accounted for under the equity, proportional amortization and cost methods were $0.2 million, $15.2 million and $1.6 million, respectively, at September 30, 2019 and $0.2 million, $11.6 million and $2.2 million, respectively, at December 31, 2018. Our policy for determining impairment of these investments includes an evaluation of whether a loss in value of an investment is other than temporary. Evidence of a loss in value includes absence of an ability to recover the carrying amount of the investment or the inability of the investee to sustain an earnings capacity which would justify the carrying amount of the investment. We perform impairment tests whenever indicators of impairment are present. If the value of an investment declines and it is considered other than temporary, the investment is written down to its respective fair value in the period in which this determination is made.
The Company sponsors the Central Pacific Bank Foundation, which is not consolidated in the Company's financial statements.
Reclassifications
Certain prior year amounts in the consolidated financial statements and the notes thereto have been reclassified to conform to the fiscal 2019 presentation. Such reclassifications had no effect on the Company's reported net income or shareholders' equity.
2. RECENT ACCOUNTING PRONOUNCEMENTS
Accounting Standards Adopted in 2019
In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)." ASU 2016-02 increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The ASU establishes a right-of-use ("ROU") model that requires a lessee to recognize a ROU lease asset and lease liability on the balance sheet for all leases with a term of longer than 12 months. The FASB has also made available several practical expedients to assist entities with the adoption of ASU 2016-02. Among other things, these practical expedients require no reassessment of whether existing contracts are or contain leases as well as no reassessment of lease classification for current leases. In July 2018, the FASB released ASU 2018-11, "Leases (Topic 842): Targeted Improvements," which adds an additional practical expedient that allows entities to elect not to recast comparative periods presented when transitioning to Topic 842. The Company elected to adopt the practical expedient allowed under ASU 2018-11. During the year ended December 31, 2018, the Company engaged a software vendor to assist in the implementation of ASU 2016-02. The Company adopted ASU 2016-02 effective January 1, 2019 using the modified retrospective approach and recorded a ROU lease asset and corresponding lease liability on the Company's consolidated balance sheet of $55.9 million for its operating leases where it is a lessee. There was no impact to the Company's financial statements for its leases where it is a
10

lessor. As of September 30, 2019, the ROU lease asset and lease liability was $52.6 million and $52.8 million, respectively. See Note 12 - Leases for required disclosures on this new standard.
In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities." ASU 2017-12 was issued to better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The FASB believes that such amendments will: 1) improve the transparency of information about an entity’s risk management activities and 2) simplify the application of hedge accounting. The ASU allows an entity that qualifies for the last-of-layer method a one-time opportunity to reclassify securities from the held-to-maturity category to the available-for-sale category. The Company adopted ASU 2017-12 effective January 1, 2019 and transferred its entire held-to-maturity investment securities portfolio with a fair value of $144.3 million at January 1, 2019 to the available-for-sale portfolio. On the date of adoption, the Company recorded a cumulative effect adjustment related to the unrealized loss on the investment securities transferred, which decreased available-for-sale investments by $4.2 million, increased deferred tax assets by $1.1 million, and decreased opening accumulated other comprehensive income (loss) ("AOCI") by $3.1 million. The ASU did not have a material impact on our current derivative activities.
In August 2018, the FASB issued ASU 2018-15, "Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract," which requires an entity in a cloud computing arrangement (i.e., hosting arrangement) that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred. Capitalized implementation costs should be presented in the same line item on the balance sheet as amounts prepaid for the hosted service, if any (generally as an “other asset”). The capitalized costs will be amortized over the term of the hosting arrangement, with the amortization expense being presented in the same income statement line item as the fees paid for the hosted service. ASU 2018-15 is effective for the Company's reporting period beginning January 1, 2020 and early adoption is permitted. The Company early adopted ASU 2018-15 during the second quarter of 2019. The adoption of the ASU did not have a material impact on our consolidated financial statements.
Impact of Other Recently Issued Accounting Pronouncements on Future Filings
In June 2016, the FASB issued ASU 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," and subsequent amendments to the guidance, ASU 2019-04 in April 2019 and ASU 2019-05 in May 2019. The standard significantly changes how entities will measure credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income. In issuing the standard, the FASB is responding to criticism that today’s “incurred loss” guidance delays the recognition of credit losses on loans, leases, held-to-maturity debt securities, loan commitments, and financial guarantees, and instead provides for a current expected credit loss (“CECL”) approach to determine the allowance for credit losses. CECL requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. In addition, this guidance modifies the accounting treatment for other-than-temporary impairment for available-for-sale debt securities. Organizations will continue to use judgment to determine which loss estimation methods are appropriate for their circumstances. This guidance requires entities to record a cumulative effect adjustment to the consolidated balance sheet as of the beginning of the first reporting period in which the guidance is effective. However, an organization may elect to phase in the regulatory capital impact over a three-year transition period if adoption of the new standard results in a reduction of retained earnings. This update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with earlier adoption permitted. As such, the Company will implement CECL for the reporting period beginning January 1, 2020. The new guidance will require significant operational changes, particularly in existing processes, data collection and analysis.
The Company has formed a steering committee that is responsible for oversight of the Company’s implementation strategy for compliance with provisions of the new standard. The Company has also established a project management governance process to manage the implementation across affected disciplines. To date, the Company has established appropriate loan pools by segment and sub-segment, developed internal loss driver models, and has leveraged a third-party software solution to measure expected losses under CECL. As part of this process, the Company has also engaged an additional third party specializing in economic forecasting to enable it to incorporate reasonable and supportable forecasts in its process. Finally, the Company is developing and enhancing internal controls, having its CECL framework independently validated by a third-party expert, performing parallel runs, and addressing remaining gaps. While the Company is evaluating the full impact of adopting this new guidance, management expects that it will be significantly influenced by its own historical experience, the composition and quality of the Company’s loans, the underlying assumptions embedded in its methodology, as well as economic condition expectations as of the date of adoption. The Company also anticipates significant changes to its reserve calculation processes
11

and procedures and continues to evaluate the potential impact on our consolidated financial statements through sensitivity analysis of underlying assumptions and economic scenarios.
In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement." The ASU is part of the FASB's disclosure framework project to improve the effectiveness of disclosures in the notes to financial statements by facilitating clear communication of the information required by generally accepted accounting principles. The ASU modifies disclosure requirements on fair value measurements in Topic 820 and is effective for the Company's reporting period beginning January 1, 2020. Early adoption is permitted. Based on preliminary evaluation, the ASU will not have a material impact on disclosures in our consolidated financial statements.
In August 2018, the FASB issued ASU 2018-14, "Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans." Like ASU 2018-13, this ASU is part of the FASB's disclosure framework project. This ASU modifies disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The ASU is effective for the Company's reporting period beginning January 1, 2021. Early adoption is permitted. Based on preliminary evaluation, the ASU will not have a material impact on disclosures in our consolidated financial statements.
3. INVESTMENT SECURITIES
A summary of our available-for-sale investment securities is as follows:

(dollars in thousands) | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value
September 30, 2019 |  |  |  |  |  |  |  |  |  |  |
Available-for-sale: |  |  |  |  |  |  |  |  |  |  |
Debt securities: |  |  |  |  |  |  |  |  |  |  |
States and political subdivisions | $ | 122,171 |  |  | $ | 2,593 |  |  | $ | (53 | ) |  | $ | 124,711 |
Corporate securities | 30,436 |  |  | 277 |  |  | — |  |  | 30,713 |
U.S. Treasury obligations and direct obligations of U.S Government agencies | 43,213 |  |  | 17 |  |  | (333 | ) |  | 42,897 |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |
Residential - U.S. Government-sponsored entities | 721,081 |  |  | 5,796 |  |  | (3,233 | ) |  | 723,644 |
Commercial - U.S. Government agencies and sponsored entities | 86,697 |  |  | 1,431 |  |  | (386 | ) |  | 87,742 |
Residential - Non-government agencies | 38,140 |  |  | 969 |  |  | — |  |  | 39,109 |
Commercial - Non-government agencies | 134,724 |  |  | 3,335 |  |  | — |  |  | 138,059 |
Total available-for-sale securities | $ | 1,176,462 |  |  | $ | 14,418 |  |  | $ | (4,005 | ) |  | $ | 1,186,875 |

12

(dollars in thousands) | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value
December 31, 2018 |  |  |  |  |  |  |  |  |  |  |
Held-to-maturity: |  |  |  |  |  |  |  |  |  |  |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |
Residential - U.S. Government-sponsored entities | $ | 83,436 |  |  | $ | 19 |  |  | $ | (3,174 | ) |  | $ | 80,281 |
Commercial - U.S. Government-sponsored entities | 65,072 |  |  | — |  |  | (1,081 | ) |  | 63,991 |
Total held-to-maturity securities | $ | 148,508 |  |  | $ | 19 |  |  | $ | (4,255 | ) |  | $ | 144,272 |
Available-for-sale: |  |  |  |  |  |  |  |  |  |  |
Debt securities: |  |  |  |  |  |  |  |  |  |  |
States and political subdivisions | $ | 174,114 |  |  | $ | 1,035 |  |  | $ | (1,475 | ) |  | $ | 173,674 |
Corporate securities | 55,259 |  |  | — |  |  | (410 | ) |  | 54,849 |
U.S. Treasury obligations and direct obligations of U.S Government agencies | 33,257 |  |  | — |  |  | (683 | ) |  | 32,574 |
Mortgage-backed securities: |  |  |  |  |  |  |  |
Residential - U.S. Government-sponsored entities | 736,175 |  |  | 369 |  |  | (19,492 | ) |  | 717,052 |
Commercial - U.S. Government agencies and sponsored entities | 53,014 |  |  | — |  |  | (1,531 | ) |  | 51,483 |
Residential - Non-government agencies | 41,245 |  |  | 337 |  |  | (464 | ) |  | 41,118 |
Commercial - Non-government agencies | 134,867 |  |  | 1,013 |  |  | (1,152 | ) |  | 134,728 |
Total available-for-sale securities | $ | 1,227,931 |  |  | $ | 2,754 |  |  | $ | (25,207 | ) |  | $ | 1,205,478 |

The amortized cost and fair value of our equity investment securities is as follows:

(dollars in thousands) | Amortized Cost |  | Fair Value
September 30, 2019 |  |  |
Equity securities | $ | 898 |  |  | $ | 1,058 |
December 31, 2018 |  |  |
Equity securities | 826 |  |  | 826 |

As discussed in Note 2 - Recent Accounting Pronouncements, on January 1, 2019 in connection with the adoption of ASU 2017-12, the Company transferred all of its held-to-maturity investment securities with an amortized cost of $148.5 million and fair value of $144.3 million to its available-for-sale investment securities portfolio.
The amortized cost and estimated fair value of our available-for-sale investment securities at September 30, 2019 by contractual maturity are shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.
13

| September 30, 2019
(dollars in thousands) | Amortized Cost |  | Fair Value
Available-for-sale: |  |  |  |  |
Due in one year or less | $ | 32,455 |  |  | $ | 32,658 |
Due after one year through five years | 60,696 |  |  | 61,195 |
Due after five years through ten years | 63,661 |  |  | 64,715 |
Due after ten years | 39,008 |  |  | 39,753 |
Mortgage-backed securities: |  |  |
Residential - U.S. Government-sponsored entities | 721,081 |  |  | 723,644 |
Commercial - U.S. Government agencies and sponsored entities | 86,697 |  |  | 87,742 |
Residential - Non-government agencies | 38,140 |  |  | 39,109 |
Commercial - Non-government agencies | 134,724 |  |  | 138,059 |
Total available-for-sale securities | $ | 1,176,462 |  |  | $ | 1,186,875 |

For the three and nine months ended September 30, 2019, proceeds from the sale of available-for-sale investment securities were $53.9 million and resulted in a gross realized gain of $36 thousand. We did not sell any available-for-sale securities during the three and nine months ended September 30, 2018.
Investment securities of $662.2 million and $980.2 million at September 30, 2019 and December 31, 2018, respectively, were pledged to secure public funds on deposit and other short-term borrowings.
Provided below is a summary of the 98 and 336 investment securities which were in an unrealized or unrecognized loss position at September 30, 2019 and December 31, 2018, respectively, aggregated by major security type and length of time in a continuous unrealized or unrecognized loss position.

| Less Than 12 Months |  | 12 Months or Longer |  | Total
(dollars in thousands) | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
September 30, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
States and political subdivisions | $ | 7,007 |  |  | $ | (26 | ) |  | $ | 1,253 |  |  | $ | (27 | ) |  | $ | 8,260 |  |  | $ | (53 | )
Corporate securities | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
U.S. Treasury obligations and direct obligations of U.S Government agencies | 16,815 |  |  | (122 | ) |  | 20,507 |  |  | (211 | ) |  | 37,322 |  |  | (333 | )
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential - U.S. Government-sponsored entities | 103,254 |  |  | (631 | ) |  | 247,482 |  |  | (2,602 | ) |  | 350,736 |  |  | (3,233 | )
Residential - Non-government agencies | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial - U.S. Government agencies and sponsored entities | 36,068 |  |  | (386 | ) |  | — |  |  | — |  |  | 36,068 |  |  | (386 | )
Commercial - Non-government agencies | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total temporarily impaired securities | $ | 163,144 |  |  | $ | (1,165 | ) |  | $ | 269,242 |  |  | $ | (2,840 | ) |  | $ | 432,386 |  |  | $ | (4,005 | )

14

| Less Than 12 Months |  | 12 Months or Longer |  | Total
(dollars in thousands) | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
December 31, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
States and political subdivisions | $ | 38,099 |  |  | $ | (157 | ) |  | $ | 49,505 |  |  | $ | (1,318 | ) |  | $ | 87,604 |  |  | $ | (1,475 | )
Corporate securities | 49,729 |  |  | (250 | ) |  | 5,120 |  |  | (160 | ) |  | 54,849 |  |  | (410 | )
U.S. Treasury obligations and direct obligations of U.S Government agencies | 30,029 |  |  | (613 | ) |  | 2,545 |  |  | (70 | ) |  | 32,574 |  |  | (683 | )
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential - U.S. Government-sponsored entities | 88,957 |  |  | (1,229 | ) |  | 666,685 |  |  | (21,437 | ) |  | 755,642 |  |  | (22,666 | )
Residential - Non-government agencies | — |  |  | — |  |  | 24,515 |  |  | (464 | ) |  | 24,515 |  |  | (464 | )
Commercial - U.S. Government-sponsored entities | 13,973 |  |  | (247 | ) |  | 101,500 |  |  | (2,365 | ) |  | 115,473 |  |  | (2,612 | )
Commercial - Non-government agencies | 33,847 |  |  | (233 | ) |  | 46,680 |  |  | (919 | ) |  | 80,527 |  |  | (1,152 | )
Total temporarily impaired securities | $ | 254,634 |  |  | $ | (2,729 | ) |  | $ | 896,550 |  |  | $ | (26,733 | ) |  | $ | 1,151,184 |  |  | $ | (29,462 | )

Visa and MasterCard Class B Common Stock
As of September 30, 2019, the Company owns 34,631 shares of Class B common stock of Visa, Inc. ("Visa"). These shares were received in 2008 as part of Visa's initial public offering ("IPO"). These shares are transferable only under limited circumstances until they can be converted into shares of the publicly traded Class A common stock. This conversion will not occur until the resolution of certain litigation, which is indemnified by Visa members. Since its IPO, Visa has funded a litigation reserve to settle these litigation claims. At its discretion, Visa may continue to increase the litigation reserve based upon a change in the conversion ratio of each member bank’s restricted Class B common stock to unrestricted Class A common stock. Due to the existing transfer restriction and the uncertainty of the outcome of the Visa litigation, the Company has determined that the Visa Class B common stock does not have a readily determinable fair value and chooses to carry the shares on the Company's consolidated balance sheets at zero cost basis.
During the first quarter of 2019, the Company converted the 11,170 shares of Class B common stock of MasterCard, Inc. ("MasterCard") it received during their initial public offering to an equal number of Class A common stock and sold the shares for $2.6 million. The shares were carried on the Company's consolidated balance sheets at zero cost basis and the proceeds received were recorded as a gain in other operating income - other in the Company's consolidated statements of income. The Company no longer owns any shares of MasterCard Class B common stock.
4. LOANS AND LEASES
Loans and leases, excluding loans held for sale, consisted of the following as of September 30, 2019 and December 31, 2018:

(dollars in thousands) | September 30, 2019 |  | December 31, 2018
Commercial, financial and agricultural | $ | 576,343 |  |  | $ | 581,177 |
Real estate: |  |  |  |  |
Construction | 96,996 |  |  | 67,269 |
Residential mortgage | 1,554,752 |  |  | 1,424,384 |
Home equity | 475,211 |  |  | 468,966 |
Commercial mortgage | 1,135,408 |  |  | 1,041,685 |
Consumer | 526,429 |  |  | 492,268 |
Leases | 31 |  |  | 124 |
Gross loans and leases | 4,365,170 |  |  | 4,075,873 |
Net deferred costs | 2,692 |  |  | 2,493 |
Total loans and leases, net of deferred costs | $ | 4,367,862 |  |  | $ | 4,078,366 |

During the nine months ended September 30, 2019, we foreclosed on one loan totaling $0.2 million.
15

During the nine months ended September 30, 2018, we foreclosed on one loan totaling $40 thousand.
During the nine months ended September 30, 2019 and 2018, we did not transfer any loans to the held-for-sale category.
We did not sell any portfolio loans during the nine months ended September 30, 2019 and 2018.
Through the third quarter of 2019, we purchased consumer loans with outstanding balances at the time of purchases totaling $80.0 million for $78.8 million, or a net discount of $1.2 million.
In 2018, we purchased consumer loans totaling $58.6 million, which included a $0.1 million premium over the $58.5 million outstanding balance at the time of purchase.
Impaired Loans
The following tables present by class, the balance in the allowance for loan and lease losses (the "Allowance") and the recorded investment in loans and leases based on the Company's impairment measurement method as of September 30, 2019 and December 31, 2018:

|  |  | Real Estate |  |  |  |  |  |
(dollars in thousands) | Comml, Fin & Ag |  | Constr |  | Resi Mortgage |  | Home Equity |  | Comml Mortgage |  | Consumer |  | Leases |  | Total
September 30, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Collectively evaluated for impairment | 7,781 |  |  | 1,693 |  |  | 13,546 |  |  | 4,287 |  |  | 12,209 |  |  | 8,651 |  |  | — |  |  | 48,167 |
Total ending balance | $ | 7,781 |  |  | $ | 1,693 |  |  | $ | 13,546 |  |  | $ | 4,287 |  |  | $ | 12,209 |  |  | $ | 8,651 |  |  | $ | — |  |  | $ | 48,167 |
Loans and leases: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 157 |  |  | $ | — |  |  | $ | 7,516 |  |  | $ | 95 |  |  | $ | 1,985 |  |  | $ | — |  |  | $ | — |  |  | $ | 9,753 |
Collectively evaluated for impairment | 576,186 |  |  | 96,996 |  |  | 1,547,236 |  |  | 475,116 |  |  | 1,133,423 |  |  | 526,429 |  |  | 31 |  |  | 4,355,417 |
Subtotal | 576,343 |  |  | 96,996 |  |  | 1,554,752 |  |  | 475,211 |  |  | 1,135,408 |  |  | 526,429 |  |  | 31 |  |  | 4,365,170 |
Net deferred costs (income) | 269 |  |  | (335 | ) |  | 3,983 |  |  | 354 |  |  | (1,496 | ) |  | (83 | ) |  | — |  |  | 2,692 |
Total loans and leases, net of deferred costs (income) | $ | 576,612 |  |  | $ | 96,661 |  |  | $ | 1,558,735 |  |  | $ | 475,565 |  |  | $ | 1,133,912 |  |  | $ | 526,346 |  |  | $ | 31 |  |  | $ | 4,367,862 |

|  |  | Real Estate |  |  |  |  |  |
(dollars in thousands) | Comml, Fin & Ag |  | Constr |  | Resi Mortgage |  | Home Equity |  | Comml Mortgage |  | Consumer |  | Leases |  | Total
December 31, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Collectively evaluated for impairment | 8,027 |  |  | 1,202 |  |  | 14,349 |  |  | 3,788 |  |  | 13,358 |  |  | 7,192 |  |  | — |  |  | 47,916 |
Total ending balance | $ | 8,027 |  |  | $ | 1,202 |  |  | $ | 14,349 |  |  | $ | 3,788 |  |  | $ | 13,358 |  |  | 7,192 |  |  | $ | — |  |  | $ | 47,916 |
Loans and leases: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 220 |  |  | $ | 2,273 |  |  | $ | 10,075 |  |  | $ | 275 |  |  | $ | 2,348 |  |  | $ | — |  |  | $ | — |  |  | $ | 15,191 |
Collectively evaluated for impairment | 580,957 |  |  | 64,996 |  |  | 1,414,309 |  |  | 468,691 |  |  | 1,039,337 |  |  | 492,268 |  |  | 124 |  |  | 4,060,682 |
Subtotal | 581,177 |  |  | 67,269 |  |  | 1,424,384 |  |  | 468,966 |  |  | 1,041,685 |  |  | 492,268 |  |  | 124 |  |  | 4,075,873 |
Net deferred costs (income) | 483 |  |  | (342 | ) |  | 3,821 |  |  | — |  |  | (1,407 | ) |  | (62 | ) |  | — |  |  | 2,493 |
Total loans and leases, net of deferred costs (income) | $ | 581,660 |  |  | $ | 66,927 |  |  | $ | 1,428,205 |  |  | $ | 468,966 |  |  | $ | 1,040,278 |  |  | $ | 492,206 |  |  | $ | 124 |  |  | $ | 4,078,366 |

16

There were no impaired loans with an allowance recorded as of September 30, 2019 and December 31, 2018. The following table presents by class, information related to impaired loans as of September 30, 2019 and December 31, 2018:

| September 30, 2019 |  | December 31, 2018
(dollars in thousands) | Unpaid Principal Balance |  | Recorded Investment |  | Allowance Allocated |  | Unpaid Principal Balance |  | Recorded Investment |  | Allowance Allocated
Impaired loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial and agricultural | $ | 267 |  |  | $ | 157 |  |  | $ | — |  |  | $ | 330 |  |  | $ | 220 |  |  | $ | — |
Real estate: |  |  |  |  |  |  |  |  |  |  |
Construction | — |  |  | — |  |  | — |  |  | 3,076 |  |  | 2,273 |  |  | — |
Residential mortgage | 8,239 |  |  | 7,516 |  |  | — |  |  | 11,019 |  |  | 10,075 |  |  | — |
Home equity | 95 |  |  | 95 |  |  | — |  |  | 275 |  |  | 275 |  |  | — |
Commercial mortgage | 1,985 |  |  | 1,985 |  |  | — |  |  | 2,348 |  |  | 2,348 |  |  | — |
Total impaired loans | $ | 10,586 |  |  | $ | 9,753 |  |  | $ | — |  |  | $ | 17,048 |  |  | $ | 15,191 |  |  | $ | — |

The following table presents by class, the average recorded investment and interest income recognized on impaired loans for the three and nine months ended September 30, 2019 and 2018:

| Three Months Ended |  | Nine Months Ended
| September 30, 2019 |  | September 30, 2018 |  | September 30, 2019 |  | September 30, 2018
(dollars in thousands) | Average Recorded Investment |  | Interest Income Recognized |  | Average Recorded Investment |  | Interest Income Recognized |  | Average Recorded Investment |  | Interest Income Recognized |  | Average Recorded Investment |  | Interest Income Recognized
Commercial, financial and agricultural | $ | 164 |  |  | $ | 2 |  |  | $ | 399 |  |  | $ | 12 |  |  | $ | 188 |  |  | $ | 7 |  |  | $ | 498 |  |  | $ | 17 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction | — |  |  | — |  |  | 2,382 |  |  | 30 |  |  | 1,323 |  |  | 62 |  |  | 2,476 |  |  | 84 |
Residential mortgage | 7,536 |  |  | 63 |  |  | 12,857 |  |  | 123 |  |  | 8,763 |  |  | 776 |  |  | 13,208 |  |  | 419 |
Home equity | 190 |  |  | — |  |  | 447 |  |  | — |  |  | 332 |  |  | 13 |  |  | 516 |  |  | — |
Commercial mortgage | 2,021 |  |  | 22 |  |  | 3,483 |  |  | 36 |  |  | 2,162 |  |  | 68 |  |  | 3,653 |  |  | 110 |
Total | $ | 9,911 |  |  | $ | 87 |  |  | $ | 19,568 |  |  | $ | 201 |  |  | $ | 12,768 |  |  | $ | 926 |  |  | $ | 20,351 |  |  | $ | 630 |

For the three and nine months ended September 30, 2019 and 2018, the amount of interest income recognized on impaired loans within the period that the loans were impaired were primarily related to loans modified in a troubled debt restructuring ("TDR") that were on accrual status. For the three and nine months ended September 30, 2019 and 2018, the amount of interest income recognized using a cash-based method of accounting during the period that the loans were impaired was not material.
Foreclosure Proceedings
The Company had $0.3 million and $0.7 million of residential mortgage loans collateralized by residential real estate property that were in the process of foreclosure at September 30, 2019 and December 31, 2018, respectively.
17

Aging Analysis of Accruing and Non-Accruing Loans and Leases
For all loan types, the Company determines delinquency status by considering the number of days full payments required by the contractual terms of the loan are past due. The following tables present by class, the aging of the recorded investment in past due loans and leases as of September 30, 2019 and December 31, 2018:

(dollars in thousands) | Accruing Loans 30 - 59 Days Past Due |  | Accruing Loans 60 - 89 Days Past Due |  | Accruing Loans Greater Than 90 Days Past Due |  | Nonaccrual Loans |  | Total Past Due and Nonaccrual |  | Loans and Leases Not Past Due |  | Total
September 30, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial and agricultural | $ | 5,845 |  |  | $ | 87 |  |  | $ | — |  |  | $ | — |  |  | $ | 5,932 |  |  | $ | 570,680 |  |  | $ | 576,612 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 96,661 |  |  | 96,661 |
Residential mortgage | — |  |  | 2,327 |  |  | — |  |  | 799 |  |  | 3,126 |  |  | 1,555,609 |  |  | 1,558,735 |
Home equity | 320 |  |  | 250 |  |  | — |  |  | 95 |  |  | 665 |  |  | 474,900 |  |  | 475,565 |
Commercial mortgage | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,133,912 |  |  | 1,133,912 |
Consumer | 2,974 |  |  | 1,296 |  |  | 235 |  |  | — |  |  | 4,505 |  |  | 521,841 |  |  | 526,346 |
Leases | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 31 |  |  | 31 |
Total | $ | 9,139 |  |  | $ | 3,960 |  |  | $ | 235 |  |  | $ | 894 |  |  | $ | 14,228 |  |  | $ | 4,353,634 |  |  | $ | 4,367,862 |

(dollars in thousands) | Accruing Loans 30 - 59 Days Past Due |  | Accruing Loans 60 - 89 Days Past Due |  | Accruing Loans Greater Than 90 Days Past Due |  | Nonaccrual Loans |  | Total Past Due and Nonaccrual |  | Loans and Leases Not Past Due |  | Total
December 31, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial and agricultural | $ | 1,348 |  |  | $ | 162 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,510 |  |  | $ | 580,150 |  |  | $ | 581,660 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 66,927 |  |  | 66,927 |
Residential mortgage | 3,966 |  |  | 157 |  |  | — |  |  | 2,048 |  |  | 6,171 |  |  | 1,422,034 |  |  | 1,428,205 |
Home equity | 433 |  |  | 104 |  |  | 298 |  |  | 275 |  |  | 1,110 |  |  | 467,856 |  |  | 468,966 |
Commercial mortgage | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,040,278 |  |  | 1,040,278 |
Consumer | 2,340 |  |  | 872 |  |  | 238 |  |  | — |  |  | 3,450 |  |  | 488,756 |  |  | 492,206 |
Leases | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 124 |  |  | 124 |
Total | $ | 8,087 |  |  | $ | 1,295 |  |  | $ | 536 |  |  | $ | 2,323 |  |  | $ | 12,241 |  |  | $ | 4,066,125 |  |  | $ | 4,078,366 |

Modifications
Troubled debt restructurings ("TDRs") included in nonperforming assets at September 30, 2019 consisted of one Hawaii residential mortgage loan with a principal balance of $0.3 million.
Concessions made to the original contractual terms of these loans consisted primarily of the deferral of interest and/or principal payments due to deterioration in the borrowers' financial condition. The principal balances on these TDRs had matured and/or were in default at the time of restructure, and we have no commitments to lend additional funds to any of these borrowers. There were $8.9 million of TDRs still accruing interest at September 30, 2019, none of which were more than 90 days delinquent. At December 31, 2018, there were $12.9 million of TDRs still accruing interest, none of which were more than 90 days delinquent.
Some loans modified in a TDR may already be on nonaccrual status and partial charge-offs may have already been taken against the outstanding loan balance. Thus, these loans have already been identified as impaired and have already been evaluated under the Company's allowance for loan and lease losses (the "Allowance") methodology. Loans that were not on nonaccrual status when modified in a TDR may have the financial effect of increasing the specific allowance associated with the loan. The loans modified in a TDR did not have a material effect on our provision for loan and lease losses (the "Provision") and the Allowance during the three and nine months ended September 30, 2019.
18

No loans were modified in a TDR during the three and nine months ended September 30, 2019 and 2018.
No loans were modified as a TDR within the previous twelve months that subsequently defaulted during the three and nine months ended September 30, 2019 and 2018.
We had no commitments on TDRs during the three and nine months ended September 30, 2019 and 2018.
Credit Quality Indicators
The Company categorizes loans and leases into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans and leases individually by classifying the loans and leases by credit risk. This analysis includes non-homogeneous loans and leases, such as commercial and commercial real estate loans. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk ratings:
Special Mention. Loans and leases classified as special mention, while still adequately protected by the borrower's capital adequacy and payment capability, exhibit distinct weakening trends and/or elevated levels of exposure to external conditions. If left unchecked or uncorrected, these potential weaknesses may result in deteriorated prospects of repayment. These exposures require management's close attention so as to avoid becoming undue or unwarranted credit exposures.
Substandard. Loans and leases classified as substandard are inadequately protected by the borrower's current financial condition and payment capability or of the collateral pledged, if any. Loans and leases so classified have a well-defined weakness or weaknesses that jeopardize the orderly repayment of debt. They are characterized by the distinct possibility that the bank will sustain some loss if the deficiencies are not corrected.
Doubtful. Loans and leases classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or orderly repayment in full, on the basis of current existing facts, conditions and values, highly questionable and improbable. Possibility of loss is extremely high, but because of certain important and reasonably specific factors that may work to the advantage and strengthening of the exposure, its classification as an estimated loss is deferred until its more exact status may be determined.
Loss. Loans and leases classified as loss are considered to be non-collectible and of such little value that their continuance as bankable assets is not warranted. This does not mean the loan has absolutely no recovery value, but rather it is neither practical nor desirable to defer writing off the loan, even though partial recovery may be obtained in the future. Losses are taken in the period in which they surface as uncollectible.
Loans and leases not meeting the criteria above are considered to be pass-rated. The following table presents by class and credit indicator, the recorded investment in the Company's loans and leases as of September 30, 2019 and December 31, 2018:

(dollars in thousands) | Pass |  | Special Mention |  | Substandard |  | Loss |  | Subtotal |  | Net Deferred Costs (Income) |  | Total
September 30, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial and agricultural | $ | 561,372 |  |  | $ | 3,318 |  |  | $ | 11,653 |  |  | $ | — |  |  | $ | 576,343 |  |  | $ | 269 |  |  | $ | 576,612 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction | 96,996 |  |  | — |  |  | — |  |  | — |  |  | 96,996 |  |  | (335 | ) |  | 96,661 |
Residential mortgage | 1,553,869 |  |  | — |  |  | 883 |  |  | — |  |  | 1,554,752 |  |  | 3,983 |  |  | 1,558,735 |
Home equity | 475,116 |  |  | — |  |  | 95 |  |  | — |  |  | 475,211 |  |  | 354 |  |  | 475,565 |
Commercial mortgage | 1,096,341 |  |  | 25,757 |  |  | 13,310 |  |  | — |  |  | 1,135,408 |  |  | (1,496 | ) |  | 1,133,912 |
Consumer | 526,193 |  |  | — |  |  | 149 |  |  | 87 |  |  | 526,429 |  |  | (83 | ) |  | 526,346 |
Leases | 31 |  |  | — |  |  | — |  |  | — |  |  | 31 |  |  | — |  |  | 31 |
Total | $ | 4,309,918 |  |  | $ | 29,075 |  |  | $ | 26,090 |  |  | $ | 87 |  |  | $ | 4,365,170 |  |  | $ | 2,692 |  |  | $ | 4,367,862 |

19

(dollars in thousands) | Pass |  | Special Mention |  | Substandard |  | Loss |  | Subtotal |  | Net Deferred Costs (Income) |  | Total
December 31, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial and agricultural | $ | 552,706 |  |  | $ | 7,961 |  |  | $ | 20,510 |  |  | $ | — |  |  | $ | 581,177 |  |  | $ | 483 |  |  | $ | 581,660 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction | 67,269 |  |  | — |  |  | — |  |  | — |  |  | 67,269 |  |  | (342 | ) |  | 66,927 |
Residential mortgage | 1,422,240 |  |  | — |  |  | 2,144 |  |  | — |  |  | 1,424,384 |  |  | 3,821 |  |  | 1,428,205 |
Home equity | 468,394 |  |  | — |  |  | 572 |  |  | — |  |  | 468,966 |  |  | — |  |  | 468,966 |
Commercial mortgage | 1,029,581 |  |  | 10,412 |  |  | 1,692 |  |  | — |  |  | 1,041,685 |  |  | (1,407 | ) |  | 1,040,278 |
Consumer | 492,030 |  |  | — |  |  | 80 |  |  | 158 |  |  | 492,268 |  |  | (62 | ) |  | 492,206 |
Leases | 124 |  |  | — |  |  | — |  |  | — |  |  | 124 |  |  | — |  |  | 124 |
Total | $ | 4,032,344 |  |  | $ | 18,373 |  |  | $ | 24,998 |  |  | $ | 158 |  |  | $ | 4,075,873 |  |  | $ | 2,493 |  |  | $ | 4,078,366 |

20

5. ALLOWANCE FOR LOAN AND LEASE LOSSES
The following table presents by class, the activity in the Allowance for the periods indicated:

|  |  | Real Estate |  |  |  |  |  |
(dollars in thousands) | Commercial, Financial & Agricultural |  | Construction |  | Residential Mortgage |  | Home Equity |  | Commercial Mortgage |  | Consumer |  | Leases |  | Total
Three Months Ended September 30, 2019
Beginning balance | $ | 8,109 |  |  | $ | 1,313 |  |  | $ | 13,367 |  |  | $ | 4,313 |  |  | $ | 11,668 |  |  | $ | 9,497 |  |  | $ | — |  |  | $ | 48,267 |
Provision (credit) for loan and lease losses | 107 |  |  | 374 |  |  | 75 |  |  | (45 | ) |  | 541 |  |  | 480 |  |  | — |  |  | 1,532 |
| 8,216 |  |  | 1,687 |  |  | 13,442 |  |  | 4,268 |  |  | 12,209 |  |  | 9,977 |  |  | — |  |  | 49,799 |
Charge-offs | 797 |  |  | — |  |  | — |  |  | 5 |  |  | — |  |  | 1,832 |  |  | — |  |  | 2,634 |
Recoveries | 362 |  |  | 6 |  |  | 104 |  |  | 24 |  |  | — |  |  | 506 |  |  | — |  |  | 1,002 |
Net charge-offs (recoveries) | 435 |  |  | (6 | ) |  | (104 | ) |  | (19 | ) |  | — |  |  | 1,326 |  |  | — |  |  | 1,632 |
Ending balance | $ | 7,781 |  |  | $ | 1,693 |  |  | $ | 13,546 |  |  | $ | 4,287 |  |  | $ | 12,209 |  |  | $ | 8,651 |  |  | $ | — |  |  | $ | 48,167 |
Three Months Ended September 30, 2018
Beginning balance | $ | 7,525 |  |  | $ | 1,811 |  |  | $ | 14,252 |  |  | $ | 3,168 |  |  | $ | 15,094 |  |  | $ | 6,331 |  |  | $ | — |  |  | $ | 48,181 |
Provision (credit) for loan and lease losses | 495 |  |  | (526 | ) |  | (168 | ) |  | 544 |  |  | (1,632 | ) |  | 1,228 |  |  | — |  |  | (59 | )
| 8,020 |  |  | 1,285 |  |  | 14,084 |  |  | 3,712 |  |  | 13,462 |  |  | 7,559 |  |  | — |  |  | 48,122 |
Charge-offs | 731 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,762 |  |  | — |  |  | 2,493 |
Recoveries | 578 |  |  | 6 |  |  | 51 |  |  | 6 |  |  | 8 |  |  | 548 |  |  | — |  |  | 1,197 |
Net charge-offs (recoveries) | 153 |  |  | (6 | ) |  | (51 | ) |  | (6 | ) |  | (8 | ) |  | 1,214 |  |  | — |  |  | 1,296 |
Ending balance | $ | 7,867 |  |  | $ | 1,291 |  |  | $ | 14,135 |  |  | $ | 3,718 |  |  | $ | 13,470 |  |  | $ | 6,345 |  |  | $ | — |  |  | $ | 46,826 |

|  |  | Real Estate |  |  |  |  |  |
(dollars in thousands) | Commercial, Financial & Agricultural |  | Construction |  | Residential Mortgage |  | Home Equity |  | Commercial Mortgage |  | Consumer |  | Leases |  | Total
Nine Months Ended September 30, 2019
Beginning balance | $ | 8,027 |  |  | $ | 1,202 |  |  | $ | 14,349 |  |  | $ | 3,788 |  |  | $ | 13,358 |  |  | $ | 7,192 |  |  | $ | — |  |  | $ | 47,916 |
Provision (credit) for loan and lease losses | 943 |  |  | (113 | ) |  | (1,301 | ) |  | 462 |  |  | (1,174 | ) |  | 5,402 |  |  | — |  |  | 4,219 |
| 8,970 |  |  | 1,089 |  |  | 13,048 |  |  | 4,250 |  |  | 12,184 |  |  | 12,594 |  |  | — |  |  | 52,135 |
Charge-offs | 2,099 |  |  | — |  |  | — |  |  | 5 |  |  | — |  |  | 5,542 |  |  | — |  |  | 7,646 |
Recoveries | 910 |  |  | 604 |  |  | 498 |  |  | 42 |  |  | 25 |  |  | 1,599 |  |  | — |  |  | 3,678 |
Net charge-offs (recoveries) | 1,189 |  |  | (604 | ) |  | (498 | ) |  | (37 | ) |  | (25 | ) |  | 3,943 |  |  | — |  |  | 3,968 |
Ending balance | $ | 7,781 |  |  | $ | 1,693 |  |  | $ | 13,546 |  |  | $ | 4,287 |  |  | $ | 12,209 |  |  | $ | 8,651 |  |  | $ | — |  |  | $ | 48,167 |
Nine Months Ended September 30, 2018
Beginning balance | $ | 7,594 |  |  | $ | 1,835 |  |  | $ | 14,328 |  |  | $ | 3,317 |  |  | $ | 16,801 |  |  | $ | 6,126 |  |  | $ | — |  |  | $ | 50,001 |
Provision (credit) for loan and lease losses | 1,227 |  |  | (1,749 | ) |  | (291 | ) |  | 383 |  |  | (3,383 | ) |  | 4,075 |  |  | — |  |  | 262 |
| 8,821 |  |  | 86 |  |  | 14,037 |  |  | 3,700 |  |  | 13,418 |  |  | 10,201 |  |  | — |  |  | 50,263 |
Charge-offs | 1,971 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 5,424 |  |  | — |  |  | 7,395 |
Recoveries | 1,017 |  |  | 1,205 |  |  | 98 |  |  | 18 |  |  | 52 |  |  | 1,568 |  |  | — |  |  | 3,958 |
Net charge-offs (recoveries) | 954 |  |  | (1,205 | ) |  | (98 | ) |  | (18 | ) |  | (52 | ) |  | 3,856 |  |  | — |  |  | 3,437 |
Ending balance | $ | 7,867 |  |  | $ | 1,291 |  |  | $ | 14,135 |  |  | $ | 3,718 |  |  | $ | 13,470 |  |  | $ | 6,345 |  |  | $ | — |  |  | $ | 46,826 |

In accordance with GAAP, loans held for sale and other real estate assets are not included in our assessment of the Allowance.
Our Provision was a debit of $1.5 million and a debit of $4.2 million in the three and nine months ended September 30, 2019, respectively, compared to a credit of $0.1 million and a debit of $0.3 million in the three and nine months ended September 30, 2018, respectively.
21

6. INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES
The components of the Company's investments in unconsolidated subsidiaries were as follows:

(dollars in thousands) | September 30, 2019 |  | December 31, 2018
Investments in low income housing tax credit partnerships | $ | 15,228 |  |  | $ | 11,603 |
Investments in common securities of statutory trusts | 1,547 |  |  | 2,169 |
Investments in affiliates | 172 |  |  | 182 |
Other | 54 |  |  | 54 |
Total | $ | 17,001 |  |  | $ | 14,008 |

The Company invests in low-income housing tax credit ("LIHTC") partnerships. As of September 30, 2019 and December 31, 2018, the Company had $11.7 million and $8.3 million, respectively, in unfunded commitments related to the LIHTC partnerships. The expected payments for the unfunded commitments as of September 30, 2019 for the remainder of fiscal year 2019, the next five succeeding fiscal years and all years thereafter are as follows (dollars in thousands):

Year Ending December 31, |
2019 (remainder) | $ | 3,669 |
2020 | 3,466 |
2021 | 1,494 |
2022 | 3,010 |
2023 | 10 |
2024 | 26 |
Thereafter | 49 |
Total unfunded commitments | $ | 11,724 |

Prior to 2018, the Company's investments in LIHTC partnerships were accounted for using the cost method. In 2018, the Company voluntarily changed its accounting policy for LIHTC partnerships from the cost method to the proportional amortization method using the practical expedient available under ASC 323, "Investments - Equity Method and Joint Ventures", which permits an investor to amortize the initial cost of the investment in proportion to only the tax credits allocated to the investor. The Company believes the proportional amortization method is preferable because it better reflects the economics of an investment that is made for the primary purpose of receiving tax credits and other tax benefits. In addition to a change in the timing of the recognition of amortization expense on LIHTC investments, amortization expense on LIHTC investments is now reflected in the income tax expense line, which provides users a better understanding of the nature of the returns of such investments, instead of in other operating expenses on the consolidated statements of income.
The following table presents amortization and tax credits recognized associated with our investments in LIHTC partnerships for the three and nine months ended September 30, 2019 and September 30, 2018:

(dollars in thousands) | Three Months Ended September 30, 2019 |  | Three Months Ended September 30, 2018 |  | Nine Months Ended September 30, 2019 |  | Nine Months Ended September 30, 2018
Proportional amortization method: |  |  |  |  |  |  |
Amortization expense recognized in income tax expense | $ | 259 |  |  | $ | 114 |  |  | $ | 776 |  |  | $ | 341 |
Tax credits recognized in income tax expense | 307 |  |  | 152 |  |  | 922 |  |  | 457 |

22

7. CORE DEPOSIT PREMIUM AND MORTGAGE SERVICING RIGHTS
The following table presents changes in core deposit premium and mortgage servicing rights for the periods presented:

(dollars in thousands) | Core Deposit Premium |  | Mortgage Servicing Rights |  | Total
Balance, January 1, 2018 | $ | 2,006 |  |  | $ | 15,843 |  |  | $ | 17,849 |
Additions | — |  |  | 1,204 |  |  | 1,204 |
Amortization | (2,006 | ) |  | (1,413 | ) |  | (3,419 | )
Balance, September 30, 2018 | $ | — |  |  | $ | 15,634 |  |  | $ | 15,634 |
Balance, January 1, 2019 | $ | — |  |  | $ | 15,596 |  |  | $ | 15,596 |
Additions | — |  |  | 1,189 |  |  | 1,189 |
Amortization | — |  |  | (1,727 | ) |  | (1,727 | )
Balance, September 30, 2019 | $ | — |  |  | $ | 15,058 |  |  | $ | 15,058 |

Income generated as the result of new mortgage servicing rights is reported as gains on sales of loans and totaled $0.4 million and $1.2 million for the three and nine months ended September 30, 2019, respectively, compared to $0.4 million and $1.2 million for the three and nine months ended September 30, 2018, respectively.
Amortization of mortgage servicing rights totaled $0.7 million and $1.7 million for the three and nine months ended September 30, 2019, respectively, compared to $0.5 million and $1.4 million for the three and nine months ended September 30, 2018, respectively.
The following table presents the fair market value and key assumptions used in determining the fair market value of our mortgage servicing rights:

| Nine Months Ended |  | Nine Months Ended
(dollars in thousands) | September 30, 2019 |  | September 30, 2018
Fair market value, beginning of period | $ | 17,696 |  |  | $ | 17,161 |
Fair market value, end of period | 15,965 |  |  | 18,315 |
Weighted average discount rate | 9.5 | % |  | 9.5 | %
Forecasted constant prepayment rate assumption (1) | 14.6 |  |  | 14.0 |

(1) Represents annualized loan prepayment rate assumption.
The gross carrying value and accumulated amortization related to our core deposit premium and mortgage servicing rights are presented below:

| September 30, 2019 |  | December 31, 2018
(dollars in thousands) | Gross Carrying Value |  | Accumulated Amortization |  | Net Carrying Value |  | Gross Carrying Value |  | Accumulated Amortization |  | Net Carrying Value
Core deposit premium | $ | 44,642 |  |  | $ | (44,642 | ) |  | $ | — |  |  | $ | 44,642 |  |  | $ | (44,642 | ) |  | $ | — |
Mortgage servicing rights | 67,202 |  |  | (52,144 | ) |  | 15,058 |  |  | 66,013 |  |  | (50,417 | ) |  | 15,596 |
Total | $ | 111,844 |  |  | $ | (96,786 | ) |  | $ | 15,058 |  |  | $ | 110,655 |  |  | $ | (95,059 | ) |  | $ | 15,596 |

23

Based on the mortgage servicing rights held as of September 30, 2019, estimated amortization expense for the remainder of fiscal year 2019, the next five succeeding fiscal years and all years thereafter are as follows (dollars in thousands):

Year Ending December 31, |
2019 (remainder) | $ | 669 |
2020 | 2,373 |
2021 | 1,918 |
2022 | 1,585 |
2023 | 1,319 |
2024 | 1,118 |
Thereafter | 6,076 |
Total | $ | 15,058 |

We perform an impairment assessment of our mortgage servicing rights whenever events or changes in circumstance indicate that the carrying value of the asset may not be recoverable.
8. DERIVATIVES
We utilize various designated and undesignated derivative financial instruments to reduce our exposure to movements in interest rates including interest rate lock commitments and forward sale commitments. We measure all derivatives at fair value on our consolidated balance sheet. In each reporting period, we record the derivative instruments in other assets or other liabilities depending on whether the derivatives are in an asset or liability position. For derivative instruments that are designated as cash flow hedging instruments, we record the effective portion of the changes in the fair value of the derivative in AOCI, net of tax, until earnings are affected by the variability of cash flows of the hedged transaction. We immediately recognize the portion of the gain or loss in the fair value of the derivative that represents hedge ineffectiveness in current period earnings. For derivative instruments that are not designated as hedging instruments, changes in the fair value of the derivative are included in current period earnings. At September 30, 2019 and December 31, 2018, we were not party to any derivatives designated as part of a fair value or cash flow hedge.
Interest Rate Lock and Forward Sale Commitments
We enter into interest rate lock commitments on certain mortgage loans that are intended to be sold. To manage interest rate risk on interest rate lock commitments, we also enter into forward loan sale commitments. The interest rate locks and forward loan sale commitments are accounted for as undesignated derivatives and are recorded at their respective fair values in other assets or other liabilities, with changes in fair value recorded in current period earnings. These instruments serve to reduce our exposure to movements in interest rates. At September 30, 2019, we were a party to interest rate lock and forward sale commitments on $1.6 million and $8.4 million of mortgage loans, respectively.
The following table presents the location of all assets and liabilities associated with our derivative instruments within the consolidated balance sheets:

Derivatives Financial Instruments Not Designated as Hedging Instruments |  | Asset Derivatives |  | Liability Derivatives
| Fair Value at |  | Fair Value at
(dollars in thousands) |  | Balance Sheet Location |  | September 30, 2019 |  | December 31, 2018 |  | September 30, 2019 |  | December 31, 2018
Interest rate lock and forward sale commitments |  | Other assets / other liabilities |  | $ | 49 |  |  | $ | 11 |  |  | $ | 3 |  |  | $ | 95 |

24

The following table presents the impact of derivative instruments and their location within the consolidated statements of income:

Derivatives Financial Instruments Not Designated as Hedging Instruments |  | Location of Gain (Loss) Recognized in Earnings on Derivatives |  | Amount of Gain (Loss) Recognized in Earnings on Derivatives
(dollars in thousands) |  |
Three Months Ended September 30, 2019 |  |  |  |  |
Interest rate lock and forward sale commitments |  | Mortgage banking income |  | $ | 110 |
Loans held for sale |  | Other income |  | (1 | )
Three Months Ended September 30, 2018 |  |  |  |
Interest rate lock and forward sale commitments |  | Mortgage banking income |  | 91 |
Loans held for sale |  | Other income |  | (6 | )
Nine Months Ended September 30, 2019 |  |  |  |
Interest rate lock and forward sale commitments |  | Mortgage banking income |  | 131 |
Loans held for sale |  | Other income |  | (1 | )
Nine Months Ended September 30, 2018 |  |  |  |
Interest rate lock and forward sale commitments |  | Mortgage banking income |  | 76 |
Loans held for sale |  | Other income |  | (6 | )

9. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Federal Home Loan Bank Advances and Other Borrowings
The bank is a member of the Federal Home Loan Bank of Des Moines (the "FHLB") and maintained a $1.80 billion line of credit as of September 30, 2019, compared to $1.43 billion at December 31, 2018. At September 30, 2019, $1.43 billion was undrawn under this arrangement, compared to $1.18 billion at December 31, 2018. Short-term borrowings under this arrangement totaled $205.0 million at September 30, 2019, compared to $197.0 million at December 31, 2018. Letters of credit under this arrangement that are used to collateralize certain government deposits totaled $118.9 million at September 30, 2019, compared to $4.6 million at December 31, 2018. Long-term borrowings under this arrangement totaled $50.0 million at September 30, 2019 and December 31, 2018. FHLB advances and standby letters of credit available at September 30, 2019 were secured by certain real estate loans with a carrying value of $2.42 billion in accordance with the collateral provisions of the Advances, Security and Deposit Agreement with the FHLB.
At September 30, 2019 and December 31, 2018, our bank had additional unused borrowings available at the Federal Reserve discount window of $65.6 million and $73.9 million, respectively. As of September 30, 2019 and December 31, 2018, certain commercial and commercial real estate loans with a carrying value totaling $118.9 million and $123.3 million, respectively, were pledged as collateral on our line of credit with the Federal Reserve discount window. The Federal Reserve does not have the right to sell or repledge these loans.
Subordinated Debentures
In October 2003, we created two wholly-owned statutory trusts, CPB Capital Trust II ("Trust II") and CPB Statutory Trust III ("Trust III"). Trust II issued $20.0 million in floating rate trust preferred securities bearing an interest rate of three-month LIBOR plus 2.85% and maturing on October 7, 2033. The principal assets of Trust II were $20.6 million of the Company's junior subordinated debentures with an identical interest rate and maturity as the Trust II trust preferred securities. Trust II issued $0.6 million of common securities to the Company.
On January 7, 2019, the Company completed the redemption of $20.0 million in floating rate trust preferred securities of Trust II. The redemption price was 100% of the aggregate liquidation amount of the securities plus accumulated but unpaid distributions up to but not including the redemption date. The Company also redeemed $0.6 million of common securities issued by Trust II and held by the Company, as a result of the concurrent redemption of 100% of the principal assets of Trust II, or $20.6 million of the Company's junior subordinated debentures with an identical interest rate and maturity as the Trust II
25

trust preferred securities. The redemption was pursuant to the optional prepayment provisions of the indenture. On January 22, 2019, Trust II was canceled with the state of Delaware.
Trust III issued $20.0 million in floating rate trust preferred securities bearing an interest rate of three-month LIBOR plus 2.85% and maturing on December 17, 2033. The principal assets of Trust III were $20.6 million of the Company's junior subordinated debentures with an identical interest rate and maturity as the Trust III trust preferred securities. Trust III issued $0.6 million of common securities to the Company.
On December 17, 2018, the Company completed the redemption of $20.0 million in floating rate trust preferred securities of Trust III. The redemption price was 100% of the aggregate liquidation amount of the securities plus accumulated but unpaid distributions up to but not including the redemption date. The Company also redeemed $0.6 million of common securities issued by Trust III and held by the Company, as a result of the concurrent redemption of 100% of the principal assets of Trust III, or $20.6 million of the Company's junior subordinated debentures with an identical interest rate and maturity as the Trust III trust preferred securities. The redemption was pursuant to the optional prepayment provisions of the indenture. On January 9, 2019, Trust III was canceled with the state of Connecticut.
In September 2004, we created a wholly-owned statutory trust, CPB Capital Trust IV ("Trust IV"). Trust IV issued $30.0 million in floating rate trust preferred securities bearing an interest rate of three-month LIBOR plus 2.45% and maturing on December 15, 2034. The principal assets of Trust IV are $30.9 million of the Company's junior subordinated debentures with an identical interest rate and maturity as the Trust IV trust preferred securities. Trust IV issued $0.9 million of common securities to the Company.
In December 2004, we created a wholly-owned statutory trust, CPB Statutory Trust V ("Trust V"). Trust V issued $20.0 million in floating rate trust preferred securities bearing an interest rate of three-month LIBOR plus 1.87% and maturing on December 15, 2034. The principal assets of Trust V are $20.6 million of the Company's junior subordinated debentures with an identical interest rate and maturity as the Trust V trust preferred securities. Trust V issued $0.6 million of common securities to the Company.
At September 30, 2019 and December 31, 2018, the Company had the following junior subordinated debentures outstanding, which is recorded in long-term debt on the Company's consolidated balance sheets:

(dollars in thousands) | September 30, 2019
Name of Trust | Amount of Subordinated Debentures |  | Interest Rate
Trust IV | $ | 30,928 |  |  | Three month LIBOR + 2.45%
Trust V | 20,619 |  |  | Three month LIBOR + 1.87%
Total | $ | 51,547 |  |  |
| December 31, 2018
Name of Trust | Amount of Subordinated Debentures |  | Interest Rate
Trust II | $ | 20,619 |  |  | Three month LIBOR + 2.85%
Trust IV | 30,928 |  |  | Three month LIBOR + 2.45%
Trust V | 20,619 |  |  | Three month LIBOR + 1.87%
Total | $ | 72,166 |  |  |

The floating trust preferred securities, the junior subordinated debentures that are the assets of Trusts IV and V and the common securities issued by Trusts IV and V are redeemable in whole or in part on any interest payment date on or after December 15, 2009 for Trust IV and V, or at any time in whole but not in part within 90 days following the occurrence of certain events. Our obligations with respect to the issuance of the trust preferred securities constitute a full and unconditional guarantee by the Company of each trust's obligations with respect to its trust preferred securities. Subject to certain exceptions and limitations, we may elect from time to time to defer interest payments on the subordinated debentures, which would result in a deferral of
26

distribution payments on the related trust preferred securities, for up to 20 consecutive quarterly periods without default or penalty.
The subordinated debentures may be included in Tier 1 capital, with certain limitations applicable, under current regulatory guidelines and interpretations.
10. REVENUE FROM CONTRACTS WITH CUSTOMERS
The following presents the Company's other operating income, segregated by revenue streams that are in-scope and out-of-scope of ASC 606, "Revenue from Contracts with Customers" for the three and nine months ended September 30, 2019 and 2018.

| Three Months Ended September 30, |  | Nine Months Ended September 30,
(dollars in thousands) | 2019 |  | 2018 |  | 2019 |  | 2018
Other operating income: |  |  |  |  |  |  |
In-scope of ASC 606 |  |  |  |  |  |  |
Service charges on deposit accounts | $ | 2,125 |  |  | $ | 2,189 |  |  | $ | 6,247 |  |  | $ | 6,169 |
Other service charges and fees | 3,260 |  |  | 2,778 |  |  | 9,021 |  |  | 8,169 |
Income on fiduciary activities | 1,126 |  |  | 1,159 |  |  | 3,220 |  |  | 3,132 |
Fees on foreign exchange | 21 |  |  | 26 |  |  | 75 |  |  | 86 |
Loan placement fees | 230 |  |  | 115 |  |  | 486 |  |  | 532 |
Net gain on sales of foreclosed assets | 17 |  |  | — |  |  | 17 |  |  | — |
In-scope other operating income | 6,779 |  |  | 6,267 |  |  | 19,066 |  |  | 18,088 |
Out-of-scope other operating income | 3,487 |  |  | 4,553 |  |  | 12,967 |  |  | 11,316 |
Total other operating income | $ | 10,266 |  |  | $ | 10,820 |  |  | $ | 32,033 |  |  | $ | 29,404 |

11. SHARE-BASED COMPENSATION
Restricted Stock Units
The table below presents the activity of restricted stock units for the nine months ended September 30, 2019:

| Shares |  | Weighted Average Grant Date Fair Value
Non-vested restricted stock units, beginning of period | 362,725 |  |  | $ | 26.98 |
Changes during the period: |  |  |  |  |
Granted | 181,431 |  |  | 28.89 |
Vested | (155,474 | ) |  | 24.40 |
Forfeited | (15,205 | ) |  | 29.24 |
Non-vested restricted stock units, end of period | 373,477 |  |  | 28.89 |

12. LEASES
We lease certain land and buildings for our bank branches and ATMs. In some instances, a lease may contain renewal options to extend the term of the lease. All renewal options are likely to be exercised and therefore have been recognized as part of our right-of-use assets and lease liabilities in accordance with ASC 842, "Leases". Certain leases also contain variable payments that are primarily determined based on common area maintenance costs and Hawaii state tax rates. All leases are operating leases and we do not include any short term leases in the calculation of the right-of-use assets and lease liabilities. The most significant assumption related to the Company’s application of ASC 842 was the discount rate assumption. As most of the Company’s lease agreements do not provide for an implicit interest rate, the Company uses the collateralized interest rate that the Company would have to pay to borrow over a similar term to estimate the Company’s lease liability.
27

Total lease cost, cash flow information, weighted-average remaining lease term and weighted-average discount rate is summarized below for the period indicated:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
(dollars in thousands) | 2019 |  | 2019
Lease cost: |  |  |
Operating lease cost | $ | 1,627 |  |  | $ | 4,883 |
Variable lease cost | 699 |  |  | 1,950 |
Less: sublease income | (11 | ) |  | (33 | )
Total lease cost | $ | 2,315 |  |  | 6,800 |
Other information: |  |  |
Operating cash flows from operating leases | $ | (1,558 | ) |  | $ | (4,663 | )
Weighted-average remaining lease term - operating leases | 13.80 years |  |  | 13.80 years |
Weighted-average discount rate - operating leases | 3.92 | % |  | 3.92 | %

The following is a schedule of annual undiscounted cash flows for our operating leases and a reconciliation of those cash flows to the operating lease liabilities for the remainder of fiscal year 2019, the next five succeeding fiscal years and all years thereafter (dollars in thousands):

Year Ending December 31, | Undiscounted Cash Flows |  | Lease Liability Expense |  | Lease Liability Reduction
2019 (remainder) | $ | 1,550 |  |  | $ | 512 |  |  | $ | 1,038 |
2020 | 6,018 |  |  | 1,939 |  |  | 4,079 |
2021 | 5,708 |  |  | 1,787 |  |  | 3,921 |
2022 | 5,271 |  |  | 1,645 |  |  | 3,626 |
2023 | 4,973 |  |  | 1,512 |  |  | 3,461 |
2024 | 4,814 |  |  | 1,383 |  |  | 3,431 |
Thereafter | 40,920 |  |  | 7,669 |  |  | 33,251 |
Total | $ | 69,254 |  |  | $ | 16,447 |  |  | $ | 52,807 |

In addition, the Company, as lessor, leases certain properties that it owns. All of these leases are operating leases. The following represents lease income related to these leases that was recognized for the period indicated:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
(dollars in thousands) | 2019 |  | 2019
Total rental income recognized | $ | 522 |  |  | 1,576 |

28

Based on the Company's leases as lessor as of September 30, 2019, estimated lease payments for the remainder of fiscal year 2019, the next five succeeding fiscal years and all years thereafter are as follows (dollars in thousands):

Year Ending December 31, |
2019 (remainder) | $ | 503 |
2020 | 1,837 |
2021 | 1,868 |
2022 | 1,308 |
2023 | 449 |
2024 | 97 |
Thereafter | 262 |
Total | $ | 6,324 |

13. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following tables present the components of other comprehensive income for the three and nine months ended September 30, 2019 and 2018, by component:

(dollars in thousands) | Before Tax |  | Tax Effect |  | Net of Tax
Three Months Ended September 30, 2019 |  |  |  |  |  |  |  |
Net unrealized gains on investment securities: |  |  |  |  |  |  |  |
Net unrealized gains arising during the period | $ | 6,027 |  |  | $ | 1,615 |  |  | $ | 4,412 |
Less: Reclassification adjustments from AOCI realized in net income | (36 | ) |  | (10 | ) |  | (26 | )
Net unrealized gains on investment securities | 5,991 |  |  | 1,605 |  |  | 4,386 |
Defined benefit plans: |  |  |  |  |  |  |  |
Amortization of net actuarial loss | 310 |  |  | 31 |  |  | 279 |
Amortization of net transition obligation | 5 |  |  | 3 |  |  | 2 |
Amortization of prior service cost | 4 |  |  | 2 |  |  | 2 |
Defined benefit plans, net | 319 |  |  | 36 |  |  | 283 |
Other comprehensive income | $ | 6,310 |  |  | $ | 1,641 |  |  | $ | 4,669 |

(dollars in thousands) | Before Tax |  | Tax Effect |  | Net of Tax
Three Months Ended September 30, 2018 |  |  |  |  |  |  |  |
Net unrealized losses on investment securities: |  |  |  |  |  |  |  |
Net unrealized losses arising during the period | $ | (8,297 | ) |  | $ | (2,225 | ) |  | $ | (6,072 | )
Less: Reclassification adjustments from AOCI realized in net income | — |  |  | — |  |  | — |
Net unrealized losses on investment securities | (8,297 | ) |  | (2,225 | ) |  | (6,072 | )
Defined benefit plans: |  |  |  |  |  |  |  |
Amortization of net actuarial loss | 289 |  |  | 78 |  |  | 211 |
Amortization of net transition obligation | 5 |  |  | 2 |  |  | 3 |
Amortization of prior service cost | 4 |  |  | 1 |  |  | 3 |
Defined benefit plans, net | 298 |  |  | 81 |  |  | 217 |
Other comprehensive loss | $ | (7,999 | ) |  | $ | (2,144 | ) |  | $ | (5,855 | )

29

(dollars in thousands) | Before Tax |  | Tax Effect |  | Net of Tax
Nine Months Ended September 30, 2019 |  |  |  |  |  |  |  |
Net unrealized gains on investment securities: |  |  |  |  |  |  |  |
Net unrealized gains arising during the period | $ | 37,671 |  |  | $ | 10,098 |  |  | $ | 27,573 |
Less: Reclassification adjustments from AOCI realized in net income | (36 | ) |  | (10 | ) |  | (26 | )
Net unrealized gains on investment securities | 37,635 |  |  | 10,088 |  |  | 27,547 |
Defined benefit plans: |  |  |  |  |  |  |
Amortization of net actuarial loss | 837 |  |  | 84 |  |  | 753 |
Amortization of net transition obligation | 14 |  |  | 4 |  |  | 10 |
Amortization of prior service cost | 13 |  |  | 3 |  |  | 10 |
Defined benefit plans, net | 864 |  |  | 91 |  |  | 773 |
Other comprehensive inco me | $ | 38,499 |  |  | $ | 10,179 |  |  | $ | 28,320 |

(dollars in thousands) | Before Tax |  | Tax Effect |  | Net of Tax
Nine Months Ended September 30, 2018 |  |  |  |  |  |  |  |
Net unrealized losses on investment securities: |  |  |  |  |  |  |  |
Net unrealized losses arising during the period | $ | (33,809 | ) |  | $ | (9,097 | ) |  | $ | (24,712 | )
Less: Reclassification adjustments from AOCI realized in net income | — |  |  | — |  |  | — |
Net unrealized losses on investment securities | (33,809 | ) |  | (9,097 | ) |  | (24,712 | )
Defined benefit plans: |  |  |  |  |  |  |  |
Amortization of net actuarial loss | 865 |  |  | 262 |  |  | 603 |
Amortization of net transition obligation | 14 |  |  | 4 |  |  | 10 |
Amortization of prior service cost | 13 |  |  | 3 |  |  | 10 |
Defined benefit plans, net | 892 |  |  | 269 |  |  | 623 |
Other comprehensive loss | $ | (32,917 | ) |  | $ | (8,828 | ) |  | $ | (24,089 | )

The following tables present the changes in each component of AOCI, net of tax, for the three and nine months ended September 30, 2019 and 2018:

(dollars in thousands) | Investment Securities |  | Defined Benefit Plans |  | AOCI
Three Months Ended September 30, 2019 |  |  |  |  |  |  |  |
Balance at beginning of period | 10,418 |  |  | (5,960 | ) |  | 4,458 |
Other comprehensive income before reclassificatio ns | 4,412 |  |  | — |  |  | 4,412 |
Reclassification adjustments from AOCI | (26 | ) |  | 283 |  |  | 257 |
Total other comprehensive income | 4,386 |  |  | 283 |  |  | 4,669 |
Balance at end of period | $ | 14,804 |  |  | $ | (5,677 | ) |  | $ | 9,127 |

30

(dollars in thousands) | Investment Securities |  | Defined Benefit Plans |  | AOCI
Three Months Ended September 30, 2018 |  |  |  |  |  |  |  |
Balance at beginning of period | $ | (14,161 | ) |  | $ | (7,087 | ) |  | $ | (21,248 | )
Other comprehensive loss before reclassifications | (6,072 | ) |  | — |  |  | (6,072 | )
Reclassification adjustments from AOCI | — |  |  | 217 |  |  | 217 |
Total other comprehensive income (loss) | (6,072 | ) |  | 217 |  |  | (5,855 | )
Balance at end of period | $ | (20,233 | ) |  | $ | (6,870 | ) |  | $ | (27,103 | )

(dollars in thousands) | Investment Securities |  | Defined Benefit Plans |  | AOCI
Nine Months Ended September 30, 2019 |  |  |  |  |  |  |  |
Balance at beginning of period | $ | (9,643 | ) |  | $ | (6,450 | ) |  | $ | (16,093 | )
Impact of the adoption of new accounting standards | (3,100 | ) |  | — |  |  | (3,100 | )
Adjusted balance at beginning of period | (12,743 | ) |  | (6,450 | ) |  | (19,193 | )
Other comprehensive income before reclassifications | 27,573 |  |  | — |  |  | 27,573 |
Reclassification adjustments from AOCI | (26 | ) |  | 773 |  |  | 747 |
Total other comprehensive income | 27,547 |  |  | 773 |  |  | 28,320 |
Balance at end of period | $ | 14,804 |  |  | $ | (5,677 | ) |  | $ | 9,127 |

(dollars in thousands) | Investment Securities |  | Defined Benefit Plans |  | AOCI
Nine Months Ended September 30, 2018 |  |  |  |  |  |  |  |
Balance at beginning of period | $ | 5,073 |  |  | $ | (6,112 | ) |  | $ | (1,039 | )
Impact of the adoption of new accounting standards | (139 | ) |  | — |  |  | (139 | )
Adjusted balance at beginning of period | 4,934 |  |  | (6,112 | ) |  | (1,178 | )
Impact of the adoption of new accounting standards | (455 | ) |  | (1,381 | ) |  | (1,836 | )
Other comprehensive loss before reclassifications | (24,712 | ) |  | — |  |  | (24,712 | )
Reclassification adjustments from AOCI | — |  |  | 623 |  |  | 623 |
Total other comprehensive income (loss) | (24,712 | ) |  | 623 |  |  | (24,089 | )
Balance at end of period | $ | (20,233 | ) |  | $ | (6,870 | ) |  | $ | (27,103 | )

31

The following table presents the amounts reclassified out of each component of AOCI for the three and nine months ended September 30, 2019 and 2018:

| Amount Reclassified from AOCI |  | Affected Line Item in the Statement Where Net Income is Presented
Details about AOCI Components | Three months ended September 30, |
(dollars in thousands) | 2019 |  | 2018 |
Sale of investment securities available-for-sale: |  |  |  |  |
Realized gains (losses) on securities available-for-sale | $ | 36 |  |  | $ | — |  |  | Investment securities gains (losses)
Tax effect | (10 | ) |  | — |  |  | Income tax benefit (expense)
Net of tax | $ | 26 |  |  | $ | — |  |  |
Defined benefit retirement and supplemental executive retirement plan items: |  |  |  |  |  |  |
Amortization of net actuarial loss | $ | (310 | ) |  | $ | (289 | ) |  | Salaries and employee benefits
Amortization of net transition obligation | (5 | ) |  | (5 | ) |  | Salaries and employee benefits
Amortization of prior service cost | (4 | ) |  | (4 | ) |  | Salaries and employee benefits
Total before tax | (319 | ) |  | (298 | ) |  |
Tax effect | 36 |  |  | 81 |  |  | Income tax benefit (expense)
Net of tax | $ | (283 | ) |  | $ | (217 | ) |  |
Total reclassification adjustments from AOCI for the period, net of tax | $ | (257 | ) |  | $ | (217 | ) |  |

| Amount Reclassified from AOCI |  | Affected Line Item in the Statement Where Net Income is Presented
Details about AOCI Components | Nine months ended September 30, |
(dollars in thousands) | 2019 |  | 2018 |
Sale of investment securities available-for-sale: |  |  |  |  |
Realized gains (losses) on securities available-for-sale | $ | 36 |  |  | $ | — |  |  | Investment securities gains (losses)
Tax effect | (10 | ) |  | — |  |  | Income tax benefit (expense)
Net of tax | $ | 26 |  |  | $ | — |  |  |
Defined benefit retirement and supplemental executive retirement plan items: |  |  |  |  |  |  |
Amortization of net actuarial loss | $ | (837 | ) |  | $ | (865 | ) |  | Salaries and employee benefits
Amortization of net transition obligation | (14 | ) |  | (14 | ) |  | Salaries and employee benefits
Amortization of prior service cost | (13 | ) |  | (13 | ) |  | Salaries and employee benefits
Total before tax | (864 | ) |  | (892 | ) |  |
Tax effect | 91 |  |  | 269 |  |  | Income tax benefit (expense)
Net of tax | $ | (773 | ) |  | $ | (623 | ) |  |
Total reclassification adjustments from AOCI for the period | $ | (747 | ) |  | $ | (623 | ) |  | Net of tax

32

14. EARNINGS PER SHARE
The following table presents the information used to compute basic and diluted earnings per common share for the periods indicated:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
(dollars in thousands, except per share data) | 2019 |  | 2018 |  | 2019 |  | 2018
Net income | $ | 14,554 |  |  | $ | 15,193 |  |  | $ | 44,125 |  |  | $ | 43,694 |
Weighted average common shares outstanding - basic | 28,424,898 |  |  | 29,297,465 |  |  | 28,575,369 |  |  | 29,536,536 |
Dilutive effect of employee stock options and awards | 177,440 |  |  | 182,347 |  |  | 186,688 |  |  | 206,702 |
Weighted average common shares outstanding - diluted | 28,602,338 |  |  | 29,479,812 |  |  | 28,762,057 |  |  | 29,743,238 |
Basic earnings per common share | $ | 0.51 |  |  | $ | 0.52 |  |  | $ | 1.54 |  |  | $ | 1.48 |
Diluted earnings per common share | $ | 0.51 |  |  | $ | 0.52 |  |  | $ | 1.53 |  |  | $ | 1.47 |
Anti-dilutive employee stock options and awards outstanding | — |  |  | — |  |  | — |  |  | — |

15. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
Disclosures about Fair Value of Financial Instruments
Fair value estimates, methods and assumptions are set forth below for our financial instruments.
Short-Term Financial Instruments
The carrying values of short-term financial instruments are deemed to approximate fair values. Such instruments are considered readily convertible to cash and include cash and due from financial institutions, interest-bearing deposits in other financial institutions, accrued interest receivable, the majority of Federal Home Loan Bank advances and other short-term borrowings, and accrued interest payable.
Investment Securities
The fair value of investment securities is based on market price quotations received from third-party pricing services. The third-party pricing services utilize pricing models supported with timely market data information. Where quoted market prices are not available, fair values are based on quoted market prices of comparable securities.
Loans
Fair values of loans are estimated based on discounted cash flows of portfolios of loans with similar financial characteristics including the type of loan, interest terms and repayment history. Fair values are calculated by discounting scheduled cash flows through estimated maturities using estimated market discount rates. Estimated market discount rates are reflective of credit and interest rate risks inherent in the Company's various loan types and are derived from available market information, as well as specific borrower information. In accordance with ASU 2016-01, the fair value of loans are measured based on the notion of exit price.
Loans Held for Sale
The fair value of loans classified as held for sale are generally based upon quoted prices for similar assets in active markets, acceptance of firm offer letters with agreed upon purchase prices, discounted cash flow models that take into account market observable assumptions, or independent appraisals of the underlying collateral securing the loans. We report the fair values of Hawaii and U.S. Mainland construction and commercial real estate loans, if any, net of applicable selling costs on our consolidated balance sheets.
33

Deposit Liabilities
The fair values of deposits with no stated maturity, such as noninterest-bearing demand deposits and interest-bearing demand and savings accounts, are equal to the amount payable on demand. The fair value of time deposits is estimated using discounted cash flow analyses. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities.
Long-Term Debt
The fair value of our long-term debt is estimated by discounting scheduled cash flows over the contractual borrowing period at the estimated market rate for similar borrowing arrangements.
Derivatives
The fair values of derivative financial instruments are based upon current market values, if available. If there are no relevant comparables, fair values are based on pricing models using current assumptions for interest rate swaps and options.
Off-Balance Sheet Financial Instruments
The fair values of off-balance sheet financial instruments are estimated based on the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties, current settlement values or quoted market prices of comparable instruments.
Limitations
Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time our entire holdings of a particular financial instrument. Because no market exists for a significant portion of our financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
34

Fair value estimates are based on existing on- and off-balance sheet financial instruments without attempting to estimate the value of future business and the value of assets and liabilities that are not considered financial instruments. For example, significant assets and liabilities that are not considered financial assets or liabilities include deferred tax assets, premises and equipment and intangible assets.

|  |  |  |  | Fair Value Measurement Using
(dollars in thousands) | Carrying Amount |  | Estimated Fair Value |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
September 30, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and due from banks | $ | 87,395 |  |  | $ | 87,395 |  |  | $ | 87,395 |  |  | $ | — |  |  | $ | — |
Interest-bearing deposits in other banks | 7,803 |  |  | 7,803 |  |  | 7,803 |  |  | — |  |  | — |
Investment securities | 1,187,933 |  |  | 1,187,933 |  |  | 1,058 |  |  | 1,175,373 |  |  | 11,502 |
Loans held for sale | 7,016 |  |  | 7,016 |  |  | — |  |  | 7,016 |  |  | — |
Net loans and leases | 4,319,695 |  |  | 4,328,177 |  |  | — |  |  | 9,752 |  |  | 4,318,425 |
Accrued interest receivable | 16,220 |  |  | 16,220 |  |  | 16,220 |  |  | — |  |  | — |
Financial liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Noninterest-bearing demand | 1,399,200 |  |  | 1,399,200 |  |  | 1,399,200 |  |  | — |  |  | — |
Interest-bearing demand and savings and money market | 2,591,775 |  |  | 2,591,775 |  |  | 2,591,775 |  |  | — |  |  | — |
Time | 1,046,684 |  |  | 1,043,147 |  |  | — |  |  | — |  |  | 1,043,147 |
Short-term borrowings | 205,000 |  |  | 205,000 |  |  | — |  |  | 205,000 |  |  | — |
Long-term debt | 101,547 |  |  | 97,324 |  |  | — |  |  | 97,324 |  |  | — |
Accrued interest payable (included in other liabilities) | 5,402 |  |  | 5,402 |  |  | 5,402 |  |  |  |  |  | — |

|  |  |  |  |  |  | Fair Value Measurement Using
(dollars in thousands) | Notional Amount |  | Carrying Amount |  | Estimated Fair Value |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
September 30, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivatives: |  |  |  |  |  |  |  |  |  |  |
Interest rate lock commitments | $ | 1,569 |  |  | $ | 49 |  |  | $ | 49 |  |  | $ | — |  |  | $ | 49 |  |  | $ | — |
Forward sale commitments | 8,412 |  |  | (3 | ) |  | (3 | ) |  | — |  |  | (3 | ) |  | — |
Off-balance sheet financial instruments: |  |  |  |  |  |  |  |  |  |  |  |
Commitments to extend credit | 1,106,657 |  |  | 1,295 |  |  | 1,295 |  |  | — |  |  | 1,295 |  |  | — |
Standby letters of credit and financial guarantees written | 11,275 |  |  | 169 |  |  | 169 |  |  | — |  |  | 169 |  |  | — |

35

|  |  |  |  | Fair Value Measurement Using
(dollars in thousands) | Carrying Amount |  | Estimated Fair Value |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
December 31, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and due from banks | $ | 80,569 |  |  | $ | 80,569 |  |  | $ | 80,569 |  |  | $ | — |  |  | $ | — |
Interest-bearing deposits in other banks | 21,617 |  |  | 21,617 |  |  | 21,617 |  |  | — |  |  | — |
Investment securities | 1,354,812 |  |  | 1,350,576 |  |  | 826 |  |  | 1,338,581 |  |  | 11,169 |
Loans held for sale | 6,647 |  |  | 6,647 |  |  | — |  |  | 6,647 |  |  | — |
Net loans and leases | 4,030,450 |  |  | 3,938,380 |  |  | — |  |  | — |  |  | 3,938,380 |
Accrued interest receivable | 17,000 |  |  | 17,000 |  |  | 17,000 |  |  | — |  |  | — |
Financial liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Noninterest-bearing demand | 1,436,967 |  |  | 1,436,967 |  |  | 1,436,967 |  |  | — |  |  | — |
Interest-bearing demand and savings and money market | 2,402,268 |  |  | 2,402,268 |  |  | 2,402,268 |  |  | — |  |  | — |
Time | 1,107,255 |  |  | 1,099,560 |  |  | — |  |  | — |  |  | 1,099,560 |
Short-term borrowings | 197,000 |  |  | 197,000 |  |  | — |  |  | 197,000 |  |  | — |
Long-term debt | 122,166 |  |  | 118,057 |  |  | — |  |  | 118,057 |  |  | — |
Accrued interest payable (included in other liabilities) | 5,051 |  |  | 5,051 |  |  | 5,051 |  |  | — |  |  | — |

|  |  |  |  |  |  | Fair Value Measurement Using
(dollars in thousands) | Notional Amount |  | Carrying Amount |  | Estimated Fair Value |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
December 31, 2018 |  |  |  |  |  |  |  |  |  |  |
Derivatives: |  |  |  |  |  |  |  |  |  |  |
Interest rate lock commitments | $ | 2,158 |  |  | $ | 11 |  |  | $ | 11 |  |  | $ | — |  |  | $ | 11 |  |  | $ | — |
Forward sale commitments | 8,530 |  |  | (95 | ) |  | (95 | ) |  | — |  |  | (95 | ) |  | — |
Off-balance sheet financial instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commitments to extend credit | 1,030,322 |  |  | 1,205 |  |  | 1,205 |  |  | — |  |  | 1,205 |  |  | — |
Standby letters of credit and financial guarantees written | 13,377 |  |  | 201 |  |  | 201 |  |  | — |  |  | 201 |  |  | — |

Fair Value Measurements
We group our financial assets and liabilities at fair value into three levels based on the markets in which the financial assets and liabilities are traded and the reliability of the assumptions used to determine fair value as follows:

• | Level 1 — Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities traded in active markets. A quoted price in an active market provides the most reliable evidence of fair value and shall be used to measure fair value whenever available.

• | Level 2 — Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

• | Level 3 — Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect our own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of discounted cash flow models and similar techniques that requires the use of significant judgment or estimation.

36

We base our fair values on the price that we would expect to receive if an asset were sold, or the price that we would expect to pay to transfer a liability in an orderly transaction between market participants at the measurement date. We also maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements.
We use fair value measurements to record adjustments to certain financial assets and liabilities and to determine fair value disclosures. Available-for-sale and equity securities and derivatives are recorded at fair value on a recurring basis. From time to time, we may be required to record other financial assets at fair value on a nonrecurring basis such as loans held for sale, impaired loans, mortgage servicing rights, and other real estate owned. These nonrecurring fair value adjustments typically involve application of the lower of cost or fair value accounting or write-downs of individual assets.
The Company's policy is to recognize transfers into or out of a level as of the end of the reporting period. There were no transfers of financial assets and liabilities between Level 1 and Level 2 of the fair value hierarchy during the three and nine months ended September 30, 2019. Also, there were no transfers of financial assets and liabilities into or out of Level 3 of the fair value hierarchy during the three and nine months ended September 30, 2019.
The following tables present the fair value of assets and liabilities measured on a recurring basis as of September 30, 2019 and December 31, 2018:

|  |  | Fair Value at Reporting Date Using
(dollars in thousands) | Fair Value |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
September 30, 2019 |  |  |  |  |  |  |  |  |  |  |
Available-for-sale securities: |  |  |  |  |  |  |  |  |  |  |
Debt securities: |  |  |  |  |  |  |  |  |  |  |
States and political subdivisions | $ | 124,711 |  |  | $ | — |  |  | $ | 113,209 |  |  | $ | 11,502 |
Corporate securities | 30,713 |  |  | — |  |  | 30,713 |  |  | — |
U.S. Treasury obligations and direct obligations of U.S Government agencies | 42,897 |  |  | — |  |  | 42,897 |  |  | — |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |
Residential - U.S. Government sponsored entities | 723,644 |  |  | — |  |  | 723,644 |  |  | — |
Commercial - U.S. Government agencies and sponsored entities | 87,742 |  |  | — |  |  | 87,742 |  |  | — |
Residential - Non-government agencies | 39,109 |  |  | — |  |  | 39,109 |  |  | — |
Commercial - Non-government agencies | 138,059 |  |  | — |  |  | 138,059 |  |  | — |
Total available-for-sale securities | 1,186,875 |  |  | — |  |  | 1,175,373 |  |  | 11,502 |
Equity securities | 1,058 |  |  | 1,058 |  |  | — |  |  | — |
Derivatives: Interest rate lock and forward sale commitments | 46 |  |  | — |  |  | 46 |  |  | — |
Total | $ | 1,187,979 |  |  | $ | 1,058 |  |  | $ | 1,175,419 |  |  | $ | 11,502 |

37

|  |  | Fair Value at Reporting Date Using
(dollars in thousands) | Fair Value |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
December 31, 2018 |  |  |  |  |  |  |  |  |  |  |
Available-for-sale securities: |  |  |  |  |  |  |  |  |  |  |
Debt securities: |  |  |  |  |  |  |  |  |  |  |
States and political subdivisions | $ | 173,674 |  |  | $ | — |  |  | $ | 162,505 |  |  | $ | 11,169 |
Corporate securities | 54,849 |  |  | — |  |  | 54,849 |  |  | — |
U.S. Treasury obligations and direct obligations of U.S Government agencies | 32,574 |  |  | — |  |  | 32,574 |  |  | — |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |
Residential - U.S. Government sponsored entities | 717,052 |  |  | — |  |  | 717,052 |  |  | — |
Commercial - U.S. Government agencies and sponsored entities | 41,118 |  |  | — |  |  | 41,118 |  |  | — |
Residential - Non-government agencies | 51,483 |  |  | — |  |  | 51,483 |  |  | — |
Commercial - Non-government agencies | 134,728 |  |  | — |  |  | 134,728 |  |  | — |
Total available-for-sale securities | 1,205,478 |  |  | — |  |  | 1,194,309 |  |  | 11,169 |
Equity securities | 826 |  |  | 826 |  |  | — |  |  | — |
Derivatives: Interest rate lock and forward sale commitments | (84 | ) |  | — |  |  | (84 | ) |  | — |
Total | $ | 1,206,220 |  |  | $ | 826 |  |  | $ | 1,194,225 |  |  | $ | 11,169 |

For the nine months ended September 30, 2019 and 2018, the changes in Level 3 assets and liabilities measured at fair value on a recurring basis are summarized as follows:

(dollars in thousands) | Available-For-Sale Debt Securities: States and Political Subdivisions
Balance at December 31, 2018 | $ | 11,169 |
Principal payments received | (285 | )
Unrealized net gain included in other comprehensive income | 618 |
Balance at September 30, 2019 | $ | 11,502 |
Balance at December 31, 2017 | $ | 11,794 |
Principal payments received | (280 | )
Unrealized net loss included in other comprehensive income | (370 | )
Balance at September 30, 2018 | $ | 11,144 |

Within the states and political subdivisions available-for-sale debt securities category, the Company holds four mortgage revenue bonds issued by the City & County of Honolulu with an aggregate fair value of $11.5 million and $11.1 million at September 30, 2019 and September 30, 2018, respectively. The Company estimates the fair value of its mortgage revenue bonds by using a discounted cash flow model to calculate the present value of estimated future principal and interest payments.
The significant unobservable input used in the fair value measurement of the Company's mortgage revenue bonds is the weighted average discount rate. As of September 30, 2019, the weighted average discount rate utilized was 3.94% compared to 5.28% at September 30, 2018 and 5.06% at December 31, 2018, which was derived by incorporating a credit spread over the FHLB Fixed-Rate Advance curve. Significant increases (decreases) in the weighted average discount rate could result in a significantly lower (higher) fair value measurement.
38

The following table presents the fair value of assets measured on a nonrecurring basis and the level of valuation assumptions used to determine the respective fair values as of September 30, 2019 and December 31, 2018:

|  |  | Fair Value Measurements Using
(dollars in thousands) | Fair Value |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
September 30, 2019 |  |  |  |  |  |  |  |  |  |  |
Other real estate (1) | $ | 466 |  |  | $ | — |  |  | $ | 466 |  |  | $ | — |
December 31, 2018 |  |  |  |  |  |  |  |  |  |  |
Other real estate (1) | $ | 414 |  |  | $ | — |  |  | $ | 414 |  |  | $ | — |

(1) | Represents other real estate that is carried at fair value less costs to sell. Fair value is generally based upon independent market prices or appraised values of the collateral.

16. SEGMENT INFORMATION
We have the following three reportable segments: Banking Operations, Treasury and All Others. These segments are consistent with our internal functional reporting lines and are managed separately because each unit has different target markets, technological requirements, and specialized skills.
The Banking Operations segment includes construction and real estate development lending, commercial lending, residential mortgage lending, indirect auto lending, trust services, retail brokerage services and our retail branch offices, which provide a full range of deposit and loan products, as well as various other banking services. The Treasury segment is responsible for managing the Company's investment securities portfolio and wholesale funding activities. The All Others segment consists of all activities not captured by the Banking Operations or Treasury segments described above and includes activities such as electronic banking, data processing and management of bank owned properties.
The accounting policies of the segments are consistent with the Company's accounting policies that are described in Note 1 - Summary of Significant Accounting Policies to the consolidated financial statements in the Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC. The majority of the Company's net income is derived from net interest income. Accordingly, management focuses primarily on net interest income, rather than gross interest income and expense amounts, in evaluating segment profitability.
Intersegment net interest income (expense) was allocated to each segment based upon a funds transfer pricing process that assigns costs of funds to assets and earnings credits to liabilities based on market interest rates that reflect interest rate sensitivity and maturity characteristics. All administrative and overhead expenses are allocated to the segments at cost. Cash, investment securities, loans and leases and their related balances are allocated to the segment responsible for acquisition and maintenance of those assets. Segment assets also include all premises and equipment used directly in segment operations.
39

Segment profits and assets are provided in the following tables for the periods indicated.

(dollars in thousands) | Banking Operations |  | Treasury |  | All Others |  | Total
Three Months Ended September 30, 2019 |  |  |  |  |  |  |  |  |  |  |
Net interest income | $ | 42,790 |  |  | $ | 2,859 |  |  | $ | — |  |  | $ | 45,649 |
Inter-segment net interest income (expense) | 4,788 |  |  | (2,825 | ) |  | (1,963 | ) |  | — |
Credit (provision) for loan and lease losses | (1,532 | ) |  | — |  |  | — |  |  | (1,532 | )
Other operating income: |  |  |  |  |  |  |
Mortgage banking income | 1,360 |  |  | — |  |  | 404 |  |  | 1,764 |
Service charges on deposit accounts | 2,125 |  |  | — |  |  | — |  |  | 2,125 |
Other service charges and fees | 1,470 |  |  | — |  |  | 2,254 |  |  | 3,724 |
Income from fiduciary activities | 1,126 |  |  | — |  |  | — |  |  | 1,126 |
Equity in earnings of unconsolidated subsidiaries | 86 |  |  | — |  |  | — |  |  | 86 |
Fees on foreign exchange | 20 |  |  | 150 |  |  | — |  |  | 170 |
Investments securities gains (losses) | — |  |  | 36 |  |  | — |  |  | 36 |
Income from bank-owned life insurance | — |  |  | 645 |  |  | — |  |  | 645 |
Loan placement fees | 230 |  |  | — |  |  | — |  |  | 230 |
Net gain (loss) sale of foreclosed assets | — |  |  | — |  |  | 17 |  |  | 17 |
Other | 154 |  |  | 4 |  |  | 185 |  |  | 343 |
Other operating income | 6,571 |  |  | 835 |  |  | 2,860 |  |  | 10,266 |
Other operating expense | (16,482 | ) |  | (352 | ) |  | (18,100 | ) |  | (34,934 | )
Administrative and overhead expense allocation | (17,495 | ) |  | (204 | ) |  | 17,699 |  |  | — |
Income before taxes | 18,640 |  |  | 313 |  |  | 496 |  |  | 19,449 |
Income tax (expense) benefit | (4,702 | ) |  | (89 | ) |  | (104 | ) |  | (4,895 | )
Net income (loss) | $ | 13,938 |  |  | $ | 224 |  |  | $ | 392 |  |  | $ | 14,554 |

(dollars in thousands) | Banking Operations |  | Treasury |  | All Others |  | Total
Three Months Ended September 30, 2018 |  |  |  |  |  |  |  |  |  |  |
Net interest income | $ | 38,872 |  |  | $ | 4,453 |  |  | $ | — |  |  | $ | 43,325 |
Inter-segment net interest income (expense) | 7,524 |  |  | (4,327 | ) |  | (3,197 | ) |  | — |
Credit (provision) for loan and lease losses | 59 |  |  | — |  |  | — |  |  | 59 |
Other operating income: |  |  |  |  |  |  |
Mortgage banking income | 1,173 |  |  | — |  |  | 750 |  |  | 1,923 |
Service charges on deposit accounts | 2,189 |  |  | — |  |  | — |  |  | 2,189 |
Other service charges and fees | 1,318 |  |  | 8 |  |  | 1,960 |  |  | 3,286 |
Income from fiduciary activities | 1,159 |  |  | — |  |  | — |  |  | 1,159 |
Equity in earnings of unconsolidated subsidiaries | 71 |  |  | — |  |  | — |  |  | 71 |
Fees on foreign exchange | 22 |  |  | 198 |  |  |  |  |  | 220 |
Income from bank-owned life insurance | — |  |  | 1,055 |  |  | — |  |  | 1,055 |
Loan placement fees | 115 |  |  | — |  |  | — |  |  | 115 |
Other | 448 |  |  | 58 |  |  | 296 |  |  | 802 |
Other operating income | 6,495 |  |  | 1,319 |  |  | 3,006 |  |  | 10,820 |
Other operating expense | (16,265 | ) |  | (335 | ) |  | (17,425 | ) |  | (34,025 | )
Administrative and overhead expense allocation | (15,481 | ) |  | (206 | ) |  | 15,687 |  |  | — |
Income before taxes | 21,204 |  |  | 904 |  |  | (1,929 | ) |  | 20,179 |
Income tax (expense) benefit | (5,128 | ) |  | (215 | ) |  | 357 |  |  | (4,986 | )
Net income (loss) | $ | 16,076 |  |  | $ | 689 |  |  | $ | (1,572 | ) |  | $ | 15,193 |

40

(dollars in thousands) | Banking Operations |  | Treasury |  | All Others |  | Total
Nine Months Ended September 30, 2019 |  |  |  |  |  |  |  |  |  |  |
Net interest income | $ | 127,059 |  |  | $ | 9,081 |  |  | $ | — |  |  | $ | 136,140 |
Inter-segment net interest income (expense) | 18,080 |  |  | (8,119 | ) |  | (9,961 | ) |  | — |
Credit (provision) for loan and lease losses | (4,219 | ) |  | — |  |  | — |  |  | (4,219 | )
Other operating income: |  |  |  |  |  |  |
Mortgage banking income | 2,967 |  |  | — |  |  | 1,822 |  |  | 4,789 |
Service charges on deposit accounts | 6,247 |  |  | — |  |  | — |  |  | 6,247 |
Other service charges and fees | 4,130 |  |  | — |  |  | 6,349 |  |  | 10,479 |
Income from fiduciary activities | 3,220 |  |  | — |  |  | — |  |  | 3,220 |
Equity in earnings of unconsolidated subsidiaries | 165 |  |  | — |  |  | — |  |  | 165 |
Fees on foreign exchange | 67 |  |  | 472 |  |  | — |  |  | 539 |
Investments securities gains (losses) | — |  |  | 36 |  |  | — |  |  | 36 |
Income from bank-owned life insurance | — |  |  | 2,511 |  |  | — |  |  | 2,511 |
Loan placement fees | 486 |  |  | — |  |  | — |  |  | 486 |
Net gain (loss) sale of foreclosed assets | — |  |  | — |  |  | 17 |  |  | 17 |
Other | 453 |  |  | 2,558 |  |  | 533 |  |  | 3,544 |
Other operating income | 17,735 |  |  | 5,577 |  |  | 8,721 |  |  | 32,033 |
Other operating expense | (48,289 | ) |  | (1,097 | ) |  | (56,003 | ) |  | (105,389 | )
Administrative and overhead expense allocation | (49,953 | ) |  | (624 | ) |  | 50,577 |  |  | — |
Income before taxes | 60,413 |  |  | 4,818 |  |  | (6,666 | ) |  | 58,565 |
Income tax (expense) benefit | (14,896 | ) |  | (1,188 | ) |  | 1,644 |  |  | (14,440 | )
Net income (loss) | $ | 45,517 |  |  | $ | 3,630 |  |  | $ | (5,022 | ) |  | $ | 44,125 |

(dollars in thousands) | Banking Operations |  | Treasury |  | All Others |  | Total
Nine Months Ended September 30, 2018 |  |  |  |  |  |  |  |  |  |  |
Net interest income | $ | 112,295 |  |  | $ | 16,024 |  |  | $ | — |  |  | $ | 128,319 |
Inter-segment net interest income (expense) | 21,360 |  |  | (14,717 | ) |  | (6,643 | ) |  | — |
Credit (provision) for loan and lease losses | (262 | ) |  | — |  |  | — |  |  | (262 | )
Other operating income: |  |  |  |  |  |  |
Mortgage banking income | 3,089 |  |  | — |  |  | 2,456 |  |  | 5,545 |
Service charges on deposit accounts | 6,169 |  |  | — |  |  | — |  |  | 6,169 |
Other service charges and fees | 3,748 |  |  | 22 |  |  | 5,927 |  |  | 9,697 |
Income from fiduciary activities | 3,132 |  |  | — |  |  | — |  |  | 3,132 |
Equity in earnings of unconsolidated subsidiaries | 151 |  |  | — |  |  | — |  |  | 151 |
Fees on foreign exchange | 75 |  |  | 633 |  |  |  |  |  | 708 |
Income from bank-owned life insurance | — |  |  | 1,874 |  |  | — |  |  | 1,874 |
Loan placement fees | 532 |  |  | — |  |  | — |  |  | 532 |
Other | 803 |  |  | 60 |  |  | 733 |  |  | 1,596 |
Other operating income | 17,699 |  |  | 2,589 |  |  | 9,116 |  |  | 29,404 |
Other operating expense | (47,967 | ) |  | (1,078 | ) |  | (51,995 | ) |  | (101,040 | )
Administrative and overhead expense allocation | (45,594 | ) |  | (652 | ) |  | 46,246 |  |  | — |
Income before taxes | 57,531 |  |  | 2,166 |  |  | (3,276 | ) |  | 56,421 |
Income tax (expense) benefit | (12,707 | ) |  | (478 | ) |  | 458 |  |  | (12,727 | )
Net income | $ | 44,824 |  |  | $ | 1,688 |  |  | $ | (2,818 | ) |  | $ | 43,694 |

41

(dollars in thousands) | Banking Operations |  | Treasury |  | All Others |  | Total
September 30, 2019 |  |  |  |  |  |  |
Investment securities | $ | — |  |  | $ | 1,187,933 |  |  | $ | — |  |  | $ | 1,187,933 |
Loans and leases (including loans held for sale) | 4,374,878 |  |  | — |  |  | — |  |  | 4,374,878 |
Other assets | 25,867 |  |  | 250,474 |  |  | 137,564 |  |  | 413,905 |
Total assets | $ | 4,400,745 |  |  | $ | 1,438,407 |  |  | $ | 137,564 |  |  | $ | 5,976,716 |

(dollars in thousands) | Banking Operations |  | Treasury |  | All Others |  | Total
December 31, 2018 |  |  |  |  |  |  |
Investment securities | $ | — |  |  | $ | 1,354,812 |  |  | $ | — |  |  | $ | 1,354,812 |
Loans and leases (including loans held for sale) | 4,085,013 |  |  | — |  |  | — |  |  | 4,085,013 |
Other assets | 36,905 |  |  | 256,652 |  |  | 73,644 |  |  | 367,201 |
Total assets | $ | 4,121,918 |  |  | $ | 1,611,464 |  |  | $ | 73,644 |  |  | $ | 5,807,026 |

17. LEGAL PROCEEDINGS
We are involved in legal actions arising in the ordinary course of business. Management, after consultation with our legal counsel, believes the ultimate disposition of those matters will not have a material adverse effect on our consolidated financial statements.
42

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Overview
Central Pacific Financial Corp. ("CPF") is a Hawaii corporation and a bank holding company. Our principal business is to serve as a holding company for our bank subsidiary, Central Pacific Bank. We refer to Central Pacific Bank herein as "our bank" or "the bank," and when we say "the Company," "we," "us" or "our," we mean the holding company on a consolidated basis with the bank and our other consolidated subsidiaries.
Central Pacific Bank is a full-service community bank with 35 branches and 78 ATMs located throughout the state of Hawaii. The bank offers a broad range of products and services including accepting time, savings, money market, and demand deposits and originating loans, including commercial loans, construction loans, commercial real estate loans, residential mortgage loans, and consumer loans.
Basis of Presentation
Management's discussion and analysis of financial condition and results of operations should be read in conjunction with the accompanying consolidated financial statements under "Part I, Item 1. Financial Statements (Unaudited)." The following discussion should also be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2018 filed with the U.S. Securities and Exchange Commission (the "SEC") on February 28, 2019.
Critical Accounting Policies and Use of Estimates
The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America ("GAAP") requires that management make certain judgments and use certain estimates and assumptions that affect amounts reported and disclosures made. Accounting estimates are deemed critical when a different estimate could have reasonably been used or where changes in the estimate are reasonably likely to occur from period to period and would materially impact our consolidated financial statements as of or for the periods presented. Management has discussed the development and selection of the critical accounting estimates noted below with the Audit Committee of the Board of Directors, and the Audit Committee has reviewed the accompanying disclosures.
Allowance for Loan and Lease Losses
The allowance for loan and lease losses (the "Allowance") is management's estimate of incurred credit losses inherent in our loan and lease portfolio at the balance sheet date. We maintain our Allowance at an amount we expect to be sufficient to absorb probable losses incurred in our loan and lease portfolio.
The Company's approach to developing the Allowance has three basic elements. These elements include specific reserves for individually impaired loans, a general allowance for loans other than those analyzed as individually impaired, and qualitative adjustments based on environmental and other factors which may be internal or external to the Company.
Specific Reserve
Individually impaired loans in all loan categories are evaluated using one of three valuation methods as prescribed under Accounting Standards Codification ("ASC") 310-10, "Fair Value of Collateral, Observable Market Price, or Cash Flow". A loan is generally evaluated for impairment on an individual basis if it meets one or more of the following characteristics: risk-rated as substandard, doubtful or loss, loans on nonaccrual status, troubled debt restructures, or any loan deemed prudent by management to so analyze. If the valuation of the impaired loan is less than the recorded investment in the loan, the deficiency will be charged off against the Allowance or, alternatively, a specific reserve will be established and included in the overall Allowance balance. The Company did not record a specific reserve as of September 30, 2019 and December 31, 2018.
General Allowance
In determining the general allowance component of the Allowance, the Company utilizes a comprehensive approach to segment the loan portfolio into homogeneous groups. The Company's methodology segments the portfolio generally by FDIC Call Report codes. In the second quarter of 2017, an additional segment was added for auto dealer purchased loans. In the third quarter of 2018, another segment was broken out for multifamily commercial real estate loans. This results in eleven segments, and is consistent with general industry practice. For the purpose of determining general allowance loss factors, loss experience is derived from a migration analysis, with the exception of national syndicated loans and auto dealer purchased loans where an
43

average historical loss rate is applied due to limited historical loss experience. The key inputs to run a migration analysis are the length and frequency of the migration period, the dates for the migration periods to start and the number of migration periods used for the analysis. For each migration period, the analysis will determine the outstanding balance in each segment and/or sub-segment at the start of each period. These loans will then be followed for the length of the migration period to identify the amount of associated charge-offs and recoveries. A loss rate for each migration period is calculated using the formula 'net charge-offs over the period divided by beginning loan balance'. The Allowance methodology applies a look back period to January 1, 2010. The Company extends its look back period with each additional quarter passing. As of September 30, 2019, the look back period was nine years and nine months.
Qualitative Adjustments
Our Allowance methodology uses qualitative adjustments to address changes in conditions, trends, and circumstances such as economic conditions and industry changes that could have a significant impact on the risk profile of the loan portfolio, and provide for losses in the loan portfolio that may not be reflected and/or captured in the historical loss data. In order to ensure that the qualitative adjustments are in compliance with current regulatory standards and U.S. GAAP, the Company is primarily basing adjustments on the nine standard factors outlined in the 2006 Interagency Policy Statement on the Allowance for Loan and Lease Losses. These factors include: lending policies, economic conditions, loan profile, lending staff, problem loan trends, loan review, collateral, credit concentrations and other internal and external factors.
In recognizing that current and relevant environmental (economic, market or other) conditions that can affect repayment may not yet be fully reflected in historical loss experience, qualitative adjustments are applied to factor in current loan portfolio and market intelligence. These adjustments, which are added to the historical loss rate, consider the nature of the Company's primary markets and are reasonable, consistently determined and appropriately documented. Management reviews the results of the qualitative adjustment quarterly to ensure it is consistent with the trends in the overall economy, and from time to time may make adjustments, if necessary, to ensure directional consistency.
Financial Summary
Net income for the three months ended September 30, 2019 was $14.6 million, or $0.51 per diluted share, compared to $15.2 million, or $0.52 per diluted share for the three months ended September 30, 2018. Net income for the nine months ended September 30, 2019 was $44.1 million, or $1.53 per diluted share, compared to $43.7 million, or $1.47 per diluted share for the nine months ended September 30, 2018.
The following table presents annualized returns on average assets and average shareholders' equity, and basic and diluted earnings per share for the periods indicated. Returns on average assets and average shareholders' equity are annualized based on a 30/360 day convention.

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2019 |  | 2018 |  | 2019 |  | 2018
Return on average assets | 0.99 | % |  | 1.06 | % |  | 1.00 | % |  | 1.03 | %
Return on average shareholders’ equity | 11.11 |  |  | 12.54 |  |  | 11.58 |  |  | 11.99 |
Basic earnings per common share | $ | 0.51 |  |  | $ | 0.52 |  |  | $ | 1.54 |  |  | $ | 1.48 |
Diluted earnings per common share | 0.51 |  |  | 0.52 |  |  | 1.53 |  |  | 1.47 |

Material Trends
The majority of our operations are concentrated in the state of Hawaii. As a result, our performance is significantly influenced by the real estate markets, economic environment and environmental conditions in Hawaii. Macroeconomic conditions also influence our performance. A favorable business environment is generally characterized by expanding gross state product, low unemployment and rising personal income; while an unfavorable business environment is characterized by the reverse.
Hawaii's economy depends significantly on conditions in the U.S. economy and key international economies, especially Japan. The growth of Hawaii's economy has slowed, yet the Hawaii Department of Business, Economic Development and Tourism ("DBEDT") sees a positive forecast with continued growth through the remainder of 2019 and in 2020. Tourism continues to be Hawaii's center of strength and its most significant economic driver. While visitor arrivals to Hawaii grew during the eight months ended August 30, 2019, visitor spending was down from the same prior year period. According to the Hawaii Tourism
44

Authority ("HTA"), 7.1 million visitors visited the state in the eight months ended August 30, 2019. This was an increase of 5.2% from the number of visitor arrivals in the eight months ended August 31, 2018. The HTA also reported total spending by visitors decreased to $12.1 billion in the eight months ended August 30, 2019, or a decrease of $61.5 million, or 0.5%, from the eight months ended August 31, 2018. According to DBEDT, total visitor arrivals are expected to increase 3.5%, while visitor spending is expected to decrease 0.2% in 2019. Total visitor arrivals and visitor spending are both expected to increase 2.0% and 2.3% in 2020, respectively.
DBEDT reported Hawaii's economy, as measured by the growth of real personal income and real gross state product, continued positive growth in 2018. DBEDT projects real personal income and real gross state product to grow at a rate of 1.2% and 1.1%, respectively, for 2019 and 1.1% and 1.2%, respectively, for 2020.
Hawaii's labor market continues to be among the best in the nation. The Department of Labor and Industrial Relations reported that Hawaii's seasonally adjusted annual unemployment rate was 2.7% in September 2019, compared to 2.6% in September 2018. Hawaii's unemployment rate in September 2019 remained below the national seasonally adjusted unemployment rate of 3.5%. DBEDT projects Hawaii's seasonally adjusted annual unemployment rate to be 3.0% in 2019 and 3.2% in 2020.
Real estate lending is a primary focus for us, including residential mortgage and commercial mortgage loans. As a result, we are dependent on the strength of Hawaii's real estate market. Home sales in Hawaii remained strong in 2018. The Oahu real estate market closed out 2018 with its eighth straight year of appreciation, however the sales volume for the year dropped. During the nine months ended September 30, 2019, Oahu sales volume and median sales prices have slowed. According to the Honolulu Board of Realtors, Oahu unit sales volume increased slightly by 0.8% for single-family homes but declined by 6.7% for condominiums for the nine months ended September 30, 2019, compared to the same time period last year. For the nine months ended September 30, 2019, the median sales price for single-family homes on Oahu was $785,000, representing a decrease of 0.5% from $789,000 in the same prior year period. The median sales price for condominiums on Oahu for the nine months ended September 30, 2019 was $425,000, representing a decrease of 1.0% from $429,500 in the same prior year period.
As we have seen in the past, our operating results are significantly impacted by the economy in Hawaii and the composition of our loan portfolio. Loan demand, deposit growth, provision for loan and lease losses ("Provision"), asset quality, noninterest income and noninterest expense are all affected by changes in economic conditions. If the residential and commercial real estate markets we have exposure to deteriorate, our results of operations would be negatively impacted.
In late 2008, the Federal Reserve lowered the target Federal Funds range to 0%-0.25%. In an attempt to help the overall economy, the Federal Reserve kept interest rates low through its targeted Federal Funds rate until the recession was safely over. In recent years, the Federal Reserve has begun raising the target Federal Funds range.
During 2018, the Federal Reserve increased the Federal Funds range four times, each by 25 basis points to 2.25%-2.50% as of December 31, 2018. The Federal Reserve left the Federal Funds range unchanged during the first half of 2019 but cut the Federal Funds range by 25 basis points at the July 2019 meeting and again by 25 basis points at the September 2019 meeting to 1.75%-2.00%. The Federal Reserve pledged future moves will be done patiently and with an eye toward how global economic and financial developments unfold.
Further decreases in the Federal Funds rate would likely result in lower overall interest rates and may support the continued expansion of the U.S. economy. Changes in monetary policy, including changes in interest rates, could influence, among other things, (i) the amount of interest we receive on loans and securities, (ii) the amount of interest we pay on deposits and borrowings, (iii) our ability to originate loans and obtain deposits and (iv) the fair value of our assets and liabilities.
RISE2020
Commencing in the second quarter of 2019, the Company launched RISE2020, a new multifaceted initiative intended to enhance customer experience, drive stronger long-term growth and profitability, improve shareholder returns and lower our efficiency ratio. RISE2020 includes initiatives in the following key areas of opportunity: Digital Banking, Revenue Enhancements, Branch Transformation and Operational Excellence. RISE2020 is intended to provide Central Pacific Bank with best-in class products and services in several strategic areas. During the third quarter of 2019, the outsourcing of the Company's residential mortgage loan servicing was completed. The Company is on track to complete the launch of its new website under the cpb.bank domain name, the employee pilot phase of our upgraded online and mobile banking platforms and the implementation of its end-to-end commercial loan origination system in the fourth quarter of 2019. The Company believes its efforts to meet its 2020 milestones in its branch modernization and digital banking initiatives are progressing on schedule.
45

The Company plans to invest approximately $40 million in RISE2020 during the remainder of 2019 and throughout 2020. Some of these investments will be capitalized, while others are recurring annually. The Company expects annual RISE2020-related expense to approximate $7 million by the start of 2021. During the third quarter of 2019, the Company incurred approximately $1.2 million in RISE2020-related expenses. While operating expenses are expected to increase, the Company is forecasting enhanced revenue growth. As a result, we expect our efficiency ratio to be in the 63-65% range in 2019 and 2020. Longer-term, the Company is targeting a 15% return on average shareholders' equity and a 57% efficiency ratio by the end of 2022.
46

Results of Operations
Net Interest Income
Net interest income, when annualized and expressed as a percentage of average interest earning assets, is referred to as "net interest margin." Interest income, which includes loan fees and resultant yield information, is expressed on a taxable equivalent basis using a federal statutory tax rate of 21% for the three and nine months ended September 30, 2019 and 2018. A comparison of net interest income on a taxable-equivalent basis ("net interest income") for the three and nine months ended September 30, 2019 and 2018 is set forth below.

(dollars in thousands) | Three Months Ended September 30,
2019 |  | 2018 |  | Variance
Average Balance |  | Average Yield/ Rate |  | Interest Income/ Expense |  | Average Balance |  | Average Yield/ Rate |  | Interest Income/ Expense |  | Average Balance |  | Average Yield/ Rate |  | Interest Income/ Expense
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest earning assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing deposits in other banks | $ | 6,295 |  |  | 2.05 | % |  | 33 |  |  | $ | 22,057 |  |  | 1.97 | % |  | 109 |  |  | $ | (15,762 | ) |  | 0.08 | % |  | (76 | )
Investment securities, excluding valuation allowance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Taxable (1) | 1,093,352 |  |  | 2.63 |  |  | 7,192 |  |  | 1,284,411 |  |  | 2.65 |  |  | 8,516 |  |  | (191,059 | ) |  | (0.02 | ) |  | (1,324 | )
Tax-exempt (1) | 117,784 |  |  | 3.04 |  |  | 896 |  |  | 163,172 |  |  | 2.86 |  |  | 1,165 |  |  | (45,388 | ) |  | 0.18 |  |  | (269 | )
Total investment securities | 1,211,136 |  |  | 2.67 |  |  | 8,088 |  |  | 1,447,583 |  |  | 2.67 |  |  | 9,681 |  |  | (236,447 | ) |  | — |  |  | (1,593 | )
Loans and leases, including loans held for sale (2) | 4,293,455 |  |  | 4.25 |  |  | 45,861 |  |  | 3,941,511 |  |  | 4.09 |  |  | 40,531 |  |  | 351,944 |  |  | 0.16 |  |  | 5,330 |
Federal Home Loan Bank stock | 16,646 |  |  | 4.46 |  |  | 186 |  |  | 7,773 |  |  | 3.11 |  |  | 60 |  |  | 8,873 |  |  | 1.35 |  |  | 126 |
Total interest earning assets | 5,527,532 |  |  | 3.90 |  |  | 54,168 |  |  | 5,418,924 |  |  | 3.70 |  |  | 50,381 |  |  | 108,608 |  |  | 0.20 |  |  | 3,787 |
Noninterest-earning assets | 379,675 |  |  |  |  |  |  |  |  | 290,901 |  |  |  |  |  |  |  |  | 88,774 |  |  |  |  |  |
Total assets | $ | 5,907,207 |  |  |  |  |  |  |  |  | $ | 5,709,825 |  |  |  |  |  |  |  |  | $ | 197,382 |  |  |  |  |  |
Liabilities and Equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing demand deposits | $ | 1,002,875 |  |  | 0.08 | % |  | 207 |  |  | $ | 933,405 |  |  | 0.08 | % |  | 181 |  |  | $ | 69,470 |  |  | — | % |  | 26 |
Savings and money market deposits | 1,582,795 |  |  | 0.39 |  |  | 1,549 |  |  | 1,524,121 |  |  | 0.15 |  |  | 593 |  |  | 58,674 |  |  | 0.24 |  |  | 956 |
Time deposits under $100,000 | 167,331 |  |  | 0.69 |  |  | 293 |  |  | 177,108 |  |  | 0.53 |  |  | 236 |  |  | (9,777 | ) |  | 0.16 |  |  | 57 |
Time deposits $100,000 and over | 874,192 |  |  | 1.88 |  |  | 4,139 |  |  | 1,049,446 |  |  | 1.70 |  |  | 4,508 |  |  | (175,254 | ) |  | 0.18 |  |  | (369 | )
Total interest-bearing deposits | 3,627,193 |  |  | 0.68 |  |  | 6,188 |  |  | 3,684,080 |  |  | 0.59 |  |  | 5,518 |  |  | (56,887 | ) |  | 0.09 |  |  | 670 |
Short-term borrowings | 191,564 |  |  | 2.34 |  |  | 1,130 |  |  | 25,163 |  |  | 2.30 |  |  | 146 |  |  | 166,401 |  |  | 0.04 |  |  | 984 |
Long-term debt | 101,547 |  |  | 3.96 |  |  | 1,013 |  |  | 92,785 |  |  | 4.90 |  |  | 1,147 |  |  | 8,762 |  |  | (0.94 | ) |  | (134 | )
Total interest-bearing liabilities | 3,920,304 |  |  | 0.84 |  |  | 8,331 |  |  | 3,802,028 |  |  | 0.71 |  |  | 6,811 |  |  | 118,276 |  |  | 0.13 |  |  | 1,520 |
Noninterest-bearing deposits | 1,360,221 |  |  |  |  |  |  |  | 1,378,981 |  |  |  |  |  |  |  | (18,760 | ) |  |  |  |
Other liabilities | 102,599 |  |  |  |  |  |  |  |  | 44,079 |  |  |  |  |  |  |  |  | 58,520 |  |  |  |  |  |
Total liabilities | 5,383,124 |  |  |  |  |  |  |  |  | 5,225,088 |  |  |  |  |  |  |  |  | 158,036 |  |  |  |  |  |
Shareholders’ equity | 524,083 |  |  |  |  |  |  |  |  | 484,737 |  |  |  |  |  |  |  |  | 39,346 |  |  |  |  |  |
Non-controlling interest | — |  |  |  |  |  |  |  |  | — |  |  |  |  |  |  |  |  | — |  |  |  |  |  |
Total equity | 524,083 |  |  |  |  |  |  |  |  | 484,737 |  |  |  |  |  |  |  |  | 39,346 |  |  |  |  |  |
Total liabilities and equity | $ | 5,907,207 |  |  |  |  |  |  |  |  | $ | 5,709,825 |  |  |  |  |  |  |  |  | $ | 197,382 |  |  |  |  |  |
Net interest income |  |  |  |  |  |  | $ | 45,837 |  |  |  |  |  |  |  |  | $ | 43,570 |  |  |  |  |  |  |  |  | $ | 2,267 |
Interest rate spread |  |  | 3.06 | % |  |  |  |  |  | 2.99 | % |  |  |  |  |  | 0.07 | % |  |
Net interest margin |  |  |  | 3.30 | % |  |  |  |  |  |  |  | 3.20 | % |  |  |  |  |  |  |  | 0.10 | % |  |  |
(1) At amortized cost. |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(2) Includes nonaccrual loans. |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

47

(dollars in thousands) | Nine Months Ended September 30,
2019 |  | 2018 |  | Variance
Average Balance |  | Average Yield/ Rate |  | Interest Income/ Expense |  | Average Balance |  | Average Yield/ Rate |  | Interest Income/ Expense |  | Average Balance |  | Average Yield/ Rate |  | Interest Income/ Expense
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest earning assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing deposits in other banks | $ | 8,540 |  |  | 2.30 | % |  | 147 |  |  | $ | 23,713 |  |  | 1.75 | % |  | 310 |  |  | $ | (15,173 | ) |  | 0.55 | % |  | (163 | )
Investment securities, excluding valuation allowance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Taxable investment securities (1) | 1,147,217 |  |  | 2.67 |  |  | 23,014 |  |  | 1,325,180 |  |  | 2.63 |  |  | 26,094 |  |  | (177,963 | ) |  | 0.04 |  |  | (3,080 | )
Tax-exempt investment securities (1) | 137,750 |  |  | 2.93 |  |  | 3,023 |  |  | 164,174 |  |  | 2.86 |  |  | 3,527 |  |  | (26,424 | ) |  | 0.07 |  |  | (504 | )
Total investment securities | 1,284,967 |  |  | 2.70 |  |  | 26,037 |  |  | 1,489,354 |  |  | 2.65 |  |  | 29,621 |  |  | (204,387 | ) |  | 0.05 |  |  | (3,584 | )
Loans and leases, including loans held for sale (2) | 4,183,703 |  |  | 4.32 |  |  | 135,169 |  |  | 3,856,420 |  |  | 4.04 |  |  | 116,620 |  |  | 327,283 |  |  | 0.28 |  |  | 18,549 |
Federal Home Loan Bank stock | 15,650 |  |  | 4.33 |  |  | 508 |  |  | 7,261 |  |  | 2.67 |  |  | 145 |  |  | 8,389 |  |  | 1.66 |  |  | 363 |
Total interest earning assets | 5,492,860 |  |  | 3.94 |  |  | 161,861 |  |  | 5,376,748 |  |  | 3.64 |  |  | 146,696 |  |  | 116,112 |  |  | 0.30 |  |  | 15,165 |
Noninterest-earning assets | 365,364 |  |  |  |  |  |  |  |  | 294,090 |  |  |  |  |  |  |  |  | 71,274 |  |  |  |  |  |
Total assets | $ | 5,858,224 |  |  |  |  |  |  |  |  | $ | 5,670,838 |  |  |  |  |  |  |  |  | $ | 187,386 |  |  |  |  |  |
Liabilities and Equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing demand deposits | $ | 972,316 |  |  | 0.08 | % |  | 598 |  |  | $ | 940,154 |  |  | 0.08 | % |  | 554 |  |  | $ | 32,162 |  |  | — | % |  | 44 |
Savings and money market deposits | 1,544,759 |  |  | 0.33 |  |  | 3,847 |  |  | 1,506,565 |  |  | 0.13 |  |  | 1,421 |  |  | 38,194 |  |  | 0.20 |  |  | 2,426 |
Time deposits under $100,000 | 172,204 |  |  | 0.69 |  |  | 884 |  |  | 178,363 |  |  | 0.48 |  |  | 645 |  |  | (6,159 | ) |  | 0.21 |  |  | 239 |
Time deposits $100,000 and over | 921,003 |  |  | 1.96 |  |  | 13,507 |  |  | 1,042,353 |  |  | 1.48 |  |  | 11,558 |  |  | (121,350 | ) |  | 0.48 |  |  | 1,949 |
Total interest-bearing deposits | 3,610,282 |  |  | 0.70 |  |  | 18,836 |  |  | 3,667,435 |  |  | 0.52 |  |  | 14,178 |  |  | (57,153 | ) |  | 0.18 |  |  | 4,658 |
Short-term borrowings | 168,350 |  |  | 2.50 |  |  | 3,146 |  |  | 14,683 |  |  | 2.16 |  |  | 237 |  |  | 153,667 |  |  | 0.34 |  |  | 2,909 |
Long-term debt | 101,547 |  |  | 4.09 |  |  | 3,104 |  |  | 92,785 |  |  | 4.64 |  |  | 3,221 |  |  | 8,762 |  |  | (0.55 | ) |  | (117 | )
Total interest-bearing liabilities | 3,880,179 |  |  | 0.86 |  |  | 25,086 |  |  | 3,774,903 |  |  | 0.62 |  |  | 17,636 |  |  | 105,276 |  |  | 0.24 |  |  | 7,450 |
Noninterest-bearing deposits | 1,370,972 |  |  |  |  |  |  |  | 1,367,574 |  |  |  |  |  |  |  |  | 3,398 |  |  |  |  |
Other liabilities | 99,143 |  |  |  |  |  |  |  |  | 42,414 |  |  |  |  |  |  |  |  | 56,729 |  |  |  |  |  |
Total liabilities | 5,350,294 |  |  |  |  |  |  |  |  | 5,184,891 |  |  |  |  |  |  |  |  | 165,403 |  |  |  |  |  |
Shareholders’ equity | 507,930 |  |  |  |  |  |  |  |  | 485,942 |  |  |  |  |  |  |  |  | 21,988 |  |  |  |  |  |
Non-controlling interest | — |  |  |  |  |  |  |  |  | 5 |  |  |  |  |  |  |  |  | (5 | ) |  |  |  |  |
Total equity | 507,930 |  |  |  |  |  |  |  |  | 485,947 |  |  |  |  |  |  |  |  | 21,983 |  |  |  |  |  |
Total liabilities and equity | $ | 5,858,224 |  |  |  |  |  |  |  |  | $ | 5,670,838 |  |  |  |  |  |  |  |  | $ | 187,386 |  |  |  |  |  |
Net interest income |  |  |  |  |  |  | $ | 136,775 |  |  |  |  |  |  |  |  | $ | 129,060 |  |  |  |  |  |  |  |  | $ | 7,715 |
Interest rate spread |  |  | 3.08 | % |  |  |  |  |  | 3.02 | % |  |  |  |  |  | 0.06 | % |  |
Net interest margin |  |  |  | 3.32 | % |  |  |  |  |  |  |  | 3.20 | % |  |  |  |  |  |  |  | 0.12 | % |  |  |
(1) At amortized cost. |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(2) Includes nonaccrual loans. |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

Net interest income (expressed on a taxable-equivalent basis) was $45.8 million for the three months ended September 30, 2019, representing an increase of 5.2% from $43.6 million in the three months ended September 30, 2018. Net interest income (expressed on a taxable-equivalent basis) was $136.8 million for the nine months ended September 30, 2019, representing an increase of 6.0% from $129.1 million in the nine months ended September 30, 2018. The increase in the three and nine months ended September 30, 2019 was primarily attributable to a significant increase in average loans and leases balances funded by
48

runoff of the investment securities portfolio and short-term borrowings, combined with higher yields earned on the loans and leases portfolio. In addition, average government time deposits (included in time deposits $100,000 and over) declined significantly. Partially offsetting this decrease were increases in rates paid on interest-bearing deposits and short-term borrowings, primarily attributable to the 25 basis point increases in the Federal Funds rate in each of the four quarters of 2018, combined with a significant increase in short-term borrowings.
Interest Income
Taxable-equivalent interest income was $54.2 million for the three months ended September 30, 2019, representing an increase of 7.5% from $50.4 million in the three months ended September 30, 2018. The increase was primarily attributable to a $351.9 million increase in average loans and leases compared to the three months ended September 30, 2018, accounting for approximately $3.6 million of the increase in interest income during the three months ended September 30, 2019. In addition, the average yields earned on the loans and leases portfolio during the three months ended September 30, 2019 increased by 16 bp, compared to the three months ended September 30, 2018, accounting for approximately $1.7 million of the increase in interest income. These increases were partially offset by a $236.4 million decline in average investment securities, which decreased interest income by approximately $1.6 million.
Taxable-equivalent interest income was $161.9 million for the nine months ended September 30, 2019, representing an increase of 10.3% from $146.7 million in the nine months ended September 30, 2018. The increase was primarily attributable to a $327.3 million increase in average loans and leases compared to the nine months ended September 30, 2018, accounting for approximately $9.9 million of the increase in interest income during the nine months ended September 30, 2019. In addition, the average yields earned on the loans and leases and investment securities portfolios during the nine months ended September 30, 2019 increased by 28 bp and 5 bp, respectively, compared to the nine months ended September 30, 2018, accounting for approximately $8.8 million and $0.4 million of the increase in interest income, respectively. These increases were partially offset by a $204.4 million decline in average investment securities, which decreased interest income by approximately $4.1 million.
Interest Expense
Interest expense for the three months ended September 30, 2019 was $8.3 million, representing an increase of 22.3% from the three months ended September 30, 2018. The increase was primarily attributable to an increase in average short-term borrowings of $166.4 million, resulting in higher interest expense of approximately $1.0 million. In addition, increases in average rates paid on time deposits $100,000 and over and savings and money market deposits of 18 bp and 24 bp, respectively, increased interest expense by approximately $0.4 million and $1.0 million, respectively. Time deposits $100,000 and over primarily consists of public funds which may be opportunistic sources of funding, but fluctuate more directly with changes in the Federal Funds rate. These increases were partially offset by a $175.3 million decline in average time deposits $100,000 and over, which decreased interest expense by approximately $0.7 million and a 94 bp decrease in rates paid on long-term debt, which decreased interest expense by approximately $0.2 million.
Interest expense for the nine months ended September 30, 2019 was $25.1 million, representing an increase of 42.2% from the nine months ended September 30, 2018. The increase was primarily attributable to 48 bp and 20 bp increases in average rates paid on time deposits $100,000 and over and savings and money market deposits, respectively, combined with a 34 bp increase in average rates paid on short-term borrowings, which increased interest expense by approximately $3.3 million, $2.3 million and $0.4 million, respectively. In addition, average short-term borrowings increased by $153.7 million, resulting in higher interest expense of approximately $2.5 million. These increases were partially offset by a $121.4 million decline in average time deposits $100,000 and over, which decreased interest expense by approximately $1.3 million, and a 55 bp decrease in rates paid on long-term debt, which decreased interest expense by approximately $0.4 million.
Net Interest Margin
Our net interest margin of 3.30% for the three months ended September 30, 2019 increased by 10 bp from 3.20% in the three months ended September 30, 2018. Our net interest margin of 3.32% for the nine months ended September 30, 2019 increased by 12 bp from 3.20% in the nine months ended September 30, 2018.
The average yields earned on our interest-earning assets, which increased by 20 bp and 30 bp in the three and nine months ended September 30, 2019, respectively, compared to the same prior year periods, outpaced the increase in average rates paid on our interest-bearing liabilities, which increased by 13 bp and 24 bp in the three and nine months ended September 30, 2019, respectively, compared to the same prior year periods.
49

The aforementioned increases in average yields earned on our loans and leases portfolio during the three and nine months ended September 30, 2019 was partially offset by the aforementioned increases in average rates paid on our time deposits $100,000 and over and savings and money market deposits during the three and nine months ended September 30, 2019.
Provision for Loan and Lease Losses
Our Provision expense was $1.5 million during the three months ended September 30, 2019, compared to a Provision reversal of $0.1 million in the three months ended September 30, 2018. Our Provision expense was $4.2 million during the nine months ended September 30, 2019, compared to expense of $0.3 million in the nine months ended September 30, 2018.
Our net charge-offs were $1.6 million during the three months ended September 30, 2019, compared to net charge-offs of $1.3 million in the three months ended September 30, 2018. Our net charge-offs were $4.0 million during the nine months ended September 30, 2019, compared to net charge-offs of $3.4 million in the nine months ended September 30, 2018.
Other Operating Income
The following tables set forth components of other operating income for the periods indicated:

| Three Months Ended |
(dollars in thousands) | September 30, 2019 |  | September 30, 2018 |  | $ Change |  | % Change |
Other operating income: |  |  |  |  |  |  |  |
Mortgage banking income | $ | 1,764 |  |  | $ | 1,923 |  |  | $ | (159 | ) |  | -8.3 | % |
Service charges on deposit accounts | 2,125 |  |  | 2,189 |  |  | (64 | ) |  | -2.9 | % |
Other service charges and fees | 3,724 |  |  | 3,286 |  |  | 438 |  |  | 13.3 | % |
Income from fiduciary activities | 1,126 |  |  | 1,159 |  |  | (33 | ) |  | -2.8 | % |
Equity in earnings of unconsolidated subsidiaries | 86 |  |  | 71 |  |  | 15 |  |  | 21.1 | % |
Fees on foreign exchange | 170 |  |  | 220 |  |  | (50 | ) |  | -22.7 | % |
Investment securities gains | 36 |  |  | — |  |  | 36 |  |  | N.M. |  | *
Income from bank-owned life insurance | 645 |  |  | 1,055 |  |  | (410 | ) |  | -38.9 | % |
Loan placement fees | 230 |  |  | 115 |  |  | 115 |  |  | 100.0 | % |
Net gain on sales of foreclosed assets | 17 |  |  | — |  |  | 17 |  |  | N.M. |  | *
Other: |  |  |  |  |  |  |  |  |  |
Income recovered on nonaccrual loans previously charged-off | 73 |  |  | 395 |  |  | (322 | ) |  | -81.5 | % |
Other recoveries | 42 |  |  | 101 |  |  | (59 | ) |  | -58.4 | % |
Commissions on sale of checks | 75 |  |  | 79 |  |  | (4 | ) |  | -5.1 | % |
Other | 153 |  |  | 227 |  |  | (74 | ) |  | -32.6 | % |
Total other operating income | $ | 10,266 |  |  | $ | 10,820 |  |  | $ | (554 | ) |  | -5.1 | % |
* Not meaningful ("N.M.")

For the three months ended September 30, 2019, total other operating income of $10.3 million decrease d by $0.6 million, or 5.1%, from $10.8 million in the year-ago quarter. The decrease from the year-ago quarter was primarily due to lower income from bank-owned life insurance of $0.4 million, lower income recovered on nonaccrual loans previously charged-off of $0.3 million and lower mortgage banking income of $0.2 million. The lower income from bank-owned life insurance was primarily attributable to fluctuations in the equity markets during the quarter. These decrease s were partially offset by higher merchant and bank card fees of $0.3 million (included in other service charges and fees).
50

| Nine Months Ended |
(dollars in thousands) | September 30, 2019 |  | September 30, 2018 |  | $ Change |  | % Change |
Other operating income: |  |  |  |  |  |  |  |
Mortgage banking income | $ | 4,789 |  |  | $ | 5,545 |  |  | $ | (756 | ) |  | -13.6 | % |
Service charges on deposit accounts | 6,247 |  |  | 6,169 |  |  | 78 |  |  | 1.3 | % |
Other service charges and fees | 10,479 |  |  | 9,697 |  |  | 782 |  |  | 8.1 | % |
Income from fiduciary activities | 3,220 |  |  | 3,132 |  |  | 88 |  |  | 2.8 | % |
Equity in earnings of unconsolidated subsidiaries | 165 |  |  | 151 |  |  | 14 |  |  | 9.3 | % |
Fees on foreign exchange | 539 |  |  | 708 |  |  | (169 | ) |  | -23.9 | % |
Investment securities gains | 36 |  |  | — |  |  | 36 |  |  | N.M. |  | *
Income from bank-owned life insurance | 2,511 |  |  | 1,874 |  |  | 637 |  |  | 34.0 | % |
Loan placement fees | 486 |  |  | 532 |  |  | (46 | ) |  | -8.6 | % |
Net gain on sales of foreclosed assets | 17 |  |  | — |  |  | 17 |  |  | N.M. |  |
Other: |  |  |  |  |  |  |  |  |  |
Income recovered on nonaccrual loans previously charged-off | 240 |  |  | 621 |  |  | (381 | ) |  | -61.4 | % |
Other recoveries | 94 |  |  | 196 |  |  | (102 | ) |  | -52.0 | % |
Commissions on sale of checks | 234 |  |  | 249 |  |  | (15 | ) |  | -6.0 | % |
Gain on sale of MasterCard stock | 2,555 |  |  | — |  |  | 2,555 |  |  | N.M. |  | *
Other | 421 |  |  | 530 |  |  | (109 | ) |  | -20.6 | % |
Total other operating income | $ | 32,033 |  |  | $ | 29,404 |  |  | $ | 2,629 |  |  | 8.9 | % |
* Not meaningful ("N.M.")

For the nine months ended September 30, 2019, total other operating income of $32.0 million increase d by $2.6 million, or 8.9%, from $29.4 million in the year-ago period. The increase from the year-ago period was primarily due to the conversion of MasterCard Class B common stock received during their initial public offering to Class A common stock and immediate sale of the converted shares resulting in a gain of $2.6 million in the first quarter of 2019, combined with higher income from bank-owned life insurance of $0.6 million, higher merchant and bank card fees of $0.4 million (included in other service charges and fees) and higher commissions and fees on investment services of $0.4 million (included in other service charges and fees). The higher income from bank-owned life insurance was primarily attributable to fluctuations in the equity markets. These increase s were partially offset by lower mortgage banking income of $0.8 million and lower income recovered on nonaccrual loans previously charged-off of $0.4 million.
51

Other Operating Expense
The following tables set forth components of other operating expense for the periods indicated:

| Three Months Ended
(dollars in thousands) | September 30, 2019 |  | September 30, 2018 |  | $ Change |  | % Change
Other operating expense: |  |  |  |  |  |  |
Salaries and employee benefits | $ | 20,631 |  |  | $ | 19,011 |  |  | $ | 1,620 |  |  | 8.5 | %
Net occupancy | 3,697 |  |  | 3,488 |  |  | 209 |  |  | 6.0 | %
Equipment | 1,067 |  |  | 1,048 |  |  | 19 |  |  | 1.8 | %
Amortization of core deposit premium | — |  |  | 669 |  |  | (669 | ) |  | -100.0 | %
Communication expense | 1,008 |  |  | 903 |  |  | 105 |  |  | 11.6 | %
Legal and professional services | 1,933 |  |  | 1,528 |  |  | 405 |  |  | 26.5 | %
Computer software expense | 2,713 |  |  | 2,672 |  |  | 41 |  |  | 1.5 | %
Advertising expense | 711 |  |  | 612 |  |  | 99 |  |  | 16.2 | %
Foreclosed asset expense | 15 |  |  | 212 |  |  | (197 | ) |  | -92.9 | %
Other: |  |  |  |  |  |  |  |  |
Charitable contributions | 230 |  |  | 166 |  |  | 64 |  |  | 38.6 | %
FDIC insurance assessment | 5 |  |  | 437 |  |  | (432 | ) |  | -98.9 | %
Miscellaneous loan expenses | 274 |  |  | 403 |  |  | (129 | ) |  | -32.0 | %
ATM and debit card expenses | 660 |  |  | 686 |  |  | (26 | ) |  | -3.8 | %
Armored car expenses | 220 |  |  | 185 |  |  | 35 |  |  | 18.9 | %
Entertainment and promotions | 323 |  |  | 185 |  |  | 138 |  |  | 74.6 | %
Stationery and supplies | 240 |  |  | 206 |  |  | 34 |  |  | 16.5 | %
Directors’ fees and expenses | 242 |  |  | 263 |  |  | (21 | ) |  | -8.0 | %
Provision for residential mortgage loan repurchase losses | — |  |  | 331 |  |  | (331 | ) |  | -100.0 | %
Increase (decrease) to the reserve for unfunded commitments | (465 | ) |  | (71 | ) |  | (394 | ) |  | 554.9 | %
Other | 1,430 |  |  | 1,091 |  |  | 339 |  |  | 31.1 | %
Total other operating expense | $ | 34,934 |  |  | $ | 34,025 |  |  | $ | 909 |  |  | 2.7 | %

For the three months ended September 30, 2019, total other operating expense was $34.9 million and increase d by $0.9 million, or 2.7%, from $34.0 million in the year-ago quarter. The increase was primarily due to higher salaries and employee benefits of $1.6 million and higher legal and professional services of $0.4 million. The increase in salaries and employee benefits was partially attributable to the addition of positions in strategic areas and higher commissions, combined with annual merit increases effective in the second quarter of 2019. These increase s were partially offset by lower amortization of core deposit premium of $0.7 million, as the intangible asset was fully amortized as of September 30, 2018, a credit to the reserve for unfunded loan commitments during the current quarter of $0.5 million and lower FDIC insurance expense of $0.4 million. FDIC insurance expense includes a $0.4 million assessment credit received in the current quarter.
52

| Nine Months Ended
(dollars in thousands) | September 30, 2019 |  | September 30, 2018 |  | $ Change |  | % Change
Other operating expense: |  |  |  |  |  |  |
Salaries and employee benefits | $ | 61,083 |  |  | $ | 56,299 |  |  | $ | 4,784 |  |  | 8.5 | %
Net occupancy | 10,680 |  |  | 10,114 |  |  | 566 |  |  | 5.6 | %
Equipment | 3,211 |  |  | 3,160 |  |  | 51 |  |  | 1.6 | %
Amortization of core deposit premium | — |  |  | 2,006 |  |  | (2,006 | ) |  | -100.0 | %
Communication expense | 2,645 |  |  | 2,547 |  |  | 98 |  |  | 3.8 | %
Legal and professional services | 5,231 |  |  | 5,118 |  |  | 113 |  |  | 2.2 | %
Computer software expense | 7,870 |  |  | 7,244 |  |  | 626 |  |  | 8.6 | %
Advertising expense | 2,134 |  |  | 1,841 |  |  | 293 |  |  | 15.9 | %
Foreclosed asset expense | 223 |  |  | 537 |  |  | (314 | ) |  | -58.5 | %
Other: |  |  |  |  |  |  |  |  |
Charitable contributions | 559 |  |  | 497 |  |  | 62 |  |  | 12.5 | %
FDIC insurance assessment | 868 |  |  | 1,305 |  |  | (437 | ) |  | -33.5 | %
Miscellaneous loan expenses | 885 |  |  | 1,026 |  |  | (141 | ) |  | -13.7 | %
ATM and debit card expenses | 1,930 |  |  | 2,032 |  |  | (102 | ) |  | -5.0 | %
Armored car expenses | 629 |  |  | 584 |  |  | 45 |  |  | 7.7 | %
Entertainment and promotions | 1,576 |  |  | 617 |  |  | 959 |  |  | 155.4 | %
Stationery and supplies | 744 |  |  | 643 |  |  | 101 |  |  | 15.7 | %
Directors’ fees and expenses | 722 |  |  | 777 |  |  | (55 | ) |  | -7.1 | %
Provision for residential mortgage loan repurchase losses | (403 | ) |  | 331 |  |  | (734 | ) |  | -221.8 | %
Increase (decrease) to the reserve for unfunded commitments | 189 |  |  | 36 |  |  | 153 |  |  | 425.0 | %
Other | 4,613 |  |  | 4,326 |  |  | 287 |  |  | 6.6 | %
Total other operating expense | $ | 105,389 |  |  | $ | 101,040 |  |  | $ | 4,349 |  |  | 4.3 | %

For the nine months ended September 30, 2019, total other operating expense was $105.4 million and increase d by $4.3 million, or 4.3%, from $101.0 million in the year-ago quarter. The increase was primarily due to higher salaries and employee benefits of $4.8 million, higher entertainment and promotions expense of $1.0 million, higher computer software expense of $0.6 million and higher net occupancy expense of $0.6 million. The higher entertainment and promotions expense was primarily attributable to expenses related to a core deposit gathering campaign in the second quarter of 2019. These increase s were partially offset by lower amortization of core deposit premium of $2.0 million, a credit to the reserve for residential mortgage loan repurchase losses of $0.4 million, compared to an increase to the reserve of $0.3 million in the year-ago period, and lower FDIC insurance expense of $0.4 million.
A key measure of operating efficiency tracked by management is the efficiency ratio, which is calculated by dividing total other operating expense by total pre-provision revenue (net interest income and total other operating income). Management believes that the efficiency ratio provides useful supplemental information that is important to a proper understanding of the company's core business results by investors. Our efficiency ratio should not be viewed as a substitute for results determined in accordance with GAAP, nor is it necessarily comparable to the efficiency ratio presented by other companies.
53

The following table sets forth a calculation of our efficiency ratio for each of the periods indicated:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
(dollars in thousands) | 2019 |  | 2018 |  | 2019 |  | 2018
Total other operating expense | $ | 34,934 |  |  | $ | 34,025 |  |  | $ | 105,389 |  |  | $ | 101,040 |
Net interest income | $ | 45,649 |  |  | $ | 43,325 |  |  | $ | 136,140 |  |  | $ | 128,319 |
Total other operating income | 10,266 |  |  | 10,820 |  |  | 32,033 |  |  | 29,404 |
Total pre-provision revenue | $ | 55,915 |  |  | $ | 54,145 |  |  | $ | 168,173 |  |  | $ | 157,723 |
Efficiency ratio | 62.48 | % |  | 62.84 | % |  | 62.67 | % |  | 64.06 | %

Our efficiency ratio improved to 62.48% in the three months ended September 30, 2019 compared to 62.84% in the year-ago quarter and improved to 62.67% in the nine months ended September 30, 2019 compared to 64.06% in the year-ago period. The efficiency ratio in the nine months ended September 30, 2019 was positively impacted by the aforementioned $2.6 million gain on sale of MasterCard stock.
Income Taxes
The Company recorded income tax expense of $4.9 million and $14.4 million for the three and nine months ended September 30, 2019, respectively, compared to $5.0 million and $12.7 million in the same prior year periods, respectively. The effective tax rate for the three and nine months ended September 30, 2019 was 25.2% and 24.7%, respectively, compared to 24.7% and 22.6% in the same prior year periods, respectively. The increase s in income tax expense and the effective tax rate in the three and nine months ended September 30, 2019 was primarily due to higher pre-tax income in the current quarter, combined with an income tax benefit of $0.7 million related to the finalization of the impact of H.R.1, commonly referred to as the Tax Cuts and Jobs Act, recorded in the first quarter of 2018 and an income tax benefit of $0.6 million related to a tax accounting method change strategy recorded in the second quarter of 2018.
The valuation allowance on our net deferred tax assets ("DTA") totaled $3.3 million at September 30, 2019 and $3.5 million at December 31, 2018, of which $3.2 million and $3.3 million, respectively, related to our DTA from net apportioned net operating loss ("NOL") carryforwards for California state income tax purposes as we do not expect to generate sufficient income in California to utilize the DTA. The remaining valuation allowance of $0.1 million and $0.2 million as of September 30, 2019 and December 31, 2018 relates to a Hawaii capital loss carryforward balance that we do not expect to be able to utilize. Net of the valuation allowance, the Company's net DTA totaled $14.0 million at September 30, 2019, compared to a net DTA of $21.5 million as of December 31, 2018, and is included in other assets on our consolidated balance sheets.
Financial Condition
Total assets at September 30, 2019 of $5.98 billion increase d by $169.7 million from $5.81 billion at December 31, 2018.
Investment Securities
Investment securities of $1.19 billion at September 30, 2019 decrease d by $166.9 million, or 12.3%, from December 31, 2018. The decrease reflects $201.4 million in principal runoff, offset by a $33.4 million increase in the market valuation on the available-for-sale portfolio and $1.0 million in net purchases.
54

Loans and Leases
The following table sets forth information regarding our outstanding loans and leases by category and geographic location as of the dates indicated.

(dollars in thousands) |  | September 30, 2019 |  | December 31, 2018 |  | $ Change |  | % Change
Hawaii: |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial and agricultural |  | $ | 439,296 |  |  | $ | 439,112 |  |  | $ | 184 |  |  | — | %
Real estate: |  |  |  |  |  |  |  |
Construction |  | 96,661 |  |  | 64,654 |  |  | 32,007 |  |  | 49.5 |
Residential mortgage |  | 1,558,735 |  |  | 1,428,205 |  |  | 130,530 |  |  | 9.1 |
Home equity |  | 475,565 |  |  | 468,966 |  |  | 6,599 |  |  | 1.4 |
Commercial mortgage |  | 909,987 |  |  | 861,086 |  |  | 48,901 |  |  | 5.7 |
Consumer |  | 369,511 |  |  | 357,908 |  |  | 11,603 |  |  | 3.2 |
Leases |  | 31 |  |  | 124 |  |  | (93 | ) |  | (75.0 | )
Total loans and leases |  | 3,849,786 |  |  | 3,620,055 |  |  | 229,731 |  |  | 6.3 |
Allowance for loan and lease losses |  | (42,286 | ) |  | (42,993 | ) |  | 707 |  |  | (1.6 | )
Net loans and leases |  | $ | 3,807,500 |  |  | $ | 3,577,062 |  |  | $ | 230,438 |  |  | 6.4 |
U.S. Mainland: |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial and agricultural |  | $ | 137,316 |  |  | $ | 142,548 |  |  | $ | (5,232 | ) |  | (3.7 | )
Real estate: |  |  |  |  |  |  |  |
Construction |  | — |  |  | 2,273 |  |  | (2,273 | ) |  | (100.0 | )
Residential mortgage |  | — |  |  | — |  |  | — |  |  | — |
Home equity |  | — |  |  | — |  |  | — |  |  | — |
Commercial mortgage |  | 223,925 |  |  | 179,192 |  |  | 44,733 |  |  | 25.0 |
Consumer |  | 156,835 |  |  | 134,298 |  |  | 22,537 |  |  | 16.8 |
Leases |  | — |  |  | — |  |  | — |  |  | — |
Total loans and leases |  | 518,076 |  |  | 458,311 |  |  | 59,765 |  |  | 13.0 |
Allowance for loan and lease losses |  | (5,881 | ) |  | (4,923 | ) |  | (958 | ) |  | 19.5 |
Net loans and leases |  | $ | 512,195 |  |  | $ | 453,388 |  |  | $ | 58,807 |  |  | 13.0 |
Total: |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial and agricultural |  | $ | 576,612 |  |  | $ | 581,660 |  |  | $ | (5,048 | ) |  | (0.9 | )
Real estate: |  |  |  |  |  |  |  |
Construction |  | 96,661 |  |  | 66,927 |  |  | 29,734 |  |  | 44.4 |
Residential mortgage |  | 1,558,735 |  |  | 1,428,205 |  |  | 130,530 |  |  | 9.1 |
Home equity |  | 475,565 |  |  | 468,966 |  |  | 6,599 |  |  | 1.4 |
Commercial mortgage |  | 1,133,912 |  |  | 1,040,278 |  |  | 93,634 |  |  | 9.0 |
Consumer |  | 526,346 |  |  | 492,206 |  |  | 34,140 |  |  | 6.9 |
Leases |  | 31 |  |  | 124 |  |  | (93 | ) |  | (75.0 | )
Total loans and leases |  | 4,367,862 |  |  | 4,078,366 |  |  | 289,496 |  |  | 7.1 |
Allowance for loan and lease losses |  | (48,167 | ) |  | (47,916 | ) |  | (251 | ) |  | 0.5 |
Net loans and leases |  | $ | 4,319,695 |  |  | $ | 4,030,450 |  |  | $ | 289,245 |  |  | 7.2 |

Loans and leases, net of deferred costs, of $4.37 billion at September 30, 2019 increase d by $289.5 million, or 7.1%, from December 31, 2018. The increase reflects net increase s in the following loan portfolios: residential mortgage of $130.5 million, commercial mortgage of $93.6 million, consumer of $34.1 million, construction of $29.7 million, and home equity of $6.6 million. These increase s were partially offset by a net decrease in the commercial, financial and agricultural portfolio of $5.0 million.
The Hawaii loan portfolio increase d by $229.7 million, or 6.3%, from December 31, 2018. The increase reflects net increase s in the following loan portfolios: residential mortgage of $130.5 million, commercial mortgage of $48.9 million, construction of
55

$32.0 million, consumer of $11.6 million and home equity of $6.6 million. The increase s in the portfolios were primarily due to an increased demand from both new and existing customers.
The U.S. Mainland loan portfolio increase d by $59.8 million, or 13.0% from December 31, 2018. The net increase was primarily attributable to net increase s in the commercial mortgage loan portfolio of $44.7 million and consumer loan portfolio of $22.5 million. These increase s were partially offset by net decrease s in commercial, financial and agricultural and construction loan portfolios of $5.2 million and $2.3 million, respectively.
Through the third quarter of 2019, we purchased U.S. Mainland consumer loans with outstanding balances at the time of purchases totaling $80.0 million for $78.8 million, or a net discount of $1.2 million.
In 2018, we purchased U.S Mainland consumer loans totaling $58.6 million, which included a $0.1 million premium over the $58.5 million outstanding balance at the time of purchase.
56

Nonperforming Assets, Accruing Loans Delinquent for 90 Days or More, Restructured Loans Still Accruing Interest
The following table sets forth nonperforming assets, accruing loans delinquent for 90 days or more and restructured loans still accruing interest as of the dates indicated.

(dollars in thousands) | September 30, 2019 |  | December 31, 2018 |  | $ Change |  | % Change
Nonperforming Assets |  |  |  |  |  |  |  |  |
Nonaccrual loans: |  |  |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |
Residential mortgage | $ | 799 |  |  | $ | 2,048 |  |  | $ | (1,249 | ) |  | (61.0 | )
Home equity | 95 |  |  | 275 |  |  | (180 | ) |  | (65.5 | )
Total nonaccrual loans | 894 |  |  | 2,323 |  |  | (1,429 | ) |  | (61.5 | )
Other real estate owned ("OREO"): |  |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |
Residential mortgage | 302 |  |  | 414 |  |  | (112 | ) |  | (27.1 | )
Home equity | 164 |  |  | — |  |  | 164 |  |  | — |
Total OREO | 466 |  |  | 414 |  |  | 52 |  |  | 12.6 |
Total nonperforming assets | 1,360 |  |  | 2,737 |  |  | (1,377 | ) |  | (50.3 | )
Accruing Loans Delinquent for 90 Days or More |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |
Home equity | — |  |  | 298 |  |  | (298 | ) |  | (100.0 | )
Consumer | 235 |  |  | 238 |  |  | (3 | ) |  | (1.3 | )
Total accruing loans delinquent for 90 days or more | 235 |  |  | 536 |  |  | (301 | ) |  | (56.2 | )
Restructured Loans Still Accruing Interest |  |  |  |  |  |  |  |
Commercial, financial and agricultural | 157 |  |  | 220 |  |  | (63 | ) |  | (28.6 | )
Real estate: |  |  |  |  |  |  |
Construction | — |  |  | 2,273 |  |  | (2,273 | ) |  | (100.0 | )
Residential mortgage | 6,717 |  |  | 8,026 |  |  | (1,309 | ) |  | (16.3 | )
Commercial mortgage | 1,985 |  |  | 2,348 |  |  | (363 | ) |  | (15.5 | )
Total restructured loans still accruing interest | 8,859 |  |  | 12,867 |  |  | (4,008 | ) |  | (31.1 | )
Total nonperforming assets, accruing loans delinquent for 90 days or more and restructured loans still accruing interest | $ | 10,454 |  |  | $ | 16,140 |  |  | $ | (5,686 | ) |  | (35.2 | )
Ratio of nonaccrual loans to total loans and leases | 0.02 | % |  | 0.06 | % |  |  |  | (0.04 | )%
Ratio of nonperforming assets to total loans and leases and OREO | 0.03 | % |  | 0.07 | % |  |  |  | (0.04 | )%
Ratio of nonperforming assets and accruing loans delinquent for 90 days or more to total loans and leases and OREO | 0.04 | % |  | 0.08 | % |  |  |  | (0.04 | )%
Ratio of nonperforming assets, accruing loans delinquent for 90 days or more, and restructured loans still accruing interest to total loans and leases and OREO | 0.24 | % |  | 0.40 | % |  |  |  | (0.16 | )%

57

The following table sets forth year-to-date activity in nonperforming assets as of the date indicated:

(dollars in thousands) |
Balance at December 31, 2018 | $ | 2,737 |
Additions | 922 |
Reductions: |  |
Payments | (2,177 | )
Return to accrual status | (27 | )
Net charge-offs, valuation and other adjustments | (95 | )
Total reductions | (2,299 | )
Net increase | (1,377 | )
Balance at September 30, 2019 | $ | 1,360 |

Nonperforming assets, which includes nonaccrual loans and leases and other real estate, totaled $1.4 million at September 30, 2019, compared to $2.7 million at December 31, 2018. There were no nonperforming loans classified as held for sale at September 30, 2019 and December 31, 2018. The decrease in nonperforming assets from December 31, 2018 was primarily attributable to $2.2 million in repayments of nonaccrual loans and $0.1 million in net charge-offs, valuation and other adjustments, offset by four additions to nonperforming assets totaling $0.9 million.
Troubled debt restructurings ("TDRs") included in nonperforming assets at September 30, 2019 consisted of one Hawaii residential mortgage loan with a combined principal balance of $0.3 million.
Concessions made to the original contractual terms of these loans consisted primarily of the deferral of interest and/or principal payments due to deterioration in the borrowers' financial condition. The principal balances on these TDRs had matured and/or were in default at the time of restructure and we have no commitments to lend additional funds to any of these borrowers. There were $8.9 million of TDRs still accruing interest at September 30, 2019, none of which were more than 90 days delinquent. At December 31, 2018, there were $12.9 million of TDRs still accruing interest, none of which were more than 90 days delinquent.
58

Allowance for Loan and Lease Losses
The following table sets forth certain information with respect to the Allowance as of the dates and for the periods indicated:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
(dollars in thousands) | 2019 |  | 2018 |  | 2019 |  | 2018
Allowance for Loan and Lease Losses: |  |  |  |  |  |  |  |  |  |  |
Balance at beginning of period | $ | 48,267 |  |  | $ | 48,181 |  |  | $ | 47,916 |  |  | $ | 50,001 |
Provision (credit) for loan and lease losses | 1,532 |  |  | (59 | ) |  | 4,219 |  |  | 262 |
Charge-offs: |  |  |  |  |  |  |
Commercial, financial and agricultural | 797 |  |  | 731 |  |  | 2,099 |  |  | 1,971 |
Real estate: |  |  |  |  |  |  |
Home equity | 5 |  |  | — |  |  | 5 |  |  | — |
Consumer | 1,832 |  |  | 1,762 |  |  | 5,542 |  |  | 5,424 |
Total charge-offs | 2,634 |  |  | 2,493 |  |  | 7,646 |  |  | 7,395 |
Recoveries: |  |  |  |  |  |  |  |  |  |  |
Commercial, financial and agricultural | 362 |  |  | 578 |  |  | 910 |  |  | 1,017 |
Real estate: |  |  |  |  |  |  |
Construction | 6 |  |  | 6 |  |  | 604 |  |  | 1,205 |
Residential mortgage | 104 |  |  | 51 |  |  | 498 |  |  | 98 |
Home equity | 24 |  |  | 6 |  |  | 42 |  |  | 18 |
Commercial mortgage | — |  |  | 8 |  |  | 25 |  |  | 52 |
Consumer | 506 |  |  | 548 |  |  | 1,599 |  |  | 1,568 |
Total recoveries | 1,002 |  |  | 1,197 |  |  | 3,678 |  |  | 3,958 |
Net charge-offs | 1,632 |  |  | 1,296 |  |  | 3,968 |  |  | 3,437 |
Balance at end of period | $ | 48,167 |  |  | $ | 46,826 |  |  | $ | 48,167 |  |  | $ | 46,826 |
Allowance as a percentage of total loans and leases | 1.10 | % |  | 1.18 | % |  | 1.10 | % |  | 1.18 | %
Annualized ratio of net charge-offs to average loans and leases | 0.15 | % |  | 0.13 | % |  | 0.13 | % |  | 0.12 | %

Our Allowance at September 30, 2019 totaled $48.2 million compared to $47.9 million at December 31, 2018. During the three months ended September 30, 2019, we recorded Provision expense of $1.5 million primarily due to the increase in our loan portfolio and reflects net charge-offs of $1.6 million. During the nine months ended September 30, 2019, we recorded Provision expense of $4.2 million primarily due to the increase in our loan portfolio and reflects net charge-offs of $4.0 million.
Our Allowance as a percentage of total loans and leases decreased from 1.17% at December 31, 2018 to 1.10% at September 30, 2019. The decrease in our Allowance as a percentage of total loans and leases reflects the credit quality of the loan portfolio, real estate markets and general economic conditions both in Hawaii and the U.S. Mainland. Our Allowance as a percentage of nonperforming assets increased from 1,751% at December 31, 2018 to 3,542% at September 30, 2019.
In accordance with GAAP, loans held for sale and other real estate assets are not included in our assessment of the Allowance.
59

Federal Home Loan Bank Stock
The bank is a member of the Federal Home Loan Bank of Des Moines (the "FHLB"). FHLB stock of $17.2 million at September 30, 2019 increased by $0.5 million, or 3.2%, from the FHLB stock balance at December 31, 2018. FHLB stock has an activity-based stock requirement, thus as borrowings increase, so will our holdings of FHLB stock. There is a minimum requirement of $7.0 million in FHLB stock even if we have no borrowings outstanding.
Deposits
The following table sets forth the composition of our deposits by category for the periods indicated:

(dollars in thousands) | September 30, 2019 |  | December 31, 2018 |  | $ Change |  | % Change
Noninterest-bearing demand deposits | $ | 1,399,200 |  |  | $ | 1,436,967 |  |  | $ | (37,767 | ) |  | (2.6 | )%
Interest-bearing demand deposits | 998,037 |  |  | 954,011 |  |  | 44,026 |  |  | 4.6 |
Savings and money market deposits | 1,593,738 |  |  | 1,448,257 |  |  | 145,481 |  |  | 10.0 |
Time deposits less than $100,000 | 165,687 |  |  | 176,707 |  |  | (11,020 | ) |  | (6.2 | )
Core deposits | 4,156,662 |  |  | 4,015,942 |  |  | 140,720 |  |  | 3.5 |
Government time deposits | 552,470 |  |  | 631,293 |  |  | (78,823 | ) |  | (12.5 | )
Other time deposits $100,000 to $250,000 | 103,959 |  |  | 106,783 |  |  | (2,824 | ) |  | (2.6 | )
Other time deposits greater than $250,000 | 224,568 |  |  | 192,472 |  |  | 32,096 |  |  | 16.7 |
Total time deposits $100,000 and greater | 880,997 |  |  | 930,548 |  |  | (49,551 | ) |  | (5.3 | )
Total deposits | $ | 5,037,659 |  |  | $ | 4,946,490 |  |  | $ | 91,169 |  |  | 1.8 |

Total deposits of $5.04 billion at September 30, 2019 increase d by $91.2 million from total deposits of $4.95 billion at December 31, 2018. Net increase s in savings and money market deposits of $145.5 million, interest-bearing demand deposits of $44.0 million and other time deposits greater than $250,000 of $32.1 million, were partially offset by net decrease s in government time deposits of $78.8 million, noninterest-bearing demand deposits of $37.8 million and time deposits less than $100,000 of $11.0 million.
Core deposits, which we define as demand deposits, savings and money market deposits, and time deposits less than $100,000, totaled $4.16 billion at September 30, 2019 and increase d by $140.7 million, or 3.5%, from December 31, 2018. Core deposits as a percentage of total deposits was 82.5% at September 30, 2019, compared to 81.2% at December 31, 2018.
Capital Resources
In order to ensure adequate levels of capital, we conduct an ongoing assessment of projected sources and uses of capital in conjunction with an analysis of the size and quality of our assets, the level of risk and regulatory capital requirements. As part of this ongoing assessment, the Board of Directors reviews our capital position on an ongoing basis to ensure it is adequate, including, but not limited to, need for raising additional capital or returning capital to our shareholders, including the ability to declare cash dividends or repurchase our securities.
Common and Preferred Equity
Shareholders' equity totaled $525.2 million at September 30, 2019, compared to $491.7 million at December 31, 2018. The change in total shareholders' equity was attributable to net income of $44.1 million and other comprehensive income of $28.3 million, partially offset by the repurchase of 631,300 shares of common stock under our repurchase program, at a cost of $18.0 million and cash dividends paid of $19.2 million in the nine months ended September 30, 2019. During the nine months ended September 30, 2019, we repurchased approximately 2.2% of our common stock outstanding as of December 31, 2018.
Our total shareholders' equity to total assets ratio was 8.79% at September 30, 2019, compared to 8.47% at December 31, 2018. Our book value per share was $18.47 and $16.97 at September 30, 2019 and December 31, 2018, respectively.
60

Holding Company Capital Resources
CPF is required to act as a source of strength to the bank under the Dodd-Frank Act. CPF is obligated to pay its expenses and payments on its junior subordinated debentures which fund payments on the outstanding trust preferred securities.
CPF relies on the bank to pay dividends to fund its obligations. As of September 30, 2019, on a stand-alone basis, CPF had an available cash balance of approximately $11.6 million in order to meet its ongoing obligations.
As a Hawaii state-chartered bank, the 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 September 30, 2019, the bank had Statutory Retained Earnings of $61.5 million. On October 22, 2019, the Company's Board of Directors declared a cash dividend of $0.23 per share on the Company's outstanding common stock, which was a 9.5% increase from the $0.21 per share a year-ago.
Dividends are payable at the discretion of the Board of Directors and there can be no assurance that the Board of Directors will continue to pay dividends at the same rate, or at all, in the future. Our ability to pay cash dividends to our shareholders is subject to restrictions under federal and Hawaii law, including restrictions imposed by the FRB and covenants set forth in various agreements we are a party to, including covenants set forth in our subordinated debentures.
In the year ended December 31, 2018, the Company repurchased 1,155,157 shares of common stock, at a cost of $32.8 million, under the Company's repurchase plan.
In June 2019, the Company’s Board of Directors authorized the repurchase of up to $30 million of its common stock from time to time in the open market or in privately negotiated transactions, pursuant to a newly authorized share repurchase program (the "Repurchase Plan"). The Repurchase Plan replaces and supersedes in its entirety the share repurchase program previously approved by the Company's Board of Directors, which had $6.8 million in remaining repurchase authority. In the nine months ended September 30, 2019, a total of 631,300 shares of common stock, at a cost of $18.0 million, were repurchased under the Company's stock repurchase plans. As of September 30, 2019, $25.9 million remained available for repurchase under the Company's Repurchase Plan. The Company's Repurchase Plan has no expiration date.
Trust Preferred Securities
On December 17, 2018, the Company completed the redemption of $20.0 million in floating rate trust preferred securities of CPB Statutory Trust III ("Trust III") bearing an interest rate of three-month LIBOR plus 2.85% and maturing on December 17, 2033. The redemption price was 100% of the aggregate liquidation amount of the securities plus accumulated but unpaid distributions up to but not including the redemption date. The Company also redeemed $0.6 million of common securities issued by Trust III and held by the Company, as a result of the concurrent redemption of 100% of the principal assets of Trust III, or $20.6 million of the Company's junior subordinated debentures with an identical interest rate and maturity as the Trust III trust preferred securities. The redemption was pursuant to the optional prepayment provisions of the indenture. On January 9, 2019, Trust III was canceled with the state of Connecticut.
On January 7, 2019, the Company completed the redemption of $20.0 million in floating rate trust preferred securities of CPB Capital Trust II ("Trust II") bearing an interest rate of three-month LIBOR plus 2.85% and maturing on October 7, 2033. The redemption price was 100% of the aggregate liquidation amount of the securities plus accumulated but unpaid distributions up to but not including the redemption date. The Company also redeemed $0.6 million of common securities issued by Trust II and held by the Company, as a result of the concurrent redemption of 100% of the principal assets of Trust II, or $20.6 million of the Company's junior subordinated debentures with an identical interest rate and maturity as the Trust II trust preferred securities. The redemption was pursuant to the optional prepayment provisions of the indenture. On January 22, 2019, Trust II was canceled with the state of Delaware.
As of September 30, 2019, we have two remaining statutory trusts, CPB Capital Trust IV ("Trust IV") and CPB Statutory Trust V ("Trust V"), which issued a total of $50.0 million in floating rate trust preferred securities. The trust preferred securities, the underlying floating rate junior subordinated debentures that are the assets of Trusts IV and V, and the common securities issued by Trusts IV and V are redeemable in whole or in part on any interest payment date on or after December 15, 2009 for Trust IV and V, or at any time in whole but not in part within 90 days following the occurrence of certain events. Our obligations with respect to the issuance of the trust preferred securities constitute a full and unconditional guarantee by the Company of each trust's obligations with respect to its trust preferred securities. Subject to certain exceptions and limitations, we may elect from time to time to defer subordinated debenture interest payments, which would result in a deferral of dividend payments on the related trust preferred securities, for up to 20 consecutive quarterly periods without default or penalty.
61

Regulatory Capital Ratios
General capital adequacy regulations adopted by the FRB and FDIC require an institution to maintain minimum leverage capital, Tier 1 risk-based capital, total risk-based capital, and common equity Tier 1 ("CET1") capital ratios. In addition to these uniform risk-based capital guidelines and leverage ratios that apply across the industry, the regulators have the discretion to set individual minimum capital requirements for specific institutions at rates significantly above the minimum guidelines and ratios. For a further discussion of the effect of forthcoming changes in required regulatory capital ratios, see the discussion in the "Business — Supervision and Regulation" sections of our 2018 Form 10-K.
The Company's and the bank's leverage capital, tier 1 risk-based capital, total risk-based capital, and CET1 risk-based capital ratios as of September 30, 2019 were above the levels required for a "well capitalized" regulatory designation.
The following table sets forth the Company's and the bank's capital ratios, as well as the minimum capital adequacy requirements applicable to all financial institutions as of the dates indicated.

|  | Actual |  | Minimum Required for Capital Adequacy Purposes |  | Minimum Required to be Well Capitalized
(dollars in thousands) |  | Amount |  | Ratio |  | Amount |  | Ratio |  | Amount |  | Ratio
Company |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
At September 30, 2019: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Leverage capital |  | $ | 561,478 |  |  | 9.5 | % |  | $ | 235,781 |  |  | 4.0 | % |  |  |  |  | N/A
Tier 1 risk-based capital |  | 561,478 |  |  | 12.6 |  |  | 267,821 |  |  | 6.0 |  |  |  |  |  | N/A
Total risk-based capital |  | 611,076 |  |  | 13.7 |  |  | 357,094 |  |  | 8.0 |  |  |  |  |  | N/A
CET1 risk-based capital |  | 511,478 |  |  | 11.5 |  |  | 200,865 |  |  | 4.5 |  |  |  |  |  | N/A
At December 31, 2018: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Leverage capital |  | $ | 570,260 |  |  | 9.9 | % |  | $ | 230,847 |  |  | 4.0 | % |  |  |  |  | N/A
Tier 1 risk-based capital |  | 570,260 |  |  | 13.5 |  |  | 252,921 |  |  | 6.0 |  |  |  |  |  | N/A
Total risk-based capital |  | 619,419 |  |  | 14.7 |  |  | 337,228 |  |  | 8.0 |  |  |  |  |  | N/A
CET1 risk-based capital |  | 500,260 |  |  | 11.9 |  |  | 189,691 |  |  | 4.5 |  |  |  |  |  | N/A
Central Pacific Bank |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
At September 30, 2019: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Leverage capital |  | $ | 550,913 |  |  | 9.4 | % |  | $ | 235,625 |  |  | 4.0 | % |  | $ | 294,531 |  |  | 5.0 | %
Tier 1 risk-based capital |  | 550,913 |  |  | 12.4 |  |  | 267,577 |  |  | 6.0 |  |  | 356,770 |  |  | 8.0 |
Total risk-based capital |  | 600,511 |  |  | 13.5 |  |  | 356,770 |  |  | 8.0 |  |  | 445,962 |  |  | 10.0 |
CET1 risk-based capital |  | 550,913 |  |  | 12.4 |  |  | 200,683 |  |  | 4.5 |  |  | 289,875 |  |  | 6.5 |
At December 31, 2018: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Leverage capital |  | $ | 533,166 |  |  | 9.3 | % |  | $ | 230,638 |  |  | 4.0 | % |  | $ | 288,298 |  |  | 5.0 | %
Tier 1 risk-based capital |  | 533,166 |  |  | 12.7 |  |  | 252,667 |  |  | 6.0 |  |  | 336,889 |  |  | 8.0 |
Total risk-based capital |  | 582,325 |  |  | 13.8 |  |  | 336,889 |  |  | 8.0 |  |  | 421,111 |  |  | 10.0 |
CET1 risk-based capital |  | 533,166 |  |  | 12.7 |  |  | 189,500 |  |  | 4.5 |  |  | 273,722 |  |  | 6.5 |

Asset/Liability Management and Interest Rate Risk
Our earnings and capital are sensitive to risk of interest rate fluctuations. Interest rate risk arises when rate-sensitive assets and rate-sensitive liabilities mature or reprice during different periods or in differing amounts. In the normal course of business, we are subjected to interest rate risk through the activities of making loans and taking deposits, as well as from our investment securities portfolio and other interest-bearing funding sources. Asset/liability management attempts to coordinate our rate-sensitive assets and rate-sensitive liabilities to meet our financial objectives.
62

Our Asset/Liability Management Policy seeks to maximize the risk-adjusted return to shareholders while maintaining consistently acceptable levels of liquidity, interest rate risk and capitalization. Our Asset/Liability Management Committee, or ALCO, monitors interest rate risk through the use of interest rate sensitivity gap, net interest income and market value of portfolio equity simulation and rate shock analyses. This process is designed to measure the impact of future changes in interest rates on net interest income and market value of portfolio equity. Adverse interest rate risk exposures are managed through the shortening or lengthening of the duration of assets and liabilities.
ALCO utilizes a detailed and dynamic simulation model to measure and manage interest rate risk exposures. The simulation process is designed to measure the impact of future changes in interest rates on net interest income and market value of portfolio equity and to allow ALCO to model alternative balance sheet strategies.
The following reflects our net interest income sensitivity analysis as of September 30, 2019, over a one-year horizon, assuming no balance sheet growth and given both a 100 bp upward and 100 bp downward parallel shift in interest rates.

Rate Change |  | Estimated Net Interest Income Sensitivity
+100 bp |  | 1.99 | %
-100 bp |  | (3.90 | )%

Liquidity and Borrowing Arrangements
Our objective in managing liquidity is to maintain a balance between sources and uses of funds in order to economically meet the cash requirements of customers for loans and deposit withdrawals and participate in lending and investment opportunities as they arise. We monitor our liquidity position in relation to changes in loan and deposit balances on a daily basis to ensure maximum utilization, maintenance of an adequate level of readily marketable assets and access to short-term funding sources.
Core deposits have historically provided us with a sizable source of relatively stable and low cost funds, but are subject to competitive pressure in our market. In addition to core deposit funding, we also have access to a variety of other short-term and long-term funding sources, which include proceeds from maturities of our investment securities, as well as secondary funding sources such as the FHLB, secured repurchase agreements and the Federal Reserve discount window, available to meet our liquidity needs. While we historically have had access to these other funding sources, access to these sources may not be guaranteed and can be restricted in the future as a result of market conditions or the Company's and bank's financial position.
The bank maintained a $1.80 billion line of credit with the FHLB as of September 30, 2019, compared to $1.43 billion at December 31, 2018. We had $205.0 million in short-term borrowings under this arrangement at September 30, 2019, compared to $197.0 million at December 31, 2018. Letters of credit under this arrangement that are used to collateralize certain government deposits totaled $118.9 million at September 30, 2019, compared to $4.6 million at December 31, 2018. Long-term borrowings under this arrangement totaled $50.0 million at September 30, 2019 and December 31, 2018. FHLB advances and standby letters of credit available at September 30, 2019 were secured by certain real estate loans with a carrying value of $2.42 billion in accordance with the collateral provisions of the Advances, Security and Deposit Agreement with the FHLB. At September 30, 2019, $1.43 billion was undrawn under this arrangement, compared to $1.18 billion at December 31, 2018.
At September 30, 2019 and December 31, 2018, our bank had additional unused borrowings available at the Federal Reserve discount window of $65.6 million and $73.9 million, respectively. As of September 30, 2019 and December 31, 2018, certain commercial and commercial real estate loans with a carrying value totaling $118.9 million and $123.3 million, respectively, were pledged as collateral on our line of credit with the Federal Reserve discount window. The Federal Reserve does not have the right to sell or repledge these loans.
Our ability to maintain adequate levels of liquidity is dependent on our ability to continue to maintain our strong risk profile and capital base. Our liquidity may also be negatively impacted by weakness in the financial markets and industry-wide reductions in liquidity.
Contractual Obligations
Information regarding our contractual obligations is provided in "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 31, 2018. During the first quarter of 2019, the Company signed an extension to its existing agreement with a computer software vendor.
63

This extension increases the Company's contractual obligations for the years 2022 through 2024 by approximately $6 million per year. There have been no other material changes in our contractual obligations since December 31, 2018.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Market risk is the risk of loss in a financial instrument arising from adverse changes in market rates/prices such as interest rates, foreign currency rates, commodity prices and equity prices. Our primary market risk exposure is interest rate risk that occurs when rate-sensitive assets and rate-sensitive liabilities mature or reprice during different periods or in differing amounts. Asset/liability management attempts to coordinate our rate-sensitive assets and rate-sensitive liabilities to meet our financial objectives. The Asset/Liability Committee ("ALCO") monitors interest rate risk through the use of interest rate sensitivity gap, net interest income and market value of portfolio equity simulation, and rate shock analyses. Adverse interest rate risk exposures are managed through the shortening or lengthening of the duration of assets and liabilities.
The primary analytical tool we use to measure and manage our interest rate risk is a simulation model that projects changes in net interest income ("NII") as market interest rates change. Our ALCO policy requires that simulated changes in NII should be within certain specified ranges, or steps must be taken to reduce interest rate risk. The results of the model indicate that the mix of rate-sensitive assets and liabilities at September 30, 2019 would not result in a fluctuation of NII that would exceed the established policy limits.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report and pursuant to Rule 13a-15 of the Securities Exchange Act of 1934, as amended, (the "Exchange Act"), the Company's management, including the principal executive officer and principal financial officer, conducted an evaluation of the effectiveness and design of the Company's disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act). Based upon that evaluation, the Company's principal executive officer and principal financial officer concluded, as of the end of the period covered by this report, that the Company's disclosure controls and procedures were effective.
Changes in Internal Control Over Financial Reporting
As of the end of the period covered by this report, there have been no changes in the Company's internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter to which this report relates that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.
64

PART II. OTHER INFORMATION
Item 1A. Risk Factors
There have been no material changes from the Risk Factors as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC on February 28, 2019, except as described below.
Our RISE2020 initiative may not be successful.
During the second half of 2019 and throughout 2020, we intend to invest an aggregate of approximately $40 million to upgrade our branch spaces, digital banking platforms and ATM network through a new initiative we call RISE2020. RISE2020 is intended to enhance customer experience, drive stronger long-term growth and profitability, improve shareholder returns and lower our efficiency ratio. However, we cannot provide any assurance that RISE2020 will achieve any of our objectives or will achieve our objectives to the extent we have forecasted. In particular, the costs of RISE2020 may exceed our expectations; we may not be able to attract new business from existing customers; new customers may not be attracted to our platform despite the amount of expense we incur; and implementation of RISE2020 initiatives may disrupt our operations. If our RISE2020 initiative is not successful, our overall noninterest expense will have increased without a corresponding increase in revenue and growth which could have a material adverse effect on our business, financial condition or results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Issuer Purchases of Equity Securities
In June 2019, the Company’s Board of Directors authorized the repurchase of up to $30 million of its common stock from time to time in the open market or in privately negotiated transactions, pursuant to a newly authorized share repurchase program (the "Repurchase Plan"). The Repurchase Plan replaces and supersedes in its entirety the share repurchase program previously approved by the Company's Board of Directors, which had $6.8 million in remaining repurchase authority.
In the three months ended September 30, 2019, the Company repurchased 140,600 shares of common stock, at an aggregate cost of $4.0 million, under the Company's stock repurchase plans. As of September 30, 2019, a total of $25.9 million remained available for repurchase under the Company's Repurchase Plan. There is no expiration date on the Repurchase Plan.

|  | Issuer Purchases of Equity Securities
Period |  | Total Number of Shares Purchased |  | Average Price Paid per Share |  | Total Shares Purchased as Part of Publicly Announced Programs |  | Maximum Dollar Value of Shares That May Yet Be Purchased Under the Program
July 1-31, 2019 |  | 11,100 |  |  | $ | 29.74 |  |  | 11,100 |  |  | $ | 29,612,363 |
August 1-31, 2 019 |  | 67,000 |  |  | 28.34 |  |  | 67,000 |  |  | 27,713,654 |
September 1-30, 2019 |  | 62,500 |  |  | 28.58 |  |  | 62,500 |  |  | 25,927,436 |
Total |  | 140,600 |  |  | $ | 28.56 |  |  | 140,600 |  |  | 25,927,436 |

65

Item 6. Exhibits

Exhibit No. |  | Document
31.1 |  | Rule 13a-14(a) Certification of Chief Executive Officer in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 *
31.2 |  | Rule 13a-14(a) Certification of Chief Financial Officer in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 *
32.1 |  | Section 1350 Certification of Chief Executive Officer in accordance with Section 906 of the Sarbanes-Oxley Act of 2002 **
32.2 |  | Section 1350 Certification of Chief Financial Officer in accordance with Section 906 of the Sarbanes-Oxley Act of 2002 **
101.INS |  | XBRL Instance Document*
101.SCH |  | XBRL Taxonomy Extension Schema Document*
101.CAL |  | XBRL Taxonomy Extension Calculation Linkbase Document*
101.LAB |  | XBRL Taxonomy Extension Label Linkbase Document*
101.PRE |  | XBRL Taxonomy Extension Presentation Linkbase Document*
101.DEF |  | XBRL Taxonomy Extension Definition Linkbase Document*
* |  | Filed herewith.
** |  | Furnished herewith.

66

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

|  | CENTRAL PACIFIC FINANCIAL CORP.
|  | (Registrant)
Date: | November 5, 2019 | /s/ Paul K. Yonamine
|  | Paul K. Yonamine
|  | Chairman and Chief Executive Officer
Date: | November 5, 2019 | /s/ David S. Morimoto
|  | David S. Morimoto
|  | Executive Vice President and Chief Financial Officer

67