EX-99.1 2 exhibit99-1erq42020.htm EX-99.1
Exhibit 99.1

|  |  | FOR IMMEDIATE RELEASE
Investor Contact: | Ian Tanaka | Media Contact: | Dean Kawamura
| VP, Treasury Manager |  | VP, Community Development Manager
| (808) 544-3646 |  | (808) 544-3642
| ian.tanaka@cpb.bank |  | dean.kawamura@cpb.bank

NEWS RELEASE

CENTRAL PACIFIC FINANCIAL CORP. REPORTS
FOURTH QUARTER 2020 QUARTERLY AND ANNUAL RESULTS
•Net income of $12.2 million, or $0.43 per diluted share for the fourth quarter, compared to net income of $6.9 million, or $0.24 per diluted share for the third quarter. Net income for the year was $37.3 million, or $1.32 per diluted share, compared to net income of $58.3 million, or $2.03 per diluted share in the previous year.
•The fourth quarter included nonrecurring expenses totaling $5.9 million primarily related to employee incentives and benefits, branch consolidation and other settlements.
•Allowance for credit losses to total loans ratio of 1.68% (or 1.83% excluding Paycheck Protection Program ("PPP") loans) at December 31, 2020, compared to 1.60% (or 1.79% excluding PPP loans) at September 30, 2020.
•Loans on forbearance or deferral declined by 58.7% to $120.2 million, or 2.4% of the total loan portfolio (or 2.6% excluding PPP loans) at December 31, 2020 from $290.8 million, or 5.8% of the total loan portfolio (or 6.5% excluding PPP loans) at September 30, 2020.
•Cost of average total deposits of 0.09% in the fourth quarter declined by 4 basis points from the third quarter.
•Mortgage banking income of $5.4 million in the fourth quarter increased by 285.4% from the year-ago quarter, and 25.1% from the third quarter.
•Completed the RISE2020 initiative culminating with the grand opening of the fully renovated Plaza headquarters building in early January 2021, and launched a new brand design.
•Board of Directors declared a quarterly cash dividend of $0.23 per share and approved share repurchase authorization of up to $25 million.
HONOLULU, HI, January 27, 2021 – Central Pacific Financial Corp. (NYSE: CPF) (the "Company"), parent company of Central Pacific Bank (the "Bank"), today reported net income in the fourth quarter of 2020 of $12.2 million, or fully diluted earnings per

Central Pacific Financial Corp. Reports Fourth Quarter 2020 Quarterly and Annual Results
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share ("EPS") of $0.43, compared to net income in the fourth quarter of 2019 of $14.2 million, or EPS of $0.50, and net income in the third quarter of 2020 of $6.9 million, or EPS of $0.24. Net income for the year was $37.3 million, or EPS of $1.32, compared to net income of $58.3 million, or EPS of $2.03 in the previous year. The Company's operating results continue to be impacted by a higher provision for credit loss expense that was driven by the economic forecast under the current COVID-19 pandemic. During the fourth quarter of 2020, the Company recorded a provision for credit loss expense of $4.5 million, compared to $2.1 million in the fourth quarter of 2019 and $14.7 million in the third quarter of 2020. During 2020, the Company recorded a provision for credit loss expense of $39.1 million, compared to $6.3 million in the previous year.
"The Company ended the 2020 year strong and with great positive momentum, despite the challenges of the operating environment. We are optimistic for improvements to the local economy in 2021 and are actively pushing forward with our strategies to position the Company for the future," said Paul Yonamine, Chairman and Chief Executive Officer.
"We are proud of the accomplishments of all of our employees this year in supporting our clients and the community, as well as moving us significantly forward with the completion of our RISE2020 initiative," said Catherine Ngo, President.
On October 20, 2020, the Company completed a $55 million private placement of ten-year fixed-to-floating rate subordinated notes, which will be used to support regulatory capital ratios and for general corporate purposes. The Company exchanged the privately placed notes for registered notes with the same terms and in the same aggregate principal amount at the end of the fourth quarter of 2020. The notes bear a fixed interest rate of 4.75% for the first five years and will reset quarterly thereafter for the remaining five years to the then current three-month Secured Overnight Financing Rate, as published by the Federal Reserve Bank of New York, plus 456 basis points.
On January 26, 2021, the Company's Board of Directors declared a quarterly cash dividend of $0.23 per share on its outstanding common shares. The dividend will be payable on March 15, 2021 to shareholders of record at the close of business on February 26, 2021. The Company's Board of Directors also approved a new share repurchase authorization of up to $25 million of its common stock.
Earnings Highlights
Net interest income for the fourth quarter of 2020 was $51.5 million, compared to $47.9 million in the year-ago quarter and $49.1 million in the previous quarter. Net interest margin for the fourth quarter of 2020 was 3.32%, compared to 3.43% in the year-ago quarter and 3.19% in the previous quarter. The increase in net interest income from the year-ago quarter was primarily due to growth in the loan portfolio, including loans originated under the PPP program, combined with lower rates paid on interest-bearing liabilities. These increases were partially offset by lower yields earned on the loan and investment securities portfolios which were primarily due to the historically low interest rate environment we are currently operating in and led to the year-over-year decline in net interest margin. The sequential quarter increase in net interest income and net interest margin is primarily due to an increase in PPP net loan fees. Net interest income for the fourth quarter of 2020 included $6.3 million in PPP net interest income and net loan fees, which are accreted into income over the term of the loans and accelerated when the loans are forgiven or paid-off, compared to $3.4 million in the previous quarter. During the fourth quarter, approximately $118.9 million in PPP loans were forgiven which resulted in the immediate recognition of $3.0 million in net loan fees.
Other operating income for the fourth quarter of 2020 totaled $14.1 million, which increased from $9.8 million in the year-ago quarter and $11.6 million in the previous quarter, primarily due to strong mortgage banking activity. Mortgage banking income increased by $4.0 million and $1.1 million from the year-ago and previous quarters, respectively. The increase in other operating income from the year-ago quarter was also attributable to higher income from bank-owned life insurance of $0.6 million, due to equity market gains. These increases were partially offset by lower service charges on deposit accounts of $0.6 million and lower other service charges and fees of $0.4 million, which were primarily attributable to lower transactional activity due to the pandemic. The increase in other operating income from the previous quarter was primarily due to the aforementioned higher mortgage banking income, combined with higher other service charges and fees of $0.4 million and a gain on the sale of certain investment securities of $0.2 million, compared to a loss on sale of certain investments in the previous quarter of $0.4 million.
Other operating expense for the fourth quarter of 2020 totaled $45.1 million, which increased from $36.2 million in the year-ago quarter and $37.0 million in the previous quarter. The current quarter expense was elevated due to $5.9 million in nonrecurring expenses, which included: employee incentives and other benefit programs of $2.0 million, branch consolidation costs of $1.3 million, litigation settlements of $0.8 million, Federal Home Loan Bank ("FHLB") advance prepayment fee $0.7 million, loss on disposal of fixed assets of $0.6 million and other nonrecurring expenses totaling $0.5 million. In addition, the increase from the year-ago quarter was due to higher FDIC insurance assessment of $0.7 million, higher computer software expense of $0.7 million, higher directors' deferred compensation expense of $0.6 million, and a higher provision for off-balance sheet

Central Pacific Financial Corp. Reports Fourth Quarter 2020 Quarterly and Annual Results
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exposures of $0.6 million. The increase in other operating expense from the previous quarter also included higher directors' deferred compensation expense of $0.9 million and higher computer software expense of $0.5 million.
The efficiency ratio for the fourth quarter of 2020 was 68.81%, compared to 62.81% in the year-ago quarter and 60.93% in the previous quarter. The increase in the efficiency ratio was primarily due to the aforementioned nonrecurring items in other operating expense.
In the fourth quarter of 2020, the Company recorded income tax expense of $3.8 million, compared to $5.2 million in the year-ago quarter and $2.2 million in the previous quarter. The effective tax rate for the fourth quarter of 2020 was 23.7%, compared to 26.7% in the year-ago quarter and 24.3% in the previous quarter.
Balance Sheet Highlights
Total assets at December 31, 2020 of $6.59 billion increased by $581.9 million, or 9.7% from December 31, 2019, and decreased by $53.6 million, or 0.8% from September 30, 2020.
Total loans at December 31, 2020 of $4.96 billion increased by $514.6 million, or 11.6% from December 31, 2019, and decreased by $66.5 million, or 1.3% from September 30, 2020. The year-over-year increase in total loans was driven by the origination of PPP loans, totaling $416.4 million, net of deferred fees and costs and loans forgiven and repaid, combined with increases in residential mortgage loans of $90.4 million, home equity loans of $60.5 million, commercial mortgage loans of $32.9 million, and construction loans of $29.6 million, partially offset by decreases in the consumer and other commercial loan portfolios of $90.0 million and $25.2 million, respectively. The sequential quarter decrease in total loans was primarily due to decreases in the PPP and consumer loan portfolios of $112.2 million and $20.9 million, respectively, partially offset by increases in home equity loans of $17.2 million, other commercial loans of $17.0 million, commercial mortgage loans of $15.1 million, residential mortgage loans of $10.2 million, and construction loans of $7.2 million.
Total deposits at December 31, 2020 of $5.80 billion increased by $676.1 million, or 13.2% from December 31, 2019, and increased by $117.2 million, or 2.1% from September 30, 2020. The sequential quarter increase in total deposits was primarily attributable to the increases in noninterest-bearing demand deposits of $27.8 million, interest-bearing demand deposits of $60.8 million, and savings and money market deposits of $50.9 million. These increases were offset by a decrease in total time deposits of $22.3 million. Core deposits, which include demand deposits, savings and money market deposits, and time deposits less than $100,000, totaled $5.05 billion at December 31, 2020. This represents an increase of $786.9 million, or 18.5% from December 31, 2019, and an increase of $131.5 million, or 2.7% from September 30, 2020. The Company's loan-to-deposit ratio was 85.7% at December 31, 2020, compared to 86.9% at December 31, 2019 and 88.6% at September 30, 2020.
During the fourth quarter of 2020, $25 million in long-term FHLB advances matured and the Company elected to prepay the remaining $25 million in long-term FHLB advances, requiring a one-time prepayment penalty of $0.7 million recorded in other operating expense. The FHLB advances that were prepaid had an interest rate of 3.25% and a maturity date of November 2021.
Asset Quality
Nonperforming assets at December 31, 2020 totaled $6.2 million, or 0.09% of total assets, compared to $1.7 million, or 0.03% of total assets at December 31, 2019, and $13.2 million, or 0.20% of total assets at September 30, 2020. The decline in nonperforming assets of $7.0 million during the fourth quarter of 2020 was primarily attributable to the sale of a commercial real estate loan of $4.2 million and the payoff of a commercial loan and a commercial real estate loan to the same borrower totaling $2.9 million.
Loans delinquent for 90 days or more still accruing interest totaled $0.8 million at December 31, 2020, compared to $1.0 million and $0.9 million at December 31, 2019 and September 30, 2020, respectively.
Loans on payment forbearance or deferrals granted to borrowers impacted by the COVID-19 pandemic declined significantly to $120.2 million or 2.4% of the total loan portfolio (or 2.6% excluding PPP loans), as of December 31, 2020, compared to $290.8 million or 5.8% of the total loan portfolio (or 6.5% excluding PPP loans), as of September 30, 2020.
Net charge-offs in the fourth quarter of 2020 totaled $1.8 million, compared to net charge-offs of $2.3 million in the year-ago quarter, and net charge-offs of $1.3 million in the previous quarter.

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In the fourth quarter of 2020, the Company recorded a provision for credit losses on loans of $4.5 million, compared to a provision of $2.1 million in the year-ago quarter and a provision of $14.7 million in the previous quarter. The higher provision for credit losses from the year-ago quarter was driven by the economic forecast which captures the effect of the COVID-19 pandemic. The allowance for credit losses, as a percentage of total loans at December 31, 2020 was 1.68%, compared to 1.08% at December 31, 2019 and 1.60% at September 30, 2020. Excluding the PPP loans, the allowance for credit losses, as a percentage of total loans at December 31, 2020 was 1.83%, compared to 1.79% at September 30, 2020.
Capital
Total shareholders' equity was $546.7 million at December 31, 2020, compared to $528.5 million and $543.9 million at December 31, 2019 and September 30, 2020, respectively.
The Company maintained its strong capital position and its capital ratios continue to exceed the levels required to be considered a "well-capitalized" institution for regulatory purposes under Basel III. At December 31, 2020, the Company's leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ratios were 8.8%, 12.9%, 15.2%, and 11.8%, respectively, compared to 8.8%, 12.8%, 13.9%, and 11.6%, respectively, at September 30, 2020.
On October 20, 2020, the Company completed a $55 million private placement of ten-year fixed-to-floating rate subordinated notes. At the end of the fourth quarter of 2020, the Company exchanged the privately placed notes for registered notes with identical terms. The proceeds from the private placement were structured to qualify initially as tier 2 capital for the Company for regulatory capital purposes and the Company downstreamed $46.8 million to the Bank.
Non-GAAP Financial Measures
This press release contains certain references to financial measures that have been adjusted to exclude certain expenses and other specified items. These financial measures differ from comparable measures calculated and presented in accordance with accounting principles generally accepted in the United States of America ("GAAP") in that they exclude unusual or non-recurring charges, losses, credits or gains. This press release identifies the specific items excluded from the comparable GAAP financial measure in the calculation of each non-GAAP financial measure. Management believes that financial presentations excluding the impact of these items provide useful supplemental information that is important to a proper understanding of the Company's core business results by investors. These presentations should not be viewed as a substitute for results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP financial measures presented by other companies.
Conference Call
The Company's management will host a conference call today at 1:00 p.m. Eastern Time (8:00 a.m. Hawaii Time) to discuss the quarterly results. Individuals are encouraged to listen to the live webcast of the presentation by visiting the investor relations page of the Company's website at http://ir.cpb.bank. Alternatively, investors may participate in the live call by dialing 1-877-505-7644. A playback of the call will be available through February 27, 2021 by dialing 1-877-344-7529 (passcode: 10151516) and on the Company's website. Information which may be discussed in the conference call is provided in an earnings supplement presentation on the Company's website at http://ir.cpb.bank.
About Central Pacific Financial Corp.
Central Pacific Financial Corp. is a Hawaii-based bank holding company with approximately $6.6 billion in assets. Central Pacific Bank, its primary subsidiary, operates 31 branches (two of which remain temporarily closed to protect the health and well-being of the Company's employees and customers from COVID-19) and 69 ATMs in the state of Hawaii, as of December 31, 2020. For additional information, please visit the Company's website at http://www.cpb.bank.

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Forward-Looking Statements
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, credit losses, 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. Words such as "believes," "plans," "anticipates," "expects," "intends," "forecasts," "hopes," "targeting," "continue," "remain," "will," "should," "estimates," "may" and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.
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: the adverse effects of the COVID-19 pandemic virus on local, national and international economies, including, but not limited to, the adverse impact on tourism and construction in the State of Hawaii, our borrowers, customers, third-party contractors, vendors and employees as well as the effects of government programs and initiatives in response to COVID-19; the impact of our participation in the Paycheck Protection Program ("PPP") and fulfillment of government guarantees on our PPP loans; the increase in inventory or adverse conditions in the real estate market and deterioration in the construction industry; adverse changes in the financial performance and/or condition of our borrowers and, as a result, increased loan delinquency rates, deterioration in asset quality, and losses in our loan portfolio; our ability to successfully implement our RISE2020 initiative; the impact of local, national, and international economies and events (including natural disasters such as wildfires, volcanic eruptions, hurricanes, tsunamis, storms, earthquakes and pandemic virus and disease, including COVID-19) 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 (the "Dodd-Frank Act"), changes in capital standards, other regulatory reform and federal and state legislation, including but not limited to regulations promulgated by the Consumer Financial Protection Bureau (the "CFPB"), government-sponsored enterprise reform, and any related rules and regulations which affect our business operations and competitiveness; the costs and effects of legal and regulatory developments, including legal proceedings or regulatory or other governmental inquiries and proceedings and the resolution thereof, 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 (the "FRB" or the "Federal Reserve"); inflation, interest rate, securities market and monetary fluctuations, including the anticipated replacement of the London Interbank Offered Rate ("LIBOR") 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; pandemic virus and disease, including COVID-19; changes in consumer spending, borrowings and savings habits; failure to maintain effective internal control over financial reporting or disclosure controls and procedures; cybersecurity and data privacy breaches and the consequence therefrom; the ability to address deficiencies 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 ("FASB") 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 urge investors to consider all of these factors carefully in evaluating the forward-looking statements contained in this Form 8-K. Forward-looking statements speak only as of the date on which such statements are made. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statements are made, or to reflect the occurrence of unanticipated events except as required by law.

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

|  | Three Months Ended |  | Year Ended
(Dollars in thousands, |  | Dec 31, |  | Sep 30, |  | Jun 30, |  | Mar 31, |  | Dec 31, |  | Dec 31,
except for per share amounts) |  | 2020 |  | 2020 |  | 2020 |  | 2020 |  | 2019 |  | 2020 |  | 2019
CONDENSED INCOME STATEMENT |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net interest income |  | $ | 51,474 |  |  | $ | 49,120 |  |  | $ | 49,259 |  |  | $ | 47,830 |  |  | $ | 47,934 |  |  | $ | 197,683 |  |  | $ | 184,074 |
Provision for credit losses [1] |  | 4,496 |  |  | 14,652 |  |  | 10,640 |  |  | 9,329 |  |  | 2,098 |  |  | 39,117 |  |  | 6,317 |
Net interest income after provision for credit losses [1] |  | 46,978 |  |  | 34,468 |  |  | 38,619 |  |  | 38,501 |  |  | 45,836 |  |  | 158,566 |  |  | 177,757 |
Total other operating income |  | 14,057 |  |  | 11,563 |  |  | 10,692 |  |  | 8,886 |  |  | 9,768 |  |  | 45,198 |  |  | 41,801 |
Total other operating expense |  | 45,092 |  |  | 36,972 |  |  | 36,427 |  |  | 36,240 |  |  | 36,242 |  |  | 154,731 |  |  | 141,631 |
Income before taxes |  | 15,943 |  |  | 9,059 |  |  | 12,884 |  |  | 11,147 |  |  | 19,362 |  |  | 49,033 |  |  | 77,927 |
Income tax expense |  | 3,772 |  |  | 2,200 |  |  | 2,967 |  |  | 2,821 |  |  | 5,165 |  |  | 11,760 |  |  | 19,605 |
Net income |  | 12,171 |  |  | 6,859 |  |  | 9,917 |  |  | 8,326 |  |  | 14,197 |  |  | 37,273 |  |  | 58,322 |
Basic earnings per common share |  | $ | 0.43 |  |  | $ | 0.24 |  |  | $ | 0.35 |  |  | $ | 0.30 |  |  | $ | 0.50 |  |  | $ | 1.33 |  |  | $ | 2.05 |
Diluted earnings per common share |  | 0.43 |  |  | 0.24 |  |  | 0.35 |  |  | 0.29 |  |  | 0.50 |  |  | 1.32 |  |  | 2.03 |
Dividends declared per common share |  | 0.23 |  |  | 0.23 |  |  | 0.23 |  |  | 0.23 |  |  | 0.23 |  |  | 0.92 |  |  | 0.90 |
PERFORMANCE RATIOS |  |  |  |  |  |  |  |  |  |  |  |  |  |
Return on average assets (ROA) [2] |  | 0.74 | % |  | 0.42 | % |  | 0.61 | % |  | 0.55 | % |  | 0.95 | % |  | 0.58 | % |  | 0.99 | %
Return on average shareholders’ equity (ROE) [2] |  | 8.87 |  |  | 4.99 |  |  | 7.34 |  |  | 6.21 |  |  | 10.70 |  |  | 6.85 |  |  | 11.36 |
Average shareholders’ equity to average assets |  | 8.29 |  |  | 8.36 |  |  | 8.36 |  |  | 8.93 |  |  | 8.87 |  |  | 8.47 |  |  | 8.72 |
Efficiency ratio [1] [3] |  | 68.81 |  |  | 60.93 |  |  | 60.76 |  |  | 63.90 |  |  | 62.81 |  |  | 63.71 |  |  | 62.70 |
Net interest margin (NIM) [2] |  | 3.32 |  |  | 3.19 |  |  | 3.26 |  |  | 3.43 |  |  | 3.43 |  |  | 3.30 |  |  | 3.35 |
Dividend payout ratio [4] |  | 53.49 |  |  | 95.83 |  |  | 65.71 |  |  | 79.31 |  |  | 46.00 |  |  | 69.70 |  |  | 44.33 |
SELECTED AVERAGE BALANCES |  |  |  |  |  |  |  |  |  |  |  |  |  |
Average loans, including loans held for sale |  | $ | 5,034,717 |  |  | $ | 5,016,955 |  |  | $ | 4,902,905 |  |  | $ | 4,462,347 |  |  | $ | 4,412,247 |  |  | $ | 4,855,169 |  |  | $ | 4,241,308 |
Average interest-earning assets |  | 6,202,228 |  |  | 6,160,381 |  |  | 6,073,361 |  |  | 5,621,043 |  |  | 5,595,142 |  |  | 6,015,166 |  |  | 5,518,641 |
Average assets |  | 6,621,127 |  |  | 6,574,492 |  |  | 6,468,129 |  |  | 6,007,237 |  |  | 5,978,797 |  |  | 6,418,661 |  |  | 5,888,615 |
Average deposits |  | 5,755,257 |  |  | 5,728,147 |  |  | 5,614,595 |  |  | 5,121,696 |  |  | 4,998,897 |  |  | 5,555,877 |  |  | 4,985,701 |
Average interest-bearing liabilities |  | 4,163,396 |  |  | 4,118,726 |  |  | 4,082,699 |  |  | 3,917,332 |  |  | 3,947,924 |  |  | 4,070,923 |  |  | 3,897,254 |
Average shareholders’ equity |  | 548,663 |  |  | 549,378 |  |  | 540,802 |  |  | 536,721 |  |  | 530,464 |  |  | 543,919 |  |  | 513,610 |

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

|  | Dec 31, |  | Sep 30, |  | Jun 30, |  | Mar 31, |  | Dec 31,
(dollars in thousands) |  | 2020 |  | 2020 |  | 2020 |  | 2020 |  | 2019
REGULATORY CAPITAL |  |  |  |  |  |  |  |  |  |
Central Pacific Financial Corp. |  |  |  |  |  |  |  |  |  |
Leverage capital |  | $ | 581,358 |  |  | $ | 573,636 |  |  | $ | 571,976 |  |  | $ | 567,947 |  |  | $ | 568,529 |
Tier 1 risk-based capital |  | 581,358 |  |  | 573,636 |  |  | 571,976 |  |  | 567,947 |  |  | 568,529 |
Total risk-based capital |  | 686,130 |  |  | 623,157 |  |  | 622,393 |  |  | 618,504 |  |  | 617,772 |
Common equity tier 1 capital |  | 531,358 |  |  | 523,636 |  |  | 521,976 |  |  | 517,947 |  |  | 518,529 |
Central Pacific Bank |  |  |  |  |  |  |  |  |  |
Leverage capital |  | 620,372 |  |  | 559,750 |  |  | 559,461 |  |  | 556,895 |  |  | 556,077 |
Tier 1 risk-based capital |  | 620,372 |  |  | 559,750 |  |  | 559,461 |  |  | 556,895 |  |  | 556,077 |
Total risk-based capital |  | 670,087 |  |  | 609,203 |  |  | 609,811 |  |  | 607,402 |  |  | 605,320 |
Common equity tier 1 capital |  | 620,372 |  |  | 559,750 |  |  | 559,461 |  |  | 556,895 |  |  | 556,077 |
REGULATORY CAPITAL RATIOS |  |  |  |  |  |  |  |  |  |
Central Pacific Financial Corp. |  |  |  |  |  |  |  |  |  |
Leverage capital ratio |  | 8.8 | % |  | 8.8 | % |  | 8.9 | % |  | 9.5 | % |  | 9.5 | %
Tier 1 risk-based capital ratio |  | 12.9 |  |  | 12.8 |  |  | 12.5 |  |  | 12.3 |  |  | 12.6 |
Total risk-based capital ratio |  | 15.2 |  |  | 13.9 |  |  | 13.6 |  |  | 13.4 |  |  | 13.6 |
Common equity tier 1 capital ratio |  | 11.8 |  |  | 11.6 |  |  | 11.4 |  |  | 11.3 |  |  | 11.5 |
Central Pacific Bank |  |  |  |  |  |  |  |  |  |
Leverage capital ratio |  | 9.4 |  |  | 8.6 |  |  | 8.7 |  |  | 9.3 |  |  | 9.3 |
Tier 1 risk-based capital ratio |  | 13.7 |  |  | 12.5 |  |  | 12.2 |  |  | 12.1 |  |  | 12.3 |
Total risk-based capital ratio |  | 14.9 |  |  | 13.6 |  |  | 13.3 |  |  | 13.2 |  |  | 13.4 |
Common equity tier 1 capital ratio |  | 13.7 |  |  | 12.5 |  |  | 12.2 |  |  | 12.1 |  |  | 12.3 |

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

|  | Dec 31, |  | Sep 30, |  | Jun 30, |  | Mar 31, |  | Dec 31,
(dollars in thousands, except for per share amounts) |  | 2020 |  | 2020 |  | 2020 |  | 2020 |  | 2019
BALANCE SHEET |  |  |  |  |  |  |  |  |  |
Total loans, net of deferred fees and costs |  | $ | 4,964,113 |  |  | $ | 5,030,626 |  |  | $ | 5,003,438 |  |  | $ | 4,511,998 |  |  | $ | 4,449,540 |
Total assets |  | 6,594,583 |  |  | 6,648,142 |  |  | 6,632,972 |  |  | 6,108,548 |  |  | 6,012,672 |
Total deposits |  | 5,796,118 |  |  | 5,678,929 |  |  | 5,794,685 |  |  | 5,136,069 |  |  | 5,120,023 |
Long-term debt |  | 105,385 |  |  | 101,547 |  |  | 167,491 |  |  | 101,547 |  |  | 101,547 |
Total shareholders’ equity |  | 546,685 |  |  | 543,903 |  |  | 544,271 |  |  | 533,781 |  |  | 528,520 |
Total shareholders’ equity to total assets |  | 8.29 | % |  | 8.18 | % |  | 8.21 | % |  | 8.74 | % |  | 8.79 | %
Tangible common equity to tangible assets [5] |  | 8.29 | % |  | 8.18 | % |  | 8.21 | % |  | 8.74 | % |  | 8.79 | %
ASSET QUALITY |  |  |  |  |  |  |  |  |  |
Allowance for credit losses ("ACL") [1] |  | $ | 83,269 |  |  | $ | 80,542 |  |  | $ | 67,339 |  |  | $ | 59,645 |  |  | $ | 47,971 |
Non-performing assets ("NPA") |  | 6,192 |  |  | 13,187 |  |  | 4,741 |  |  | 3,647 |  |  | 1,719 |
ACL to total loans [1] |  | 1.68 | % |  | 1.60 | % |  | 1.35 | % |  | 1.32 | % |  | 1.08 | %
ACL to total loans, excluding PPP loans [1] |  | 1.83 | % |  | 1.79 | % |  | 1.50 | % |  | 1.32 | % |  | 1.08 | %
ACL to non-performing assets [1] |  | 1,344.78 | % |  | 610.77 | % |  | 1,420.35 | % |  | 1,635.45 | % |  | 2,790.63 | %
NPA to total assets |  | 0.09 | % |  | 0.20 | % |  | 0.07 | % |  | 0.06 | % |  | 0.03 | %
PER SHARE OF COMMON STOCK OUTSTANDING |  |  |  |  |  |  |  |  |  |
Book value per common share |  | $ | 19.40 |  |  | $ | 19.30 |  |  | $ | 19.33 |  |  | $ | 18.99 |  |  | $ | 18.68 |
Tangible book value per common share |  | 19.40 |  |  | 19.30 |  |  | 19.33 |  |  | 18.99 |  |  | 18.68 |
Closing market price per common share |  | 19.01 |  |  | 13.57 |  |  | 16.03 |  |  | 15.90 |  |  | 29.58 |
[1] The Company adopted ASU 2016-13, "Financial Instruments-Credit Losses" ("CECL"), effective January 1, 2020 using the modified retrospective approach. Results for the reporting periods beginning after January 1, 2020 are presented under CECL, while prior period amounts continue to be reported under previous GAAP.
[2] ROA, ROE and ROTE are annualized based on a 30/360 day convention. Annualized net interest income and expense in the NIM calculation are based on the day count interest payment conventions at the interest-earning asset or interest-bearing liability level (i.e. 30/360, actual/actual).
[3] Efficiency ratio is defined as total operating expense divided by total revenue (net interest income and total other operating income).
[4] Dividend payout ratio is defined as dividends declared per share divided by diluted earnings per share.
[5] The tangible common equity ratio is a non-GAAP measure which should be read in conjunction with the Company’s GAAP financial information. Comparison of our ratio with those of other companies may not be possible because other companies may calculate the ratio differently. See Reconciliation of Non-GAAP Financial Measures in Table 2.

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES |
Consolidated Balance Sheets |
(Unaudited) | TABLE 2

|  | Dec 31, |  | Sep 30, |  | Jun 30, |  | Mar 31, |  | Dec 31,
(Dollars in thousands, except share data) |  | 2020 |  | 2020 |  | 2020 |  | 2020 |  | 2019
ASSETS |  |  |  |  |  |  |  |  |  |
Cash and due from financial institutions |  | $ | 97,546 |  |  | $ | 89,665 |  |  | $ | 102,132 |  |  | $ | 81,972 |  |  | $ | 78,418 |
Interest-bearing deposits in other financial institutions |  | 6,521 |  |  | 5,489 |  |  | 41,201 |  |  | 11,021 |  |  | 24,554 |
Investment securities: |  |  |  |  |  |  |  |  |  |
Available-for-sale debt securities, at fair value |  | 1,182,609 |  |  | 1,166,319 |  |  | 1,168,594 |  |  | 1,184,023 |  |  | 1,126,983 |
Equity securities, at fair value |  | 1,351 |  |  | 1,204 |  |  | 1,209 |  |  | 1,002 |  |  | 1,127 |
Total investment securities |  | 1,183,960 |  |  | 1,167,523 |  |  | 1,169,803 |  |  | 1,185,025 |  |  | 1,128,110 |
Loans held for sale |  | 16,687 |  |  | 23,962 |  |  | 10,443 |  |  | 3,910 |  |  | 9,083 |
Loans, net of deferred fees and costs |  | 4,964,113 |  |  | 5,030,626 |  |  | 5,003,438 |  |  | 4,511,998 |  |  | 4,449,540 |
Less allowance for credit losses [1] |  | 83,269 |  |  | 80,542 |  |  | 67,339 |  |  | 59,645 |  |  | 47,971 |
Loans, net of allowance for credit losses |  | 4,880,844 |  |  | 4,950,084 |  |  | 4,936,099 |  |  | 4,452,353 |  |  | 4,401,569 |
Premises and equipment, net |  | 65,278 |  |  | 61,095 |  |  | 55,032 |  |  | 50,447 |  |  | 46,343 |
Accrued interest receivable |  | 20,224 |  |  | 21,478 |  |  | 19,590 |  |  | 16,851 |  |  | 16,500 |
Investment in unconsolidated subsidiaries |  | 29,968 |  |  | 30,239 |  |  | 16,428 |  |  | 16,721 |  |  | 17,115 |
Other real estate owned |  | — |  |  | 128 |  |  | — |  |  | 100 |  |  | 164 |
Mortgage servicing rights |  | 11,865 |  |  | 12,429 |  |  | 12,771 |  |  | 13,345 |  |  | 14,718 |
Bank-owned life insurance |  | 163,161 |  |  | 161,743 |  |  | 161,758 |  |  | 159,637 |  |  | 159,656 |
Federal Home Loan Bank ("FHLB") stock |  | 8,237 |  |  | 17,468 |  |  | 9,229 |  |  | 18,109 |  |  | 14,983 |
Right of use lease asset |  | 45,857 |  |  | 44,896 |  |  | 50,039 |  |  | 51,198 |  |  | 52,348 |
Other assets |  | 64,435 |  |  | 61,943 |  |  | 48,447 |  |  | 47,859 |  |  | 49,111 |
Total assets |  | $ | 6,594,583 |  |  | $ | 6,648,142 |  |  | $ | 6,632,972 |  |  | $ | 6,108,548 |  |  | $ | 6,012,672 |
LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |  |  |  |  |  |  |  |
Deposits: |  |  |  |  |  |  |  |  |  |
Noninterest-bearing demand |  | $ | 1,790,269 |  |  | $ | 1,762,476 |  |  | $ | 1,851,012 |  |  | $ | 1,430,540 |  |  | $ | 1,450,532 |
Interest-bearing demand |  | 1,174,888 |  |  | 1,114,123 |  |  | 1,067,483 |  |  | 1,018,508 |  |  | 1,043,010 |
Savings and money market |  | 1,932,043 |  |  | 1,881,104 |  |  | 1,945,744 |  |  | 1,693,280 |  |  | 1,600,028 |
Time |  | 898,918 |  |  | 921,226 |  |  | 930,446 |  |  | 993,741 |  |  | 1,026,453 |
Total deposits |  | 5,796,118 |  |  | 5,678,929 |  |  | 5,794,685 |  |  | 5,136,069 |  |  | 5,120,023 |
FHLB advances and other short-term borrowings |  | 22,000 |  |  | 206,000 |  |  | — |  |  | 222,000 |  |  | 150,000 |
Long-term debt |  | 105,385 |  |  | 101,547 |  |  | 167,491 |  |  | 101,547 |  |  | 101,547 |
Lease liability |  | 47,191 |  |  | 45,355 |  |  | 50,440 |  |  | 51,541 |  |  | 52,632 |
Other liabilities |  | 77,156 |  |  | 72,369 |  |  | 76,050 |  |  | 63,561 |  |  | 59,950 |
Total liabilities |  | 6,047,850 |  |  | 6,104,200 |  |  | 6,088,666 |  |  | 5,574,718 |  |  | 5,484,152 |
Shareholders' equity: |  |  |  |  |  |  |  |  |  |
Preferred stock, no par value, authorized 1,000,000 shares; issued and outstanding: none at December 31, 2020, September 30, 2020, June 30, 2020, March 31, 2020, and December 31, 2019 |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Common stock, no par value, authorized 185,000,000 shares; issued and outstanding: 28,183,340 at December 31, 2020, 28,179,798 at September 30, 2020, 28,154,159 at June 30, 2020, 28,115,353 at March 31, 2020, and 28,289,257 at December 31, 2019 |  | 442,635 |  |  | 442,635 |  |  | 442,699 |  |  | 442,853 |  |  | 447,602 |
Additional paid-in capital |  | 94,842 |  |  | 94,336 |  |  | 93,007 |  |  | 92,284 |  |  | 91,611 |
Accumulated deficit [1] |  | (10,920) |  |  | (16,609) |  |  | (16,986) |  |  | (20,428) |  |  | (19,102) |
Accumulated other comprehensive income |  | 20,128 |  |  | 23,541 |  |  | 25,551 |  |  | 19,072 |  |  | 8,409 |
Total shareholders' equity |  | 546,685 |  |  | 543,903 |  |  | 544,271 |  |  | 533,781 |  |  | 528,520 |
Non-controlling interest |  | 48 |  |  | 39 |  |  | 35 |  |  | 49 |  |  | — |
Total equity |  | 546,733 |  |  | 543,942 |  |  | 544,306 |  |  | 533,830 |  |  | 528,520 |
Total liabilities and shareholders' equity |  | $ | 6,594,583 |  |  | $ | 6,648,142 |  |  | $ | 6,632,972 |  |  | $ | 6,108,548 |  |  | $ | 6,012,672 |
[1] The Company adopted ASU 2016-13, "Financial Instruments-Credit Losses" ("CECL"), effective January 1, 2020 using the modified retrospective approach. Results for the reporting periods beginning after January 1, 2020 are presented under CECL, while prior period amounts continue to be reported under previous GAAP.

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES |
Consolidated Statements of Income |
(Unaudited) | TABLE 3

|  | Three Months Ended |  | Year Ended
|  | Dec 31, |  | Sep 30, |  | Jun 30, |  | Mar 31, |  | Dec 31, |  | Dec 31,
(Dollars in thousands, except per share data) |  | 2020 |  | 2020 |  | 2020 |  | 2020 |  | 2019 |  | 2020 |  | 2019
Interest income: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest and fees on loans |  | $ | 48,259 |  |  | $ | 45,751 |  |  | $ | 45,915 |  |  | $ | 46,204 |  |  | $ | 47,488 |  |  | $ | 186,129 |  |  | $ | 182,657 |
Interest and dividends on investment securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Taxable investment securities |  | 5,002 |  |  | 5,233 |  |  | 6,310 |  |  | 6,757 |  |  | 6,486 |  |  | 23,302 |  |  | 29,454 |
Tax-exempt investment securities |  | 504 |  |  | 621 |  |  | 599 |  |  | 668 |  |  | 656 |  |  | 2,392 |  |  | 3,044 |
Dividend income on investment securities |  | 18 |  |  | 17 |  |  | 17 |  |  | 17 |  |  | 17 |  |  | 69 |  |  | 63 |
Interest on deposits in other financial institutions |  | 4 |  |  | 3 |  |  | 3 |  |  | 36 |  |  | 54 |  |  | 46 |  |  | 201 |
Dividend income on FHLB stock |  | 114 |  |  | 128 |  |  | 106 |  |  | 132 |  |  | 456 |  |  | 480 |  |  | 964 |
Total interest income |  | 53,901 |  |  | 51,753 |  |  | 52,950 |  |  | 53,814 |  |  | 55,157 |  |  | 212,418 |  |  | 216,383 |
Interest expense: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest on deposits: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Demand |  | 105 |  |  | 115 |  |  | 114 |  |  | 176 |  |  | 202 |  |  | 510 |  |  | 800 |
Savings and money market |  | 314 |  |  | 417 |  |  | 567 |  |  | 1,118 |  |  | 1,253 |  |  | 2,416 |  |  | 5,100 |
Time |  | 813 |  |  | 1,284 |  |  | 2,124 |  |  | 3,268 |  |  | 3,653 |  |  | 7,489 |  |  | 18,044 |
Interest on short-term borrowings |  | 65 |  |  | 71 |  |  | 74 |  |  | 508 |  |  | 1,139 |  |  | 718 |  |  | 4,285 |
Interest on long-term debt |  | 1,130 |  |  | 746 |  |  | 812 |  |  | 914 |  |  | 976 |  |  | 3,602 |  |  | 4,080 |
Total interest expense |  | 2,427 |  |  | 2,633 |  |  | 3,691 |  |  | 5,984 |  |  | 7,223 |  |  | 14,735 |  |  | 32,309 |
Net interest income |  | 51,474 |  |  | 49,120 |  |  | 49,259 |  |  | 47,830 |  |  | 47,934 |  |  | 197,683 |  |  | 184,074 |
Provision for credit losses |  | 4,496 |  |  | 14,652 |  |  | 10,640 |  |  | 9,329 |  |  | 2,098 |  |  | 39,117 |  |  | 6,317 |
Net interest income after provision for credit losses |  | 46,978 |  |  | 34,468 |  |  | 38,619 |  |  | 38,501 |  |  | 45,836 |  |  | 158,566 |  |  | 177,757 |
Other operating income: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgage banking income |  | 5,434 |  |  | 4,345 |  |  | 3,566 |  |  | 337 |  |  | 1,410 |  |  | 13,682 |  |  | 6,685 |
Service charges on deposit accounts |  | 1,560 |  |  | 1,475 |  |  | 1,149 |  |  | 2,050 |  |  | 2,159 |  |  | 6,234 |  |  | 8,406 |
Other service charges and fees |  | 3,709 |  |  | 3,345 |  |  | 2,916 |  |  | 4,897 |  |  | 4,095 |  |  | 14,867 |  |  | 15,113 |
Income from fiduciary activities |  | 1,113 |  |  | 1,149 |  |  | 1,270 |  |  | 1,297 |  |  | 1,175 |  |  | 4,829 |  |  | 4,395 |
Equity in earnings of unconsolidated subsidiaries |  | 181 |  |  | 104 |  |  | 104 |  |  | 26 |  |  | 92 |  |  | 415 |  |  | 257 |
Net gain (loss) on sales of investment securities |  | 151 |  |  | (352) |  |  | — |  |  | — |  |  | — |  |  | (201) |  |  | 36 |
Income from bank-owned life insurance |  | 1,219 |  |  | 1,179 |  |  | 1,424 |  |  | (19) |  |  | 594 |  |  | 3,803 |  |  | 3,105 |
Net gain (loss) on sales of foreclosed assets |  | (9) |  |  | — |  |  | (6) |  |  | — |  |  | (162) |  |  | (15) |  |  | (145) |
Other (refer to Table 4) |  | 699 |  |  | 318 |  |  | 269 |  |  | 298 |  |  | 405 |  |  | 1,584 |  |  | 3,949 |
Total other operating income |  | 14,057 |  |  | 11,563 |  |  | 10,692 |  |  | 8,886 |  |  | 9,768 |  |  | 45,198 |  |  | 41,801 |
Other operating expense: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Salaries and employee benefits |  | 23,403 |  |  | 20,729 |  |  | 20,622 |  |  | 20,347 |  |  | 21,207 |  |  | 85,101 |  |  | 82,290 |
Net occupancy |  | 4,011 |  |  | 3,834 |  |  | 3,645 |  |  | 3,672 |  |  | 3,619 |  |  | 15,162 |  |  | 14,299 |
Equipment |  | 1,157 |  |  | 1,234 |  |  | 1,043 |  |  | 1,097 |  |  | 1,142 |  |  | 4,531 |  |  | 4,353 |
Communication expense |  | 758 |  |  | 856 |  |  | 774 |  |  | 837 |  |  | 906 |  |  | 3,225 |  |  | 3,551 |
Legal and professional services |  | 2,507 |  |  | 2,262 |  |  | 2,238 |  |  | 2,028 |  |  | 2,123 |  |  | 9,035 |  |  | 7,354 |
Computer software expense |  | 3,625 |  |  | 3,114 |  |  | 3,035 |  |  | 2,943 |  |  | 2,942 |  |  | 12,717 |  |  | 10,812 |
Advertising expense |  | 756 |  |  | 1,020 |  |  | 923 |  |  | 1,092 |  |  | 527 |  |  | 3,791 |  |  | 2,661 |
Foreclosed asset expense |  | (2) |  |  | 6 |  |  | — |  |  | 67 |  |  | 28 |  |  | 71 |  |  | 251 |
Other (refer to Table 4) |  | 8,877 |  |  | 3,917 |  |  | 4,147 |  |  | 4,157 |  |  | 3,748 |  |  | 21,098 |  |  | 16,060 |
Total other operating expense |  | 45,092 |  |  | 36,972 |  |  | 36,427 |  |  | 36,240 |  |  | 36,242 |  |  | 154,731 |  |  | 141,631 |
Income before income taxes |  | 15,943 |  |  | 9,059 |  |  | 12,884 |  |  | 11,147 |  |  | 19,362 |  |  | 49,033 |  |  | 77,927 |
Income tax expense |  | 3,772 |  |  | 2,200 |  |  | 2,967 |  |  | 2,821 |  |  | 5,165 |  |  | 11,760 |  |  | 19,605 |
Net income |  | $ | 12,171 |  |  | $ | 6,859 |  |  | $ | 9,917 |  |  | $ | 8,326 |  |  | $ | 14,197 |  |  | $ | 37,273 |  |  | $ | 58,322 |
Per common share data: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic earnings per share |  | $ | 0.43 |  |  | $ | 0.24 |  |  | $ | 0.35 |  |  | $ | 0.30 |  |  | $ | 0.50 |  |  | $ | 1.33 |  |  | $ | 2.05 |
Diluted earnings per share |  | 0.43 |  |  | 0.24 |  |  | 0.35 |  |  | 0.29 |  |  | 0.50 |  |  | 1.32 |  |  | 2.03 |
Cash dividends declared |  | 0.23 |  |  | 0.23 |  |  | 0.23 |  |  | 0.23 |  |  | 0.23 |  |  | 0.92 |  |  | 0.90 |
Basic weighted average shares outstanding |  | 28,071,151 |  |  | 28,060,020 |  |  | 28,040,802 |  |  | 28,126,400 |  |  | 28,259,294 |  |  | 28,074,543 |  |  | 28,495,699 |
Diluted weighted average shares outstanding |  | 28,177,366 |  |  | 28,111,664 |  |  | 28,095,230 |  |  | 28,277,753 |  |  | 28,448,243 |  |  | 28,180,576 |  |  | 28,677,100 |
Note: Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period.

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES |
Other Operating Income and Other Operating Expense - Detail |
(Unaudited) | TABLE 4

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

|  | Three Months Ended |  | Year Ended
|  | Dec 31, |  | Sep 30, |  | Jun 30, |  | Mar 31, |  | Dec 31, |  | Dec 31,
(Dollars in thousands) |  | 2020 |  | 2020 |  | 2020 |  | 2020 |  | 2019 |  | 2020 |  | 2019
Other operating income - other: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income recovered on nonaccrual loans previously charged-off |  | $ | 73 |  |  | $ | 47 |  |  | $ | 37 |  |  | $ | 23 |  |  | $ | 80 |  |  | $ | 180 |  |  | $ | 320 |
Other recoveries |  | 38 |  |  | 22 |  |  | 26 |  |  | 40 |  |  | 36 |  |  | 126 |  |  | 130 |
Commissions on sale of checks |  | 69 |  |  | 73 |  |  | 56 |  |  | 81 |  |  | 75 |  |  | 279 |  |  | 309 |
Gain on sale of MasterCard stock |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,555 |
Other |  | 519 |  |  | 176 |  |  | 150 |  |  | 154 |  |  | 214 |  |  | 999 |  |  | 635 |
Total other operating income - other |  | $ | 699 |  |  | $ | 318 |  |  | $ | 269 |  |  | $ | 298 |  |  | $ | 405 |  |  | $ | 1,584 |  |  | $ | 3,949 |

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

|  | Three Months Ended |  | Year Ended
|  | Dec 31, |  | Sep 30, |  | Jun 30, |  | Mar 31, |  | Dec 31, |  | Dec 31,
(Dollars in thousands) |  | 2020 |  | 2020 |  | 2020 |  | 2020 |  | 2019 |  | 2020 |  | 2019
Other operating expense - other: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Charitable contributions |  | $ | 63 |  |  | $ | 12 |  |  | $ | 10 |  |  | $ | 187 |  |  | $ | 122 |  |  | $ | 272 |  |  | $ | 681 |
FDIC insurance assessment |  | 733 |  |  | 649 |  |  | 475 |  |  | — |  |  | — |  |  | 1,857 |  |  | 868 |
Miscellaneous loan expenses |  | 512 |  |  | 497 |  |  | 399 |  |  | 300 |  |  | 361 |  |  | 1,708 |  |  | 1,246 |
ATM and debit card expenses |  | 498 |  |  | 573 |  |  | 584 |  |  | 634 |  |  | 672 |  |  | 2,289 |  |  | 2,602 |
Armored car expenses |  | 251 |  |  | 192 |  |  | 229 |  |  | 294 |  |  | 186 |  |  | 966 |  |  | 815 |
Entertainment and promotions |  | 220 |  |  | 132 |  |  | 165 |  |  | 280 |  |  | 495 |  |  | 797 |  |  | 2,071 |
Stationery and supplies |  | 196 |  |  | 226 |  |  | 220 |  |  | 248 |  |  | 305 |  |  | 890 |  |  | 1,049 |
Directors’ fees and expenses |  | 213 |  |  | 213 |  |  | 196 |  |  | 241 |  |  | 246 |  |  | 863 |  |  | 968 |
Directors' deferred compensation plan expense |  | 706 |  |  | (237) |  |  | 103 |  |  | (1,483) |  |  | 148 |  |  | (911) |  |  | 561 |
Provision (credit) for residential mortgage loan repurchase losses |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (403) |
Provision for off-balance sheet credit exposures |  | 402 |  |  | 221 |  |  | 573 |  |  | 1,798 |  |  | (160) |  |  | 2,994 |  |  | 29 |
Branch consolidation costs |  | 1,310 |  |  | 321 |  |  | — |  |  | — |  |  | — |  |  | 1,631 |  |  | — |
Litigation settlement |  | 750 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 750 |  |  | — |
FHLB advance prepayment fee |  | 747 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 747 |  |  | — |
Loss on disposal of fixed assets |  | 552 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 552 |  |  | (3) |
Other |  | 1,724 |  |  | 1,118 |  |  | 1,193 |  |  | 1,658 |  |  | 1,373 |  |  | 5,693 |  |  | 5,576 |
Total other operating expense - other |  | $ | 8,877 |  |  | $ | 3,917 |  |  | $ | 4,147 |  |  | $ | 4,157 |  |  | $ | 3,748 |  |  | $ | 21,098 |  |  | $ | 16,060 |
Note: Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period.

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES |
Average Balances, Interest Income & Expense, Yields and Rates (Taxable Equivalent) |
(Unaudited) | TABLE 5

|  | Three Months Ended |  | Three Months Ended |  | Three Months Ended
|  | December 31, 2020 |  | September 30, 2020 |  | December 31, 2019
|  | Average |  | Average |  |  |  | Average |  | Average |  |  |  | Average |  | Average |  |
(Dollars in thousands) |  | Balance |  | Yield/Rate |  | Interest |  | Balance |  | Yield/Rate |  | Interest |  | Balance |  | Yield/Rate |  | Interest
ASSETS
Interest-earning assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing deposits in other financial institutions |  | $ | 16,786 |  |  | 0.10 | % |  | $ | 4 |  |  | $ | 12,262 |  |  | 0.09 | % |  | $ | 3 |  |  | $ | 13,704 |  |  | 1.57 | % |  | $ | 54 |
Investment securities, excluding valuation allowance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Taxable |  | 1,048,665 |  |  | 1.91 |  |  | 5,020 |  |  | 1,029,987 |  |  | 2.04 |  |  | 5,250 |  |  | 1,042,057 |  |  | 2.50 |  |  | 6,503 |
Tax-exempt |  | 90,452 |  |  | 2.83 |  |  | 638 |  |  | 88,749 |  |  | 3.54 |  |  | 786 |  |  | 108,630 |  |  | 3.06 |  |  | 830 |
Total investment securities |  | 1,139,117 |  |  | 1.99 |  |  | 5,658 |  |  | 1,118,736 |  |  | 2.16 |  |  | 6,036 |  |  | 1,150,687 |  |  | 2.55 |  |  | 7,333 |
Loans, including loans held for sale |  | 5,034,717 |  |  | 3.82 |  |  | 48,259 |  |  | 5,016,955 |  |  | 3.64 |  |  | 45,751 |  |  | 4,412,247 |  |  | 4.28 |  |  | 47,488 |
Federal Home Loan Bank stock |  | 11,608 |  |  | 3.91 |  |  | 114 |  |  | 12,428 |  |  | 4.12 |  |  | 128 |  |  | 18,504 |  |  | 9.85 |  |  | 456 |
Total interest-earning assets |  | 6,202,228 |  |  | 3.48 |  |  | 54,035 |  |  | 6,160,381 |  |  | 3.36 |  |  | 51,918 |  |  | 5,595,142 |  |  | 3.94 |  |  | 55,331 |
Noninterest-earning assets |  | 418,899 |  |  |  |  |  |  | 414,111 |  |  |  |  |  |  | 383,655 |  |  |  |  |
Total assets |  | $ | 6,621,127 |  |  |  |  |  |  | $ | 6,574,492 |  |  |  |  |  |  | $ | 5,978,797 |  |  |  |  |
LIABILITIES AND EQUITY
Interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing demand deposits |  | $ | 1,149,759 |  |  | 0.04 | % |  | $ | 105 |  |  | $ | 1,092,976 |  |  | 0.04 | % |  | $ | 115 |  |  | $ | 1,019,854 |  |  | 0.08 | % |  | $ | 202 |
Savings and money market deposits |  | 1,902,876 |  |  | 0.07 |  |  | 314 |  |  | 1,910,971 |  |  | 0.09 |  |  | 417 |  |  | 1,592,398 |  |  | 0.31 |  |  | 1,253 |
Time deposits under $100,000 |  | 153,611 |  |  | 0.47 |  |  | 181 |  |  | 160,634 |  |  | 0.57 |  |  | 232 |  |  | 167,675 |  |  | 0.71 |  |  | 299 |
Time deposits $100,000 and over |  | 755,352 |  |  | 0.33 |  |  | 632 |  |  | 769,030 |  |  | 0.54 |  |  | 1,052 |  |  | 828,434 |  |  | 1.61 |  |  | 3,354 |
Total interest-bearing deposits |  | 3,961,598 |  |  | 0.12 |  |  | 1,232 |  |  | 3,933,611 |  |  | 0.18 |  |  | 1,816 |  |  | 3,608,361 |  |  | 0.56 |  |  | 5,108 |
Federal Home Loan Bank advances and other short-term borrowings |  | 76,968 |  |  | 0.33 |  |  | 65 |  |  | 79,984 |  |  | 0.35 |  |  | 71 |  |  | 238,016 |  |  | 1.90 |  |  | 1,139 |
Long-term debt |  | 124,830 |  |  | 3.60 |  |  | 1,130 |  |  | 105,131 |  |  | 2.82 |  |  | 746 |  |  | 101,547 |  |  | 3.81 |  |  | 976 |
Total interest-bearing liabilities |  | 4,163,396 |  |  | 0.23 |  |  | 2,427 |  |  | 4,118,726 |  |  | 0.25 |  |  | 2,633 |  |  | 3,947,924 |  |  | 0.73 |  |  | 7,223 |
Noninterest-bearing deposits |  | 1,793,659 |  |  |  |  |  |  | 1,794,536 |  |  |  |  |  |  | 1,390,536 |  |  |  |  |
Other liabilities |  | 115,407 |  |  |  |  |  |  | 111,851 |  |  |  |  |  |  | 109,873 |  |  |  |  |
Total liabilities |  | 6,072,462 |  |  |  |  |  |  | 6,025,113 |  |  |  |  |  |  | 5,448,333 |  |  |  |  |
Shareholders’ equity |  | 548,663 |  |  |  |  |  |  | 549,378 |  |  |  |  |  |  | 530,464 |  |  |  |  |
Non-controlling interest |  | 2 |  |  |  |  |  |  | 1 |  |  |  |  |  |  | — |  |  |  |  |
Total equity |  | 548,665 |  |  |  |  |  |  | 549,379 |  |  |  |  |  |  | 530,464 |  |  |  |  |
Total liabilities and equity |  | $ | 6,621,127 |  |  |  |  |  |  | $ | 6,574,492 |  |  |  |  |  |  | $ | 5,978,797 |  |  |  |  |
Net interest income |  |  |  |  |  | $ | 51,608 |  |  |  |  |  |  | $ | 49,285 |  |  |  |  |  |  | $ | 48,108 |
Interest rate spread |  |  |  | 3.25 | % |  |  |  |  |  | 3.11 | % |  |  |  |  |  | 3.21 | % |  |
Net interest margin |  |  |  | 3.32 | % |  |  |  |  |  | 3.19 | % |  |  |  |  |  | 3.43 | % |  |

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

|  | Year Ended |  | Year Ended
|  | December 31, 2020 |  | December 31, 2019
|  | Average |  | Average |  |  |  | Average |  | Average |  |
(Dollars in thousands) |  | Balance |  | Yield/Rate |  | Interest |  | Balance |  | Yield/Rate |  | Interest
ASSETS
Interest-earning assets: |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing deposits in other financial institutions |  | $ | 13,980 |  |  | 0.33 | % |  | $ | 46 |  |  | $ | 9,842 |  |  | 2.04 | % |  | $ | 201 |
Investment securities, excluding valuation allowance: |  |  |  |  |  |  |  |  |  |  |  |
Taxable |  | 1,037,209 |  |  | 2.25 |  |  | 23,371 |  |  | 1,120,711 |  |  | 2.63 |  |  | 29,517 |
Tax-exempt |  | 96,217 |  |  | 3.15 |  |  | 3,028 |  |  | 130,411 |  |  | 2.95 |  |  | 3,853 |
Total investment securities |  | 1,133,426 |  |  | 2.33 |  |  | 26,399 |  |  | 1,251,122 |  |  | 2.67 |  |  | 33,370 |
Loans, including loans held for sale |  | 4,855,169 |  |  | 3.83 |  |  | 186,129 |  |  | 4,241,308 |  |  | 4.31 |  |  | 182,657 |
Federal Home Loan Bank stock |  | 12,591 |  |  | 3.81 |  |  | 480 |  |  | 16,369 |  |  | 5.89 |  |  | 964 |
Total interest-earning assets |  | 6,015,166 |  |  | 3.54 |  |  | 213,054 |  |  | 5,518,641 |  |  | 3.94 |  |  | 217,192 |
Noninterest-earning assets |  | 403,495 |  |  |  |  |  |  | 369,974 |  |  |  |  |
Total assets |  | $ | 6,418,661 |  |  |  |  |  |  | $ | 5,888,615 |  |  |  |  |
LIABILITIES AND EQUITY
Interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing demand deposits |  | $ | 1,078,589 |  |  | 0.05 | % |  | $ | 510 |  |  | $ | 984,298 |  |  | 0.08 | % |  | $ | 800 |
Savings and money market deposits |  | 1,830,972 |  |  | 0.13 |  |  | 2,416 |  |  | 1,556,766 |  |  | 0.33 |  |  | 5,100 |
Time deposits under $100,000 |  | 160,082 |  |  | 0.60 |  |  | 958 |  |  | 171,064 |  |  | 0.69 |  |  | 1,183 |
Time deposits $100,000 and over |  | 794,276 |  |  | 0.82 |  |  | 6,531 |  |  | 897,670 |  |  | 1.88 |  |  | 16,861 |
Total interest-bearing deposits |  | 3,863,919 |  |  | 0.27 |  |  | 10,415 |  |  | 3,609,798 |  |  | 0.66 |  |  | 23,944 |
Federal Home Loan Bank advances and other short-term borrowings |  | 89,904 |  |  | 0.80 |  |  | 718 |  |  | 185,909 |  |  | 2.31 |  |  | 4,285 |
Long-term debt |  | 117,100 |  |  | 3.08 |  |  | 3,602 |  |  | 101,547 |  |  | 4.02 |  |  | 4,080 |
Total interest-bearing liabilities |  | 4,070,923 |  |  | 0.36 |  |  | 14,735 |  |  | 3,897,254 |  |  | 0.83 |  |  | 32,309 |
Noninterest-bearing deposits |  | 1,691,958 |  |  |  |  |  |  | 1,375,903 |  |  |  |  |
Other liabilities |  | 111,859 |  |  |  |  |  |  | 101,848 |  |  |  |  |
Total liabilities |  | 5,874,740 |  |  |  |  |  |  | 5,375,005 |  |  |  |  |
Shareholders’ equity |  | 543,919 |  |  |  |  |  |  | 513,610 |  |  |  |  |
Non-controlling interest |  | 2 |  |  |  |  |  |  | — |  |  |  |  |
Total equity |  | 543,921 |  |  |  |  |  |  | 513,610 |  |  |  |  |
Total liabilities and equity |  | $ | 6,418,661 |  |  |  |  |  |  | $ | 5,888,615 |  |  |  |  |
Net interest income |  |  |  |  |  | $ | 198,319 |  |  |  |  |  |  | $ | 184,883 |
Interest rate spread |  |  |  | 3.18 | % |  |  |  |  |  | 3.11 | % |  |
Net interest margin |  |  |  | 3.30 | % |  |  |  |  |  | 3.35 | % |  |

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

|  | Dec 31, |  | Sep 30, |  | Jun 30, |  | Mar 31, |  | Dec 31,
(Dollars in thousands) |  | 2020 |  | 2020 |  | 2020 |  | 2020 |  | 2019
HAWAII: |  |  |  |  |  |  |  |  |  |
Commercial, financial and agricultural: |  |  |  |  |  |  |  |  |  |
SBA Paycheck Protection Program |  | $ | 375,879 |  |  | $ | 485,286 |  |  | $ | 483,827 |  |  | $ | — |  |  | $ | — |
Other |  | 426,670 |  |  | 414,754 |  |  | 431,887 |  |  | 454,817 |  |  | 454,582 |
Real estate: |  |  |  |  |  |  |  |  |  |
Construction |  | 125,407 |  |  | 118,247 |  |  | 103,518 |  |  | 100,617 |  |  | 95,854 |
Residential mortgage |  | 1,690,212 |  |  | 1,680,060 |  |  | 1,657,558 |  |  | 1,632,536 |  |  | 1,599,801 |
Home equity |  | 551,266 |  |  | 534,056 |  |  | 510,962 |  |  | 504,686 |  |  | 490,734 |
Commercial mortgage |  | 898,055 |  |  | 914,144 |  |  | 912,422 |  |  | 917,886 |  |  | 909,798 |
Consumer |  | 332,430 |  |  | 342,203 |  |  | 350,414 |  |  | 367,960 |  |  | 373,451 |
Total loans, net of deferred fees and costs |  | 4,399,919 |  |  | 4,488,750 |  |  | 4,450,588 |  |  | 3,978,502 |  |  | 3,924,220 |
Allowance for credit losses |  | (73,152) |  |  | (71,575) |  |  | (59,765) |  |  | (51,646) |  |  | (42,592) |
Loans, net of allowance for credit losses |  | $ | 4,326,767 |  |  | $ | 4,417,175 |  |  | $ | 4,390,823 |  |  | $ | 3,926,856 |  |  | $ | 3,881,628 |
U.S. MAINLAND: [1] |  |  |  |  |  |  |  |  |  |
Commercial, financial and agricultural: |  |  |  |  |  |  |  |  |  |
SBA Paycheck Protection Program |  | $ | 40,496 |  |  | $ | 43,295 |  |  | $ | 42,581 |  |  | $ | — |  |  | $ | — |
Other |  | 118,421 |  |  | 113,316 |  |  | 115,971 |  |  | 120,507 |  |  | 115,722 |
Real estate: |  |  |  |  |  |  |  |  |  |
Commercial mortgage |  | 258,273 |  |  | 227,121 |  |  | 217,747 |  |  | 221,251 |  |  | 213,617 |
Consumer |  | 147,004 |  |  | 158,144 |  |  | 176,551 |  |  | 191,738 |  |  | 195,981 |
Total loans, net of deferred fees and costs |  | 564,194 |  |  | 541,876 |  |  | 552,850 |  |  | 533,496 |  |  | 525,320 |
Allowance for credit losses |  | (10,117) |  |  | (8,967) |  |  | (7,574) |  |  | (7,999) |  |  | (5,379) |
Loans, net of allowance for credit losses |  | $ | 554,077 |  |  | $ | 532,909 |  |  | $ | 545,276 |  |  | $ | 525,497 |  |  | $ | 519,941 |
TOTAL: |  |  |  |  |  |  |  |  |  |
Commercial, financial and agricultural: |  |  |  |  |  |  |  |  |  |
SBA Paycheck Protection Program |  | $ | 416,375 |  |  | $ | 528,581 |  |  | $ | 526,408 |  |  | $ | — |  |  | $ | — |
Other |  | 545,091 |  |  | 528,070 |  |  | 547,858 |  |  | 575,324 |  |  | 570,304 |
Real estate: |  |  |  |  |  |  |  |  |  |
Construction |  | 125,407 |  |  | 118,247 |  |  | 103,518 |  |  | 100,617 |  |  | 95,854 |
Residential mortgage |  | 1,690,212 |  |  | 1,680,060 |  |  | 1,657,558 |  |  | 1,632,536 |  |  | 1,599,801 |
Home equity |  | 551,266 |  |  | 534,056 |  |  | 510,962 |  |  | 504,686 |  |  | 490,734 |
Commercial mortgage |  | 1,156,328 |  |  | 1,141,265 |  |  | 1,130,169 |  |  | 1,139,137 |  |  | 1,123,415 |
Consumer |  | 479,434 |  |  | 500,347 |  |  | 526,965 |  |  | 559,698 |  |  | 569,432 |
Total loans, net of deferred fees and costs |  | 4,964,113 |  |  | 5,030,626 |  |  | 5,003,438 |  |  | 4,511,998 |  |  | 4,449,540 |
Allowance for credit losses |  | (83,269) |  |  | (80,542) |  |  | (67,339) |  |  | (59,645) |  |  | (47,971) |
Loans, net of allowance for credit losses |  | $ | 4,880,844 |  |  | $ | 4,950,084 |  |  | $ | 4,936,099 |  |  | $ | 4,452,353 |  |  | $ | 4,401,569 |
[1] U.S. Mainland includes territories of the United States.

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

|  | Dec 31, |  | Sep 30, |  | Jun 30, |  | Mar 31, |  | Dec 31,
(Dollars in thousands) |  | 2020 |  | 2020 |  | 2020 |  | 2020 |  | 2019
Noninterest-bearing demand |  | $ | 1,790,269 |  |  | $ | 1,762,476 |  |  | $ | 1,851,012 |  |  | $ | 1,430,540 |  |  | $ | 1,450,532 |
Interest-bearing demand |  | 1,174,888 |  |  | 1,114,123 |  |  | 1,067,483 |  |  | 1,018,508 |  |  | 1,043,010 |
Savings and money market |  | 1,932,043 |  |  | 1,881,104 |  |  | 1,945,744 |  |  | 1,693,280 |  |  | 1,600,028 |
Time deposits less than $100,000 |  | 149,063 |  |  | 157,051 |  |  | 159,739 |  |  | 162,399 |  |  | 165,755 |
Core deposits |  | 5,046,263 |  |  | 4,914,754 |  |  | 5,023,978 |  |  | 4,304,727 |  |  | 4,259,325 |
Government time deposits |  | 500,344 |  |  | 500,762 |  |  | 509,927 |  |  | 523,343 |  |  | 533,088 |
Other time deposits $100,000 to $250,000 |  | 90,149 |  |  | 95,918 |  |  | 96,633 |  |  | 100,047 |  |  | 107,550 |
Other time deposits greater than $250,000 |  | 159,362 |  |  | 167,495 |  |  | 164,147 |  |  | 207,952 |  |  | 220,060 |
Total time deposits $100,000 and over |  | 749,855 |  |  | 764,175 |  |  | 770,707 |  |  | 831,342 |  |  | 860,698 |
Total deposits |  | $ | 5,796,118 |  |  | $ | 5,678,929 |  |  | $ | 5,794,685 |  |  | $ | 5,136,069 |  |  | $ | 5,120,023 |

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

|  | Dec 31, |  | Sep 30, |  | Jun 30, |  | Mar 31, |  | Dec 31,
(Dollars in thousands) |  | 2020 |  | 2020 |  | 2020 |  | 2020 |  | 2019
Nonaccrual loans: [1] |  |  |  |  |  |  |  |  |  |
Commercial, financial and agricultural |  | $ | 1,461 |  |  | $ | 1,536 |  |  | $ | 934 |  |  | $ | 667 |  |  | $ | 467 |
Real estate: |  |  |  |  |  |  |  |  |  |
Residential mortgage |  | 4,115 |  |  | 4,032 |  |  | 3,215 |  |  | 2,287 |  |  | 979 |
Home equity |  | 524 |  |  | 533 |  |  | 538 |  |  | 545 |  |  | 92 |
Commercial mortgage |  | — |  |  | 6,889 |  |  | — |  |  | — |  |  | — |
Consumer |  | 92 |  |  | 69 |  |  | 54 |  |  | 48 |  |  | 17 |
Total nonaccrual loans |  | 6,192 |  |  | 13,059 |  |  | 4,741 |  |  | 3,547 |  |  | 1,555 |
Other real estate owned ("OREO"): |  |  |  |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |  |  |  |
Residential mortgage |  | — |  |  | 128 |  |  | — |  |  | — |  |  | — |
Home equity |  | — |  |  | — |  |  | — |  |  | 100 |  |  | 164 |
Total OREO |  | — |  |  | 128 |  |  | — |  |  | 100 |  |  | 164 |
Total nonperforming assets ("NPAs") |  | 6,192 |  |  | 13,187 |  |  | 4,741 |  |  | 3,647 |  |  | 1,719 |
Loans delinquent for 90 days or more still accruing interest: [1] |  |  |  |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |  |  |  |
Residential mortgage |  | 567 |  |  | 588 |  |  | 726 |  |  | 1,221 |  |  | 724 |
Consumer |  | 240 |  |  | 321 |  |  | 444 |  |  | 352 |  |  | 286 |
Total loans delinquent for 90 days or more still accruing interest |  | 807 |  |  | 909 |  |  | 1,170 |  |  | 1,573 |  |  | 1,010 |
Restructured loans still accruing interest: [1] |  |  |  |  |  |  |  |  |  |
Commercial, financial and agricultural |  | 100 |  |  | 137 |  |  | 172 |  |  | 113 |  |  | 135 |
Real estate: |  |  |  |  |  |  |  |  |  |
Residential mortgage |  | 5,718 |  |  | 5,178 |  |  | 5,290 |  |  | 5,431 |  |  | 5,502 |
Commercial mortgage |  | 1,761 |  |  | 1,825 |  |  | 1,888 |  |  | 1,709 |  |  | 1,839 |
Consumer |  | 207 |  |  | 214 |  |  | 145 |  |  | — |  |  | — |
Total restructured loans still accruing interest |  | 7,786 |  |  | 7,354 |  |  | 7,495 |  |  | 7,253 |  |  | 7,476 |
Total NPAs and loans delinquent for 90 days or more and restructured loans still accruing interest |  | $ | 14,785 |  |  | $ | 21,450 |  |  | $ | 13,406 |  |  | $ | 12,473 |  |  | $ | 10,205 |
Total nonaccrual loans as a percentage of total loans |  | 0.12 | % |  | 0.26 | % |  | 0.09 | % |  | 0.08 | % |  | 0.03 | %
Total NPAs as a percentage of total loans and OREO |  | 0.12 | % |  | 0.26 | % |  | 0.09 | % |  | 0.08 | % |  | 0.04 | %
Total NPAs and loans delinquent for 90 days or more still accruing interest as a percentage of total loans and OREO |  | 0.14 | % |  | 0.28 | % |  | 0.12 | % |  | 0.12 | % |  | 0.06 | %
Total NPAs, loans delinquent for 90 days or more and restructured loans still accruing interest as a percentage of total loans and OREO |  | 0.30 | % |  | 0.43 | % |  | 0.27 | % |  | 0.28 | % |  | 0.23 | %
Quarter-to-quarter changes in NPAs: |  |  |  |  |  |  |  |  |  |
Balance at beginning of quarter |  | $ | 13,187 |  |  | $ | 4,741 |  |  | $ | 3,647 |  |  | $ | 1,719 |  |  | $ | 1,360 |
Additions |  | 1,370 |  |  | 9,060 |  |  | 1,771 |  |  | 2,056 |  |  | 695 |
Reductions: |  |  |  |  |  |  |  |  |  |
Payments |  | (3,186) |  |  | (393) |  |  | (367) |  |  | (60) |  |  | (34) |
Return to accrual status |  | (548) |  |  | — |  |  | (123) |  |  | — |  |  | — |
Sales of NPAs |  | (4,353) |  |  | — |  |  | (94) |  |  | — |  |  | (302) |
Charge-offs, valuation and other adjustments |  | (278) |  |  | (221) |  |  | (93) |  |  | (68) |  |  | — |
Total reductions |  | (8,365) |  |  | (614) |  |  | (677) |  |  | (128) |  |  | (336) |
Balance at end of quarter |  | $ | 6,192 |  |  | $ | 13,187 |  |  | $ | 4,741 |  |  | $ | 3,647 |  |  | $ | 1,719 |
[1] Section 4013 of the CARES Act and the revised Interagency Statement are being applied to loan modifications related to the COVID-19 pandemic as eligible and applicable. These loan modifications are not included in the delinquent or restructured loan balances presented above.

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES |
Allowance for Credit Losses on Loans |
(Unaudited) | TABLE 10

|  | Three Months Ended |  | Year Ended
|  | Dec 31, |  | Sep 30, |  | Jun 30, |  | Mar 31, |  | Dec 31, |  | Dec 31,
(Dollars in thousands) |  | 2020 |  | 2020 |  | 2020 |  | 2020 |  | 2019 |  | 2020 |  | 2019
Allowance for credit losses ("ACL"): |  |  |  |  |  |  |  |  |  |  |  |  |  |
ACL at beginning of period |  | $ | 80,542 |  |  | $ | 67,339 |  |  | $ | 59,645 |  |  | $ | 47,971 |  |  | $ | 48,167 |  |  | $ | 47,971 |  |  | $ | 47,916 |
Adoption of ASU 2016-13 |  | — |  |  | — |  |  | — |  |  | 3,566 |  |  | — |  |  | 3,566 |  |  | — |
Adjusted ACL at beginning of period |  | 80,542 |  |  | 67,339 |  |  | 59,645 |  |  | 51,537 |  |  | 48,167 |  |  | 51,537 |  |  | 47,916 |
Provision for credit losses on loans [1] |  | 4,496 |  |  | 14,465 |  |  | 10,640 |  |  | 9,329 |  |  | 2,098 |  |  | 38,930 |  |  | 6,317 |
Charge-offs: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial and agricultural |  | 676 |  |  | 810 |  |  | 1,103 |  |  | 437 |  |  | 379 |  |  | 3,026 |  |  | 2,478 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential mortgage |  | — |  |  | 11 |  |  | 52 |  |  | — |  |  | — |  |  | 63 |  |  | — |
Home equity |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 5 |
Commercial mortgage |  | — |  |  | 75 |  |  | — |  |  | — |  |  | — |  |  | 75 |  |  | — |
Consumer |  | 1,856 |  |  | 1,492 |  |  | 2,626 |  |  | 2,217 |  |  | 2,723 |  |  | 8,191 |  |  | 8,265 |
Leases |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total charge-offs |  | 2,532 |  |  | 2,388 |  |  | 3,781 |  |  | 2,654 |  |  | 3,102 |  |  | 11,355 |  |  | 10,748 |
Recoveries: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial and agricultural |  | 189 |  |  | 321 |  |  | 305 |  |  | 342 |  |  | 264 |  |  | 1,157 |  |  | 1,174 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction |  | — |  |  | — |  |  | — |  |  | 131 |  |  | 6 |  |  | 131 |  |  | 610 |
Residential mortgage |  | 15 |  |  | 13 |  |  | 20 |  |  | 181 |  |  | 26 |  |  | 229 |  |  | 524 |
Home equity |  | 2 |  |  | — |  |  | — |  |  | 31 |  |  | — |  |  | 33 |  |  | 42 |
Commercial mortgage |  | 1 |  |  | 12 |  |  | 1 |  |  | 2 |  |  | — |  |  | 16 |  |  | 25 |
Consumer |  | 556 |  |  | 780 |  |  | 509 |  |  | 746 |  |  | 512 |  |  | 2,591 |  |  | 2,111 |
Total recoveries |  | 763 |  |  | 1,126 |  |  | 835 |  |  | 1,433 |  |  | 808 |  |  | 4,157 |  |  | 4,486 |
Net charge-offs |  | 1,769 |  |  | 1,262 |  |  | 2,946 |  |  | 1,221 |  |  | 2,294 |  |  | 7,198 |  |  | 6,262 |
ACL at end of period |  | $ | 83,269 |  |  | $ | 80,542 |  |  | $ | 67,339 |  |  | $ | 59,645 |  |  | $ | 47,971 |  |  | $ | 83,269 |  |  | $ | 47,971 |
Average loans, net of deferred fees and costs |  | $ | 5,034,717 |  |  | $ | 5,016,955 |  |  | $ | 4,902,905 |  |  | $ | 4,462,347 |  |  | $ | 4,412,247 |  |  | $ | 4,855,169 |  |  | $ | 4,241,308 |
Annualized ratio of net charge-offs to average loans |  | 0.14 | % |  | 0.10 | % |  | 0.24 | % |  | 0.11 | % |  | 0.21 | % |  | 0.15 | % |  | 0.15 | %
[1] The Company recorded a reserve on accrued interest receivable for loans on payment forbearance or deferral, which were granted to borrowers impacted by the COVID-19 pandemic. This reserve was recorded as a contra-asset against accrued interest receivable with the offset to provision for credit losses. The provision for credit losses presented in this table excludes the provision for credit losses on accrued interest receivable of $0.187 million.

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES |
Reconciliation of Non-GAAP Financial Measures |
(Unaudited) | TABLE 11

The Company believes that pre-tax, pre-provision ("PTPP") earnings, a non-GAAP financial measure, is useful as a tool to help evaluate the ability to provide for credit costs through operations. The following tables set forth a reconciliation of our PTPP earnings and our PTPP earnings to average assets for each of the periods indicated:

|  | Three Months Ended |  | Year Ended
|  | Dec 31, |  | Sep 30, |  | Jun 30, |  | Mar 31, |  | Dec 31, |  | Dec 31,
(Dollars in thousands) |  | 2020 |  | 2020 |  | 2020 |  | 2020 |  | 2019 |  | 2020 |  | 2019
Net income |  | $ | 12,171 |  |  | $ | 6,859 |  |  | $ | 9,917 |  |  | $ | 8,326 |  |  | $ | 14,197 |  |  | $ | 37,273 |  |  | $ | 58,322 |
Add: Income tax expense |  | 3,772 |  |  | 2,200 |  |  | 2,967 |  |  | 2,821 |  |  | 5,165 |  |  | 11,760 |  |  | 19,605 |
Income before taxes |  | 15,943 |  |  | 9,059 |  |  | 12,884 |  |  | 11,147 |  |  | 19,362 |  |  | 49,033 |  |  | 77,927 |
Add: Provision for credit losses |  | 4,496 |  |  | 14,652 |  |  | 10,640 |  |  | 9,329 |  |  | 2,098 |  |  | 39,117 |  |  | 6,317 |
PTPP earnings |  | $ | 20,439 |  |  | $ | 23,711 |  |  | $ | 23,524 |  |  | $ | 20,476 |  |  | $ | 21,460 |  |  | $ | 88,150 |  |  | $ | 84,244 |

|  | Three Months Ended |  | Year Ended
|  | Dec 31, |  | Sep 30, |  | Jun 30, |  | Mar 31, |  | Dec 31, |  | Dec 31,
(Dollars in thousands) |  | 2020 |  | 2020 |  | 2020 |  | 2020 |  | 2019 |  | 2020 |  | 2019
Net income |  | $ | 12,171 |  |  | $ | 6,859 |  |  | $ | 9,917 |  |  | $ | 8,326 |  |  | $ | 14,197 |  |  | $ | 37,273 |  |  | $ | 58,322 |
Net income (annualized) |  | 48,684 |  |  | 27,436 |  |  | 39,668 |  |  | 33,304 |  |  | 56,788 |  |  | 37,273 |  |  | 58,322 |
PTPP earnings |  | 20,439 |  |  | 23,711 |  |  | 23,524 |  |  | 20,476 |  |  | 21,460 |  |  | 88,150 |  |  | 84,244 |
PTPP earnings (annualized) |  | 81,756 |  |  | 94,844 |  |  | 94,096 |  |  | 81,904 |  |  | 85,840 |  |  | 88,150 |  |  | 84,244 |
Average assets |  | 6,621,127 |  |  | 6,574,492 |  |  | 6,468,129 |  |  | 6,007,237 |  |  | 5,978,797 |  |  | 6,418,661 |  |  | 5,888,615 |
Return on average assets |  | 0.74 | % |  | 0.42 | % |  | 0.61 | % |  | 0.55 | % |  | 0.95 | % |  | 0.58 | % |  | 0.99 | %
PTPP earnings to average assets |  | 1.23 | % |  | 1.44 | % |  | 1.45 | % |  | 1.36 | % |  | 1.44 | % |  | 1.37 | % |  | 1.43 | %

The following table sets forth a reconciliation of the ratios of our allowance for credit losses ("ACL") to total loans and ACL to total loans, excluding SBA Paycheck Protection Program ("PPP") loans, for each of the periods indicated:

|  | Dec 31, |  | Sep 30, |  | Jun 30, |  | Mar 31, |  | Dec 31,
(Dollars in thousands) |  | 2020 |  | 2020 |  | 2020 |  | 2020 |  | 2019
ACL |  | $ | 83,269 |  |  | $ | 80,542 |  |  | $ | 67,339 |  |  | $ | 59,645 |  |  | $ | 47,971 |
Total loans |  | $ | 4,964,113 |  |  | $ | 5,030,626 |  |  | $ | 5,003,438 |  |  | $ | 4,511,998 |  |  | $ | 4,449,540 |
PPP loans |  | 416,375 |  |  | 528,581 |  |  | 526,408 |  |  | — |  |  | — |
Total loans, excluding PPP loans |  | $ | 4,547,738 |  |  | $ | 4,502,045 |  |  | 4,477,030 |  |  | 4,511,998 |  |  | $ | 4,449,540 |
Ratio of ACL to total loans |  | 1.68 | % |  | 1.60 | % |  | 1.35 | % |  | 1.32 | % |  | 1.08 | %
Ratio of ACL to total loans, excluding PPP loans |  | 1.83 | % |  | 1.79 | % |  | 1.50 | % |  | 1.32 | % |  | 1.08 | %

CENTRAL PACIFIC FINANCIAL CORP. AND SUBSIDIARIES |
Reconciliation of Non-GAAP Financial Measures |
(Unaudited) | TABLE 11 (CONTINUED)

The following table sets forth a reconciliation of the ratios of our loans on payment forbearance or deferrals to total loans and loans on payment forbearance or deferrals to total loans, excluding PPP loans, for each of the periods indicated:

|  | Dec 31, |  | Sep 30, |  | Jun 30, |  |  |  |
|  | 2020 |  | 2020 |  | 2020 |  |  |  |
Loans on payment forbearance or deferrals |  | $ | 120,206 |  |  | $ | 290,841 |  |  | $ | 567,860 |  |  |  |  |
Total loans |  | 4,964,113 |  |  | 5,030,626 |  |  | 5,003,438 |  |  |  |  |
Total loans, excluding PPP loans |  | 4,547,738 |  |  | 4,502,045 |  |  | 4,477,030 |  |  |  |  |
Ratio of loans on payment forbearance or deferrals to total loans |  | 2.42 | % |  | 5.78 | % |  | 11.35 | % |  |  |  |
Ratio of loans on payment forbearance or deferrals to total loans, excluding PPP loans |  | 2.64 | % |  | 6.46 | % |  | 12.68 | % |  |  |  |