PR Newswire | Jan 27, 2021 06:31AM EST

Annual Results

01/27 05:30 CST

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, Jan. 27, 2021

HONOLULU, Jan. 27, 2021 /PRNewswire/ -- 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 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 HighlightsNet 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 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 HighlightsTotal 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 QualityNonperforming 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.

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.

CapitalTotal 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 MeasuresThis 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 CallThe 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.

Forward-Looking StatementsThis document may contain forward-looking statements concerning: projections of revenues, xpenses, 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 TABLE 1 (Unaudited)



Three Months Ended Year Ended

(Dollars in Dec 31, thousands, Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, except for per 2020 2020 2020 2020 2019 2020 2019 share amounts)

CONDENSED INCOME STATEMENT

Net interest $51,474 $49,120 $49,259 $47,830 $47,934 $197,683 $184,074 income

Provision for credit losses 4,496 14,652 10,640 9,329 2,098 39,117 6,317 [1]

Net interest income after provision for 46,978 34,468 38,619 38,501 45,836 158,566 177,757 credit losses [1]

Total other 14,057 11,563 10,692 8,886 9,768 45,198 41,801 operating income

Total other operating 45,092 36,972 36,427 36,240 36,242 154,731 141,631 expense

Income before 15,943 9,059 12,884 11,147 19,362 49,033 77,927 taxes

Income tax 3,772 2,200 2,967 2,821 5,165 11,760 19,605 expense

Net income 12,171 6,859 9,917 8,326 14,197 37,273 58,322

Basic earnings $0.43 $0.24 $0.35 $0.30 $0.50 $1.33 $2.05 per common share

Diluted earnings0.43 0.24 0.35 0.29 0.50 1.32 2.03 per common share

Dividends declared per 0.23 0.23 0.23 0.23 0.23 0.92 0.90 common share



PERFORMANCE RATIOS

Return on average assets 0.74 %0.42 %0.61 %0.55 %0.95 %0.58 %0.99 %(ROA) [2]

Return on average 8.87 4.99 7.34 6.21 10.70 6.85 11.36 shareholders' equity (ROE) [2]

Average shareholders' 8.29 8.36 8.36 8.93 8.87 8.47 8.72 equity to average assets

Efficiency ratio68.81 60.93 60.76 63.90 62.81 63.71 62.70 [1] [3]

Net interest 3.32 3.19 3.26 3.43 3.43 3.30 3.35 margin (NIM) [2]

Dividend payout 53.49 95.83 65.71 79.31 46.00 69.70 44.33 ratio [4]



SELECTED AVERAGE BALANCES

Average loans, including loans $5,034,717 $5,016,955 $4,902,905 $4,462,347 $4,412,247 $4,855,169 $4,241,308 held for sale

Average interest-earning6,202,228 6,160,381 6,073,361 5,621,043 5,595,142 6,015,166 5,518,641 assets

Average assets 6,621,127 6,574,492 6,468,129 6,007,237 5,978,797 6,418,661 5,888,615

Average deposits5,755,257 5,728,147 5,614,595 5,121,696 4,998,897 5,555,877 4,985,701

Average interest-bearing4,163,396 4,118,726 4,082,699 3,917,332 3,947,924 4,070,923 3,897,254 liabilities

Average shareholders' 548,663 549,378 540,802 536,721 530,464 543,919 513,610 equity

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



Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,

(dollars in 2020 2020 2020 2020 2019 thousands)

REGULATORY CAPITAL

Central Pacific Financial Corp

Leverage $581,358 $573,636 $571,976 $567,947 $ 568,529 capital

Tier 1 risk-based 581,358 573,636 571,976 567,947 568,529 capital

Total risk-based 686,130 623,157 622,393 618,504 617,772 capital

Common equity 531,358 523,636 521,976 517,947 518,529 tier 1 capital

Central Pacific Bank

Leverage 620,372 559,750 559,461 556,895 556,077 capital

Tier 1 risk-based 620,372 559,750 559,461 556,895 556,077 capital

Total risk-based 670,087 609,203 609,811 607,402 605,320 capital

Common equity 620,372 559,750 559,461 556,895 556,077 tier 1 capital



REGULATORY CAPITAL RATIOS

Central Pacific Financial Corp

Leverage 8.8 %8.8 %8.9 %9.5 %9.5 % capital ratio

Tier 1 risk-based 12.9 12.8 12.5 12.3 12.6 capital ratio

Total risk-based 15.2 13.9 13.6 13.4 13.6 capital ratio

Common equity tier 1 capital11.8 11.6 11.4 11.3 11.5 ratio

Central Pacific Bank

Leverage 9.4 8.6 8.7 9.3 9.3 capital ratio

Tier 1 risk-based 13.7 12.5 12.2 12.1 12.3 capital ratio

Total risk-based 14.9 13.6 13.3 13.2 13.4 capital ratio

Common equity tier 1 capital13.7 12.5 12.2 12.1 12.3 ratio



Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,

(dollars in thousands, 2020 2020 2020 2020 2019 except for per share amounts)

BALANCE SHEET

Total loans, net of $4,964,113 $5,030,626 $5,003,438 $4,511,998 $ 4,449,540 deferred fees and costs

Total assets 6,594,583 6,648,142 6,632,972 6,108,548 6,012,672

Total deposits5,796,118 5,678,929 5,794,685 5,136,069 5,120,023

Long-term debt105,385 101,547 167,491 101,547 101,547

Total shareholders' 546,685 543,903 544,271 533,781 528,520 equity

Total shareholders' 8.29 %8.18 %8.21 %8.74 %8.79 % equity to total assets

Tangible common equity 8.29 %8.18 %8.21 %8.74 %8.79 % to tangible assets [5]



ASSET QUALITY

Allowance for credit losses $83,269 $80,542 $67,339 $59,645 $ 47,971 ("ACL") [1]

Non-performing6,192 13,187 4,741 3,647 1,719 assets ("NPA")

ACL to total 1.68 %1.60 %1.35 %1.32 %1.08 % loans [1]

ACL to total loans, 1.83 %1.79 %1.50 %1.32 %1.08 % excluding PPP loans [1]

ACL to non-performing1,344.78 %610.77 %1,420.35 %1,635.45 %2,790.63 % assets [1]

NPA to total 0.09 %0.20 %0.07 %0.06 %0.03 % assets



PER SHARE OF COMMON STOCK OUTSTANDING

Book value per$19.40 $19.30 $19.33 $18.99 $ 18.68 common share

Tangible book value per 19.40 19.30 19.33 18.99 18.68 common share

Closing market price per 19.01 13.57 16.03 15.90 29.58 common share



[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 TABLE 2 (Unaudited)



Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,

(Dollars in thousands, except 2020 2020 2020 2020 2019 share data)

ASSETS

Cash and due from financial $97,546 $89,665 $102,132 $81,972 $78,418 institutions

Interest-bearing deposits in other 6,521 5,489 41,201 11,021 24,554 financial institutions

Investment securities:

Available-for-sale debt securities, at1,182,609 1,166,319 1,168,594 1,184,023 1,126,983 fair value

Equity securities, 1,351 1,204 1,209 1,002 1,127 at fair value

Total investment 1,183,960 1,167,523 1,169,803 1,185,025 1,128,110 securities

Loans held for sale16,687 23,962 10,443 3,910 9,083

Loans, net of deferred fees and 4,964,113 5,030,626 5,003,438 4,511,998 4,449,540 costs

Less allowance for 83,269 80,542 67,339 59,645 47,971 credit losses [1]

Loans, net of allowance for 4,880,844 4,950,084 4,936,099 4,452,353 4,401,569 credit losses

Premises and 65,278 61,095 55,032 50,447 46,343 equipment, net

Accrued interest 20,224 21,478 19,590 16,851 16,500 receivable

Investment in unconsolidated 29,968 30,239 16,428 16,721 17,115 subsidiaries

Other real estate - 128 - 100 164 owned

Mortgage servicing 11,865 12,429 12,771 13,345 14,718 rights

Bank-owned life 163,161 161,743 161,758 159,637 159,656 insurance

Federal Home Loan 8,237 17,468 9,229 18,109 14,983 Bank ("FHLB") stock

Right of use lease 45,857 44,896 50,039 51,198 52,348 asset

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$1,790,269$1,762,476$1,851,012$1,430,540$1,450,532demand

Interest-bearing 1,174,888 1,114,123 1,067,483 1,018,508 1,043,010 demand

Savings and money 1,932,043 1,881,104 1,945,744 1,693,280 1,600,028 market

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 22,000 206,000 - 222,000 150,000 borrowings

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, 442,635 442,635 442,699 442,853 447,602 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

Additional paid-in 94,842 94,336 93,007 92,284 91,611 capital

Accumulated deficit(10,920) (16,609) (16,986) (20,428) (19,102) [1]

Accumulated other comprehensive 20,128 23,541 25,551 19,072 8,409 income

Total shareholders'546,685 543,903 544,271 533,781 528,520 equity

Non-controlling 48 39 35 49 - interest

Total equity 546,733 543,942 544,306 533,830 528,520

Total liabilities and shareholders' $6,594,583$6,648,142$6,632,972$6,108,548$6,012,672equity



[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 TABLE 3 (Unaudited)



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 4 3 3 36 54 46 201 institutions

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 credit46,978 34,468 38,619 38,501 45,836 158,566 177,757 losses

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 181 104 104 26 92 415 257 subsidiaries

Net gain (loss) on sales of investment 151 (352) - - - (201) 36 securities

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 28,071,15128,060,02028,040,80228,126,40028,259,29428,074,54328,495,699

Diluted weighted average shares outstanding 28,177,36628,111,66428,095,23028,277,75328,448,24328,180,57628,677,100



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 Sep Jun Mar Dec Dec 31, 31, 30, 30, 31, 31,

(Dollars in thousands) 2020 2020 2020 2020 2019 2020 2019

Other operating income - other:

Income recovered on nonaccrual loans $73 $47 $37 $23 $80 $180 $320 previously charged-off

Other recoveries 38 22 26 40 36 126 130

Commissions on sale of 69 73 56 81 75 279 309 checks

Gain on sale of - - - - - - 2,555 MasterCard stock

Other 519 176 150 154 214 999 635

Total other operating $699$318$269$298$405$1,584$3,949income - other



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 $63 $12 $10 $187 $122 $272 $681 contributions

FDIC insurance 733 649 475 - - 1,857 868 assessment

Miscellaneous loan 512 497 399 300 361 1,708 1,246 expenses

ATM and debit card 498 573 584 634 672 2,289 2,602 expenses

Armored car expenses 251 192 229 294 186 966 815

Entertainment and 220 132 165 280 495 797 2,071 promotions

Stationery and 196 226 220 248 305 890 1,049 supplies

Directors' fees and 213 213 196 241 246 863 968 expenses

Directors' deferred compensation plan 706 (237) 103 (1,483)148 (911) 561 expense

Provision (credit) for residential mortgage - - - - - - (403) loan repurchase losses

Provision for off-balance sheet 402 221 573 1,798 (160) 2,994 29 credit exposures

Branch consolidation 1,310 321 - - - 1,631 - costs

Litigation settlement 750 - - - - 750 -

FHLB advance 747 - - - - 747 - prepayment fee

Loss on disposal of 552 - - - - 552 (3) fixed assets

Other 1,724 1,118 1,193 1,658 1,373 5,693 5,576

Total other operating $8,877$3,917$4,147$4,157$3,748$21,098$16,060expense - other



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 TABLE 5 Equivalent) (Unaudited)



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/ Interest Balance Yield/ Interest Balance Yield/ Interest Rate Rate Rate

ASSETS

Interest-earning assets:

Interest-bearing deposits in other $16,786 0.10% $4 $12,262 0.09% $3 $13,704 1.57% $54 financial institutions

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 1,139,117 1.99 5,658 1,118,736 2.16 6,036 1,150,687 2.55 7,333 securities

Loans, including loans5,034,717 3.82 48,259 5,016,955 3.64 45,751 4,412,247 4.28 47,488 held for sale

Federal Home Loan Bank11,608 3.91 114 12,428 4.12 128 18,504 9.85 456 stock

Total interest-earning6,202,228 3.48 54,035 6,160,381 3.36 51,918 5,595,142 3.94 55,331 assets

Noninterest-earning 418,899 414,111 383,655 assets

Total assets $6,621,127 $6,574,492 $5,978,797



LIABILITIES AND EQUITY

Interest-bearing liabilities:

Interest-bearing $1,149,7590.04% $105 $1,092,9760.04% $115 $1,019,8540.08% $202 demand deposits

Savings and money 1,902,876 0.07 314 1,910,971 0.09 417 1,592,398 0.31 1,253 market deposits

Time deposits under 153,611 0.47 181 160,634 0.57 232 167,675 0.71 299 $100,000

Time deposits $100,000755,352 0.33 632 769,030 0.54 1,052 828,434 1.61 3,354 and over

Total interest-bearing3,961,598 0.12 1,232 3,933,611 0.18 1,816 3,608,361 0.56 5,108 deposits

Federal Home Loan Bank advances and other 76,968 0.33 65 79,984 0.35 71 238,016 1.90 1,139 short-term borrowings

Long-term debt 124,830 3.60 1,130 105,131 2.82 746 101,547 3.81 976

Total interest-bearing4,163,396 0.23 2,427 4,118,726 0.25 2,633 3,947,924 0.73 7,223 liabilities

Noninterest-bearing 1,793,659 1,794,536 1,390,536 deposits

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 2 1 - interest

Total equity 548,665 549,379 530,464

Total liabilities and $6,621,127 $6,574,492 $5,978,797 equity



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 TABLE 6 Rates (Taxable Equivalent) (Unaudited)



Year Ended Year Ended

December 31, 2020 December 31, 2019

Average Average Average Average

(Dollars in thousands)Balance Yield/ Interest Balance Yield/ Interest Rate Rate

ASSETS

Interest-earning assets:

Interest-bearing deposits in other $13,980 0.33% $46 $9,842 2.04% $201 financial institutions

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 1,133,426 2.33 26,399 1,251,122 2.67 33,370 securities

Loans, including loans4,855,169 3.83 186,129 4,241,308 4.31 182,657 held for sale

Federal Home Loan Bank12,591 3.81 480 16,369 5.89 964 stock

Total interest-earning6,015,166 3.54 213,054 5,518,641 3.94 217,192 assets

Noninterest-earning 403,495 369,974 assets

Total assets $6,418,661 $5,888,615



LIABILITIES AND EQUITY

Interest-bearing liabilities:

Interest-bearing $1,078,5890.05% $510 $984,298 0.08% $800 demand deposits

Savings and money 1,830,972 0.13 2,416 1,556,766 0.33 5,100 market deposits

Time deposits under 160,082 0.60 958 171,064 0.69 1,183 $100,000

Time deposits $100,000794,276 0.82 6,531 897,670 1.88 16,861 and over

Total interest-bearing3,863,919 0.27 10,415 3,609,798 0.66 23,944 deposits

Federal Home Loan Bank advances and other 89,904 0.80 718 185,909 2.31 4,285 short-term borrowings

Long-term debt 117,100 3.08 3,602 101,547 4.02 4,080

Total interest-bearing4,070,923 0.36 14,735 3,897,254 0.83 32,309 liabilities

Noninterest-bearing 1,691,958 1,375,903 deposits

Other liabilities 111,859 101,848

Total liabilities 5,874,740 5,375,005

Shareholders' equity 543,919 513,610

Non-controlling 2 - interest

Total equity 543,921 513,610

Total liabilities and $6,418,661 $5,888,615 equity



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 TABLE 7 (Unaudited)



Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,

(Dollars in 2020 2020 2020 2020 2019 thousands)

HAWAII:

Commercial, financial and agricultural:

SBA Paycheck Protection $375,879 $485,286 $483,827 $- $- Program

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 1,690,212 1,680,060 1,657,558 1,632,536 1,599,801 mortgage

Home equity 551,266 534,056 510,962 504,686 490,734

Commercial 898,055 914,144 912,422 917,886 909,798 mortgage

Consumer 332,430 342,203 350,414 367,960 373,451

Total loans, net of 4,399,919 4,488,750 4,450,588 3,978,502 3,924,220 deferred fees and costs

Allowance for(73,152) (71,575) (59,765) (51,646) (42,592) credit losses

Loans, net of allowance for$4,326,767$4,417,175$4,390,823$3,926,856$3,881,628credit losses



U.S. MAINLAND: [1]

Commercial, financial and agricultural:

SBA Paycheck Protection $40,496 $43,295 $42,581 $- $- Program

Other 118,421 113,316 115,971 120,507 115,722

Real estate:

Commercial 258,273 227,121 217,747 221,251 213,617 mortgage

Consumer 147,004 158,144 176,551 191,738 195,981

Total loans, net of 564,194 541,876 552,850 533,496 525,320 deferred fees and costs

Allowance for(10,117) (8,967) (7,574) (7,999) (5,379) credit losses

Loans, net of allowance for$554,077 $532,909 $545,276 $525,497 $519,941 credit losses



TOTAL:

Commercial, financial and agricultural:

SBA Paycheck Protection $416,375 $528,581 $526,408 $- $- Program

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 1,690,212 1,680,060 1,657,558 1,632,536 1,599,801 mortgage

Home equity 551,266 534,056 510,962 504,686 490,734

Commercial 1,156,328 1,141,265 1,130,169 1,139,137 1,123,415 mortgage

Consumer 479,434 500,347 526,965 559,698 569,432

Total loans, net of 4,964,113 5,030,626 5,003,438 4,511,998 4,449,540 deferred fees and costs

Allowance for(83,269) (80,542) (67,339) (59,645) (47,971) credit losses

Loans, net of allowance for$4,880,844$4,950,084$4,936,099$4,452,353$4,401,569credit losses



[1] U.S. Mainland includes territories of the United States

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



Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,

(Dollars in 2020 2020 2020 2020 2019 thousands)

Noninterest-bearing$1,790,269$1,762,476$1,851,012$1,430,540$1,450,532demand

Interest-bearing 1,174,888 1,114,123 1,067,483 1,018,508 1,043,010 demand

Savings and money 1,932,043 1,881,104 1,945,744 1,693,280 1,600,028 market

Time deposits less 149,063 157,051 159,739 162,399 165,755 than $100,000

Core deposits 5,046,263 4,914,754 5,023,978 4,304,727 4,259,325



Government time 500,344 500,762 509,927 523,343 533,088 deposits

Other time deposits $100,000 to 90,149 95,918 96,633 100,047 107,550 $250,000

Other time deposits greater than 159,362 167,495 164,147 207,952 220,060 $250,000

Total time deposits749,855 764,175 770,707 831,342 860,698 $100,000 and over

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 TABLE 9 (Unaudited)



Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,

(Dollars in 2020 2020 2020 2020 2019 thousands)

Nonaccrual loans: [1]

Commercial, financial and $1,461 $1,536 $934 $667 $467 agricultural

Real estate:

Residential 4,115 4,032 3,215 2,287 979 mortgage

Home equity 524 533 538 545 92

Commercial - 6,889 - - - mortgage

Consumer 92 69 54 48 17

Total nonaccrual 6,192 13,059 4,741 3,547 1,555 loans

Other real estate owned ("OREO"):

Real estate:

Residential - 128 - - - mortgage

Home equity - - - 100 164

Total OREO - 128 - 100 164

Total nonperforming 6,192 13,187 4,741 3,647 1,719 assets ("NPAs")

Loans delinquent for 90 days or more still accruing interest: [1]

Real estate:

Residential 567 588 726 1,221 724 mortgage

Consumer 240 321 444 352 286

Total loans delinquent for 90 807 909 1,170 1,573 1,010 days or more still accruing interest

Restructured loans still accruing interest: [1]

Commercial, financial and 100 137 172 113 135 agricultural

Real estate:

Residential 5,718 5,178 5,290 5,431 5,502 mortgage

Commercial 1,761 1,825 1,888 1,709 1,839 mortgage

Consumer 207 214 145 - -

Total restructured loans still 7,786 7,354 7,495 7,253 7,476 accruing interest

Total NPAs and loans delinquent for 90 days or more and $14,785 $21,450 $13,406 $12,473 $10,205 restructured loans still accruing interest



Total nonaccrual loans as a 0.12 %0.26 %0.09 %0.08 %0.03 %percentage of total loans

Total NPAs as a percentage of 0.12 %0.26 %0.09 %0.08 %0.04 %total loans and OREO

Total NPAs and loans delinquent for 90 days or more still 0.14 %0.28 %0.12 %0.12 %0.06 %accruing interest as a percentage of total loans and OREO

Total NPAs, loans delinquent for 90 days or more and restructured loans still accruing 0.30 %0.43 %0.27 %0.28 %0.23 %interest as a percentage of total loans and OREO



Quarter-to-quarter changes in NPAs:

Balance at beginning of $13,187 $4,741 $3,647 $1,719 $1,360 quarter

Additions 1,370 9,060 1,771 2,056 695

Reductions:

Payments (3,186) (393) (367) (60) (34)

Return to accrual (548) - (123) - - status

Sales of NPAs (4,353) - (94) - (302)

Charge-offs, valuation and (278) (221) (93) (68) - other adjustments

Total reductions (8,365) (614) (677) (128) (336)

Balance at end of $6,192 $13,187 $4,741 $3,647 $1,719 quarter



[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 TABLE 10 (Unaudited)



Three Months Ended Year Ended

Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Dec 31, (Dollars in 2020 2020 2020 2020 2019 2020 2019 thousands)

Allowance for credit losses ("ACL"):

ACL at beginning $80,542 $67,339 $59,645 $47,971 $48,167 $47,971 $47,916 of period

Adoption of ASU - - - 3,566 - 3,566 - 2016-13

Adjusted ACL at beginning of 80,542 67,339 59,645 51,537 48,167 51,537 47,916 period



Provision for credit losses on 4,496 14,465 10,640 9,329 2,098 38,930 6,317 loans [1]



Charge-offs:

Commercial, financial and 676 810 1,103 437 379 3,026 2,478 agricultural

Real estate:

Residential - 11 52 - - 63 - mortgage

Home equity - - - - - - 5

Commercial - 75 - - - 75 - mortgage

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 189 321 305 342 264 1,157 1,174 agricultural

Real estate:

Construction - - - 131 6 131 610

Residential 15 13 20 181 26 229 524 mortgage

Home equity 2 - - 31 - 33 42

Commercial 1 12 1 2 - 16 25 mortgage

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 $83,269 $80,542 $67,339 $59,645 $47,971 $83,269 $47,971 period



Average loans, net of deferred fees $5,034,717 $5,016,955 $4,902,905 $4,462,347 $4,412,247 $4,855,169 $4,241,308 and costs



Annualized ratio of net charge-offs0.14 %0.10 %0.24 %0.11 %0.21 %0.15 %0.15 %to average loans



[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 4,496 14,652 10,640 9,329 2,098 39,117 6,317 losses

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 81,756 94,844 94,096 81,904 85,840 88,150 84,244 (annualized)

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 0.74 %0.42 %0.61 %0.55 %0.95 %0.58 %0.99 %assets

PTPP earnings to 1.23 %1.44 %1.45 %1.36 %1.44 %1.37 %1.43 %average assets

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 2020 2020 2020 2020 2019 thousands)

ACL $83,269 $80,542 $67,339 $59,645 $47,971



Total $4,964,113 $5,030,626 $5,003,438 $4,511,998 $4,449,540 loans

PPP loans 416,375 528,581 526,408 - -

Total loans, $4,547,738 $4,502,045 4,477,030 4,511,998 $4,449,540 excluding PPP loans



Ratio of ACL to 1.68 %1.60 %1.35 %1.32 %1.08 %total loans

Ratio of ACL to total 1.83 %1.79 %1.50 %1.32 %1.08 %loans, excluding PPP loans

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 $120,206 $290,841 $567,860 deferrals

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 2.42 %5.78 %11.35 %or deferrals to total loans

Ratio of loans on payment forbearance or deferrals to total loans, excluding2.64 %6.46 %12.68 %PPP loans



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SOURCE Central Pacific Financial Corp.