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8-K

Central Pacific Financial Corp (CPF)

8-K 2021-01-27 For: 2021-01-27
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported):

January 27, 2021

Central Pacific Financial Corp.

(Exact name of registrant as specified in its charter)

Hawaii 001-31567 99-0212597
(State or other<br>jurisdiction of<br>incorporation) (Commission<br>File Number) (I.R.S. Employer<br>Identification No.)

220 South King Street, Honolulu, Hawaii

(Address of principal executive offices)

96813

(Zip Code)

(808) 544-0500

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

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

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On January 27, 2021, Central Pacific Financial Corp. issued a press release regarding its results of operations and financial condition for the quarter ended December 31, 2020. A copy of the press release is furnished herewith as Exhibit 99.1. The information set forth in Item 7.01 is incorporated herein by reference.

ITEM 7.01. REGULATION FD DISCLOSURE

On January 27, 2021, Central Pacific Financial Corp. will hold an investor conference call and webcast to discuss financial results for the quarter ended December 31, 2020, including the attached press release and other matters relating to the Company.

The Company has also made available on its website a slide presentation containing certain additional information about the Company's financial results for the quarter ended December 31, 2020 (the "Earnings Supplement"). The Earnings Supplement is furnished herewith as Exhibit 99.2 and is incorporated herein by reference. All information in Exhibit 99.2 is presented as of the particular date or dates referenced therein, and the Company does not undertake any obligation to, and disclaims any duty to, update any of the information provided except as required by law.

The Earnings Supplement contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act and, as such, may involve known and unknown risks, uncertainties and assumptions. These forward-looking statements relate to the Company’s current expectations and are subject to the limitations and qualifications set forth in the attached presentation as well as in the Company’s other documents filed with the Securities and Exchange Commission, including, without limitation, that actual events and/or results may differ materially from those projected in such forward-looking statements.

The information provided in Items 2.02 and 7.01 of this Current Report, including Exhibit 99.1 and 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall the information in Exhibit 99.1 or 99.2 be deemed incorporated by reference in any filings under the Securities Act of 1933, as amended.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits
99.1 Press release dated January 27, 2021
99.2 Earnings Supplement
104 Cover Page Interactive Data File (embedded in the cover page formatted in Inline XBRL)

SIGNATURES

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

Central Pacific Financial Corp.
(Registrant)
Date: January 27, 2021 /s/ David S. Morimoto
David S. Morimoto
Executive Vice President and Chief Financial Officer

Document

Exhibit 99.1

cpfmidnight1a.jpg

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.

Central Pacific Financial Corp. Reports Fourth Quarter 2020 Quarterly and Annual Results

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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
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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
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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
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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
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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
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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
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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
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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
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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
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Allowance for Credit Losses on Loans
(Unaudited) TABLE 10
Year Ended
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Sep 30, Jun 30, Mar 31, Dec 31, Dec 31,
(Dollars in thousands) 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 67,339 59,645 51,537 48,167 51,537 47,916
Provision for credit losses on loans [1] 14,465 10,640 9,329 2,098 38,930 6,317
Charge-offs:
Commercial, financial and agricultural 810 1,103 437 379 3,026 2,478
Real estate:
Residential mortgage 11 52 — — 63 —
Home equity — — — — — 5
Commercial mortgage 75 — — — 75 —
Consumer 1,492 2,626 2,217 2,723 8,191 8,265
Leases — — — — — —
Total charge-offs 2,388 3,781 2,654 3,102 11,355 10,748
Recoveries:
Commercial, financial and agricultural 321 305 342 264 1,157 1,174
Real estate:
Construction — — 131 6 131 610
Residential mortgage 13 20 181 26 229 524
Home equity — — 31 — 33 42
Commercial mortgage 12 1 2 — 16 25
Consumer 780 509 746 512 2,591 2,111
Total recoveries 1,126 835 1,433 808 4,157 4,486
Net charge-offs 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 % 0.10 % 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.

All values are in US Dollars.

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 %

cpf_4qearningssupplement

4th Quarter 2020 Earnings Supplement January 27, 2021

2Central Pacific Financial Corp. 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, borrowing 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.

3Central Pacific Financial Corp. 4th Quarter & Full Year 2020 Highlights • Strong Pre-tax, Pre-provision earnings • Mortgage banking business continues to outperform • One-time expenses impacted 4Q • Solid liquidity and capital; balance sheet well positioned • Committed to supporting our employees, customers and community 4Q 2020 2020 Year NET INCOME $12.2 Million $37.3 Million DILUTED EPS $0.43 $1.32 PRE-TAX, PRE-PROVISION EARNINGS $20.4 Million $88.2 Million LOAN GROWTH* +$46 Million +1.0% +$98 Million +2.2% NET INTEREST MARGIN 3.32% Actual 3.17% Normalized* 3.30% Actual 3.29% Normalized* EFFICIENCY RATIO 68.8% Actual 59.8% Normalized** 63.7% Actual 60.8% Normalized ** * Normalized to exclude PPP impact, refer to slide 26 for additional details. ** Normalized to exclude one-time expenses, refer to slide 27 for additional details.

4Central Pacific Financial Corp. Strong Credit Metrics $0 $20 $40 $60 $80 $100 0.90% 1.10% 1.30% 1.50% 1.70% 1.90% 4Q19 1Q20 2Q20* 3Q20* 4Q20* ALLOWANCE FOR CREDIT LOSSES (ACL) ACL in $ Millions (right) ACL/Total Loans (left) Peer Average (left) * Excludes the PPP loan portfolio from total loans. Note: Peer Average includes banks $3-7B in assets. Source S&P Global. $0 $20 $40 $60 $80 $100 3.00% 5.00% 7.00% 9.00% 11.00% 13.00% 15.00% 4Q19 1Q20 2Q20 3Q20 4Q20 CLASSIFIED ASSETS Classified Assets + OREO (right) Classified Assets + OREO/Tier 1 Capital + ACL (left) Peer Average (left) $0 $20 $40 $60 $80 $100 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 4Q19 1Q20 2Q20 3Q20 4Q20 NON PERFORMING LOANS NPLs in $ Millions (right) NPL /Total Loans (left) Peer Average (left) $0 $20 $40 $60 $80 $100 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 4Q19 1Q20 2Q20 3Q20 4Q20 NET CHARGE-OFFS Net Charge-offs in $ Millions (right) NCO/Avg Loans (left) Peer Average (left)

5Central Pacific Financial Corp Digital Banking • Launched cpb.bank website in November 2019 • Launched new online and mobile banking platforms in August 2020 • Full ATM network upgrade completed in November 2020 Revenue Enhancements • Committed to best-in-class small business and cash management products, with new platform fully rolled out in July 2020 • Enhanced sales management with enterprise-wide tools and CRM system Branch Transformation • CPB Concept Branch for innovation and testing open since March 2020 • Revitalization project of Plaza Headquarters completed and re-opened in January 2021 • New headquarters includes co-working areas and community meeting space Operational Excellence • Outsourced residential mortgage loan servicing in August 2019 • End-to-end commercial loan origination system implemented in October 2019 • Other initiatives leveraging Robotic Process Automation (RPA) to enhance operational efficiency ongoing RISE2020 Initiative Completed

6Central Pacific Financial Corp. • New, modernized flagship main branch • Reimagined inviting lobby for customers and the community, including a new co-working space Grand Reopening of Plaza Headquarters

7Central Pacific Financial Corp. • New online/mobile platform publicly launched late August 2020. New mobile app rating 4.6 & 4.4 out of 5 stars* on Apple and Android respectively • Complete personal financial management (PFM) all in one site, with account aggregation, budgeting, and goal setting tools • Open API to leverage other apps; currently Zelle with other app partners on the roadmap Newly Upgraded Online/Mobile and ATMs • Entire ATM network was replaced in 2020 with new full-function ATMs • New ATMs have a vibrant backlit surround, touch screen, multi-denomination currency and envelope-less deposit • Same day credit on ATM deposits up to 8:00 pm, which is 2 hours later than any major Hawaii competitor • Digital initiatives have helped migrate deposit transactions, with an average of 77% of all deposits processed via electronic methods in the 2nd half of 2020.* Mobile app rating as of January 22, 2021

8Central Pacific Financial Corp. • 31 total branches, with 23 on the island of Oahu (pictured) • 4 branches identified in red were consolidated into neighboring branches in 2020, with an expected go-forward annual expense savings of $1.8 million Branch Consolidation Initiative

9Central Pacific Financial Corp. Resilient Hawaii Market STRENGTHS AND RECOVERY FACTORS • Hawaii has the 2nd lowest per capita COVID-19 case rate in the nation • Re-opened tourism on October 15, 2020 for trans- Pacific travelers with a negative COVID-19 test • While tourism drives ~20% of GDP, government/defense and real estate makes up another ~45% of GDP • Construction and development in Hawaii continues through the pandemic • Housing prices remain strong with an Oahu median home sales price of $870K in December 2020 * Other primarily includes finance, education, professional & administrative services. Tourism Related, 23% RE/Construction, 26% Gov't/Military, 20% Healthcare, 7% Other*, 24% STATE OF HAWAII REAL GROSS STATE PRODUCT (GSP) 2019 $500 $550 $600 $650 $700 $750 $800 $850 $900 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 20 -J an 20 -F eb 20 -M ar 20 -A pr 20 -M ay 20 -J un 20 -J ul 20 -A ug 20 -S ep 20 -O ct 20 -N ov 20 -D ec OAHU SINGLE FAMILY HOME MEDIAN SALES PRICE ($ IN THOUSANDS) $870K

10Central Pacific Financial Corp. Solid Liquidity & Capital Position STRONG CAPITAL • $230 million capital cushion to the well-capitalized Total RBC minimum of 10% at 12/31/20 • $55 million subordinated note offering completed in October 2020, provided additional Tier 2 capital and increased CPF Total RBC to 15.2% • New share repurchase authorization approved by the Board of Directors in January 2021 AMPLE LIQUIDITY • At 12/31/20, over $2.3 billion in available alternative sources of liquidity, including $1.6 billion in FHLB/FRB lines and $0.7 billion in unpledged investment securities * Excludes the PPP impact to the assets denominator, refer to slide 26 for more details. 11.8% 1.1% 2.3% 9.5% 8.9% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% Risk-based Capital Tier 1 Leverage Excl PPP* TCE Excl PPP* REGULATORY CAPITAL RATIOS AS OF DECEMBER 31, 2020 Tier 2 Tier 1 CET1 15.2% Total RBC

11Central Pacific Financial Corp. Total Loan Portfolio LOAN PORTFOLIO HIGHLIGHTS • Conservative and Diversified Loan Portfolio 45% Commercial 55% Consumer • Predominantly Hawaii Focused 89% Hawaii 11% Mainland/Guam • 77% Real Estate Secured (excluding PPP loan balances from total loan portfolio balance) Note: Totals may not sum due to rounding. TOTAL LOAN PORTFOLIO OF $4,964MM OUTSTANDING BALANCE AS OF 12/31/2020 $ IN MILLIONS Commercial & Industrial $545 / 11% Paycheck Protection Program $416 / 8% Construction $125 / 3% Residential $1,690 / 34%Home Equity $551 / 11% CRE - Owner Occupied $242 / 5% CRE - Investor $914 / 18% Consumer $479 / 10%

12Central Pacific Financial Corp. C&I – Industry Composition LOAN PORTFOLIO HIGHLIGHTS • Many borrowers are essential businesses • Well established, locally owned and operated by strong management • Borrowers have good liquidity with access to capital • Long term relationships averaging 12 years • Granular with average outstanding loan amount of $160,000 • Criticized loan exposure of 1.5%; majority COVID-19 related • Total undrawn commitments of $360MM Other Industries include: Other Services; Professional, Scientific and Technical; Utilities; Construction; Accommodation; Administrative; Management of Companies; Information; Finance and Insurance OUTSTANDING BALANCE AS OF 12/31/2020 $ IN MILLIONS Other Industries $172 / 31% Healthcare $102 / 19%Transportation & Warehousing $65 / 12% Real Estate and Rental & Leasing $53 / 10% Foodservice $50 / 9% Retail Trade $43 / 8% Manufacturing $39 / 7% Wholesale Trade $21 / 4% $545MM 11%

13Central Pacific Financial Corp. Paycheck Protection Program [PPP] LOAN PORTFOLIO HIGHLIGHTS • Over 7,000 loans made • Granular with average outstanding loan amount of $69,000 • 66% to existing customers • 34% to new customers • SBA Forgiveness process commenced in October with approximately 1,500 loans approved by the SBA at 12/31/2020 Other Industries include: Other Services; Educational Services; Information; Finance and Insurance OUTSTANDING BALANCE AS OF 12/31/2020 $ IN MILLIONS Other Industries $63 / 15% Foodservice $69 / 17% Healthcare $58 / 14% Construction $57 / 14% Professional, Scientific, and Technical Services $44 / 11% Administrative and Waste Management $27 / 6% Real Estate and Rental & Leasing $22 / 5% Retail Trade $22 / 5% Manufacturing $19 / 5% Transportation & Warehousing $18 / 4% Wholesale Trade $17 / 4% $416MM 8%

14Central Pacific Financial Corp. CRE – Property Type Composition LOAN PORTFOLIO DETAILS • Strong borrowers that operate out of their own properties • Well-collateralized with WA LTV of 65% • 94% secured in Hawaii and 6% in Mainland HI WA LTV 66%1 ML WA LTV 55%1 • Long term relationships averaging 14 years • Average outstanding loan amount of $1.2MM • Criticized loan exposure of 0.5%; majority COVID-19 related 1 Based on LTV at origination. OUTSTANDING BALANCE AS OF 12/31/2020 $ IN MILLIONS Industrial $117 / 48% Commercial & Office $56 / 23% Other $32 / 13% Retail $26 / 11% Restaurant $11 / 5% Owner Occupied $242MM 5%

15Central Pacific Financial Corp. CRE – Property Type Composition LOAN PORTFOLIO DETAILS • Seasoned real estate investors • Well-collateralized with WA LTV of 59% • 73% secured in Hawaii and 27% in Mainland HI WA LTV 61%1 ML WA LTV 57%1 • Long term relationships averaging 12 years • Average outstanding loan amount of $2.6MM • Criticized loan exposure of 1.6%; majority COVID-19 related 1 Based on LTV at origination. OUTSTANDING BALANCE AS OF 12/31/2020 $ IN MILLIONS Multifamily $304 / 33% Retail & Shopping Center $222 / 24% Industrial $156 / 17% Commercial & Office $107 / 12% Hotel $49 / 5% Restaurant $20 / 2%Other $34 / 4% Self Storage $24 / 3% Investor $914MM 18%

16Central Pacific Financial Corp. High Risk Industries LOAN PORTFOLIO DETAILS • Well established, locally owned and operated by strong management • Borrowers have access to capital with good liquidity • Long term relationships averaging 12 years • Granular with average outstanding loan amount of $287,000 • Criticized loan exposure of 1.6%; majority COVID-19 related • Total undrawn commitments of $83MM INDUSTRY OUTSTANDING BALANCE (EXCL. PPP) % OF TOTAL LOAN PORTFOLIO (EXCL. PPP) TOTAL PAYMENT DEFERRAL DEFERRAL AS % OF TOTAL LOANS (EXCL. PPP) TOTAL CRITICIZED CRITICIZED AS % OF TOTAL LOANS (EXCL. PPP) C&I CRE CRITICIZED W/PPP FOODSERVICE $ 64 1.4% $5 0.1% $41 0.9% $50 $14 $9 RETAIL TRADE 64 1.4% 0 0.0% 13 0.3% 43 21 5 ACCOMMODATION 60 1.3% 8 0.2% 18 0.4% 10 50 - MANUFACTURING 58 1.3% 0 0.0% 5 0.1% 39 19 1 TOTAL $245 5.4% $12 0.3% $77 1.7% $142 $103 $15 Note: Totals may not sum due to rounding. OUTSTANDING BALANCE AS OF 12/31/2020 $ IN MILLIONS

17Central Pacific Financial Corp. Residential Mortgage LOAN PORTFOLIO DETAILS • 100% in Hawaii; 89% on Oahu • 81% of loan balance are loans <$1.0MM • Average outstanding loan amount of $445,000 • WA LTV 62%1 • WA FICO 773 • Criticized loan exposure of 0.1% 1 Based on LTV at origination. Owner Occupied $1,377 / 81% Investor & Second Home $313 / 19% $1,690MM 34% OUTSTANDING BALANCE AS OF 12/31/2020 $ IN MILLIONS

18Central Pacific Financial Corp. Home Equity LOAN PORTFOLIO DETAILS • 100% in Hawaii; 85% on Oahu • 50% of loan balance are lines/loans <$250 thousand • Average outstanding loan amount of $143,000 • 56% are 1st mortgages • 19% are 2nd mortgages behind CPB 1st mortgage • WA CLTV 63%1 • WA FICO 770 • Total undrawn commitments of $555MM 1 Based on LTV at origination. Owner Occupied $471 / 85% Investor & Second Home $80 / 15% $551MM 11% OUTSTANDING BALANCE AS OF 12/31/2020 $ IN MILLIONS

19Central Pacific Financial Corp. Consumer LOAN PORTFOLIO DETAILS • Total Consumer HI WA FICO 719 ML WA FICO 7581 • Auto HI WA FICO 702 ML WA FICO 7511 • Personal HI WA FICO 746 ML WA FICO 7631 • Total undrawn commitments of $103MM 1 Based on origination score. Personal $229 / 48% Auto $250 / 52% $479MM 10% Hawaii $204 / 81% Mainland $46 / 19% AUTO $250MM 5% Private Banking $57 / 25% Hawaii $72 / 31% Mainland $100 / 44% PERSONAL $229MM 5% OUTSTANDING BALANCE AS OF 12/31/2020 $ IN MILLIONS

20Central Pacific Financial Corp. Loan Payment Deferrals Continue to Decline • Loan deferrals continue to decline down to 3% of the overall portfolio as of 12/31/20 • Residential mortgages were extended to 9-month deferrals as deemed appropriate; these loans have low WA LTV of 60% • Re-deferral rates improved to 15% • Approximately 40% of the Commercial Mortgage and C&I deferrals will resume payment in January 2021 $- $100 $200 $300 $400 $500 $600 $700 In $ M ill io ns HISTORICAL TREND OF TOTAL LOAN DEFERRALS 1. Excludes PPP loans 2. Calculated as total balance on 2nd and 3rd deferral divided by the sum of total balance of active deferrals and total balance back on payment. $ MILLIONS AS OF DEC. 31, 2020 ON 1ST DEFERRAL ON 2ND DEFERRAL ON 3RD DEFERRAL TOTAL ACTIVE DEFERRALS % OF ASSET CLASS1 TOTAL BACK ON PAYMENT RE-DEFERRAL RATE2 $ Count $ Count $ Count $ Count $ Count RESIDENTIAL MORTGAGE 4.3 9 6.6 20 59.5 123 $70.4 152 3% 116.9 280 35% COML MTG/ CONSTRUCTION 25.4 6 16.1 4 - - 41.5 10 3% 167.0 87 8% COML & INDUSTRIAL (C&I) 0.9 15 5.2 6 - - 6.1 21 1% 113.9 645 4% CONSUMER 2.1 136 0.2 13 - - 2.3 149 0% 68.8 4,176 0% TOTAL 32.7 166 28.1 43 59.5 123 120.3 332 3% 466.6 5,188 15%

21Central Pacific Financial Corp. Loan Payment Deferrals – Portfolio & Industry Residential $70 / 59% Commercial Real Estate $42 / 34% Commercial & Industrial $6 / 5% Consumer $2 / 2% DEFERRALS BY LOAN PORTFOLIO $120MM 3% Real Estate and Rental & Leasing $33 / 71% Accommodation $8 / 16% Foodservice $5 / 10% Other Industries $1 / 3% CRE AND C&I DEFERRALS BY INDUSTRY $47MM 1% Note: Totals may not sum due to rounding. Other Industries include: Transportation & Warehousing; Wholesale Trade; Retail Trade; Manufacturing; Educational Services OUTSTANDING BALANCE AS OF 12/31/2020 $ IN MILLIONS

22Central Pacific Financial Corp. Loans Rated Special Mention LOAN PORTFOLIO DETAILS • $142MM Special Mention Loans • 3.1% of Total Loan Portfolio (excl PPP) CREDIT RISK MANAGEMENT APPROACH • Ongoing monitoring of all risk rated loans and frequent high-touch of majority borrowers • Assessment for risk rating migration based on:  Near term business strategy and outlook  Management strength and actions taken  Financial position including cash burn, cash liquidity, and access to capital  Payment deferral; federal and state support Other Industries include: Management of Companies; Healthcare; Educational Services; Other Services; Healthcare; Transportation & Warehousing; Professional, Scientific and Technical; Finance and Insurance Real Estate and Rental & Leasing $50 / 35% Foodservice $40 / 28% Retail Trade $13 / 9% Accommodation $11 / 7% Utilities $5 / 4% Manufacturing $4 / 3% Construction $3 / 2% Other Industries $16 / 12% $142MM 3% OUTSTANDING BALANCE AS OF 12/31/2020 $ IN MILLIONS

23Central Pacific Financial Corp. Loans Rated Classified LOAN PORTFOLIO HIGHLIGHTS • $50MM Classified Loans • 1.1% of Total Loan Portfolio (excl PPP) • Real Estate and Rental & Leasing exposure totals 4 CRE- Investor borrowers; well-collateralized with WA LTV of 69% • Manufacturing exposure totals 3 C&I borrowers • Foodservice exposure totals 6 C&I borrowers • Residential exposure totals 24 borrowers and HELOC totals 3 borrowers Real Estate and Rental & Leasing $29 / 58% Accommodation $8 / 15% Healthcare $3 / 6% Foodservice $2 / 3% Manufacturing $2 / 3% Other Industries $1 / 5% Residential/HELOC $5 / 10% $50MM 1% OUTSTANDING BALANCE AS OF 12/31/2020 $ IN MILLIONS Other Industries include: Retail Trade; Wholesale Trade; Utilities; Professional, Scientific and Technical; Construction; Other Services

Mahalo

25Central Pacific Financial Corp. Appendix

26Central Pacific Financial Corp. Non-GAAP Financial Measures - Excluding PPP 1. Net interest income excludes PPP interest income less an assumed funding cost of 0.25% and PPP net loan fee income; Total Interest-Earning Assets excludes average PPP loan balances; Total Assets excludes PPP loan balance; Average Assets excludes average PPP loan balances. 2. Net interest income shown on a taxable equivalent basis. 3. Net interest margin calculation based on the day count interest accrual conventions at the interest-earning asset or interest-bearing liability level (i.e. 30/360, actual/actual) 4. Tangible Common Equity is equivalent to total shareholders’ equity as there are no intangibles. $ MILLIONS DEC. 31, 2020 Actual PPP Exclusions1 DEC. 31, 2020 Normalized Quarter-ended 12/31/20: Net Interest Income2 $51.6 (6.3) $45.3 Total Interest-Earning Assets $6,202.2 (504.7) $5,697.5 Net Interest Margin3 3.32% 3.17% Year-ended 12/31/20: Net Interest Income2 $198.3 (12.2) $186.1 Total Interest-Earning Assets $6,015.2 (358.3) $5,656.9 Net Interest Margin3 3.30% 3.29% Tangible Common Equity4 $546.7 $546.7 Total Assets $6,594.6 (416.4) $6,178.2 Tangible Common Equity Ratio 8.29% 8.85% Tier 1 Capital $581.4 $581.4 Average Assets for Lev. Ratio $6,599.5 (504.7) $6,094.8 Leverage Capital Ratio 8.81% 9.54% The Company believes the following non-GAAP financial measures provides useful information about our operating results and enhances the overall understanding of our past performance and future performance. Investors should consider our performance and financial condition as reported under GAAP and all other relevant information when assessing our performance or financial condition.

27Central Pacific Financial Corp. Non-GAAP Financial Measures - Excluding One-Time Expenses Note: Efficiency Ratio calculated as Other Operating Expense divided by the sum of Net Interest Income and Other Operating Income. $ MILLIONS Quarter Ended DEC. 31, 2020 Year Ended DEC. 31, 2020 Net Interest Income $51.5 $197.7 Other Operating Income 14.1 45.2 Other Operating Expense 45.1 154.7 Efficiency Ratio - GAAP 68.8% 63.7% Other Operating Expense - Adjustments Employee incentives and benefit programs $ (2.0) $ (2.9) Branch consolidation costs (1.3) (1.6) Litigation settlements (0.8) (0.8) Debt prepayment fee (0.7) (0.7) Loss on disposal of fixed assets (0.6) (0.6) Other one-time expenses (0.5) (0.5) $ (5.9) $ (7.1) Other Operating Expense - Adjusted $39.2 $ 147.6 Efficiency Ratio Normalized- non-GAAP 59.8% 60.8% The Company believes the following non-GAAP financial measures provides useful information about our operating results and enhances the overall understanding of our past performance and future performance. Investors should consider our performance and financial condition as reported under GAAP and all other relevant information when assessing our performance or financial condition.

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