T
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
£
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Hawaii
|
99-0212597
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
Identification
No.)
|
Large
accelerated filer £
|
Accelerated
filer T
|
Non-accelerated
filer £
|
Smaller
reporting company £
|
Part
I.
|
Financial
Information
|
Item
I.
|
Financial
Statements (Unaudited)
|
Consolidated
Balance Sheets
June
30, 2009 and December 31, 2008
|
|
Consolidated
Statements of Operations
Three
and six months ended June 30, 2009 and 2008
|
|
Consolidated
Statements of Cash Flows
Six
months ended June 20, 2009 and 2008
|
|
Notes
to Consolidated Financial Statements
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
Item
4.
|
Controls
and Procedures
|
Part
II.
|
Other
Information
|
Item
1A.
|
Risk
Factors
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
Item
6.
|
Exhibits
|
Signatures
|
|
Exhibit
Index
|
CENTRAL
PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
|
||||||
CONSOLIDATED
BALANCE SHEETS
|
||||||
(Unaudited)
|
||||||
(Dollars
in thousands)
|
June
30, 2009
|
December
31, 2008
|
||||
Assets
|
||||||
Cash
and due from banks
|
$ | 161,985 | $ | 107,270 | ||
Interest-bearing
deposits in other banks
|
23,071 | 475 | ||||
Federal
funds sold
|
19,000 | - | ||||
Investment
securities:
|
||||||
Available
for sale
|
1,049,949 | 742,600 | ||||
Held
to maturity (fair value of $6,907 at June 30, 2009 and $8,759 at December
31, 2008)
|
6,830 | 8,697 | ||||
Total
investment securities
|
1,056,779 | 751,297 | ||||
Loans
held for sale
|
84,748 | 40,108 | ||||
Loans
and leases
|
3,688,519 | 4,030,266 | ||||
Less
allowance for loan and lease losses
|
166,071 | 119,878 | ||||
Net
loans and leases
|
3,522,448 | 3,910,388 | ||||
Premises
and equipment, net
|
77,142 | 81,059 | ||||
Accrued
interest receivable
|
18,724 | 20,079 | ||||
Investment
in unconsolidated subsidiaries
|
17,534 | 15,465 | ||||
Other
real estate
|
17,862 | 11,220 | ||||
Goodwill
|
152,689 | 152,689 | ||||
Other
intangible assets
|
44,713 | 39,783 | ||||
Bank-owned
life insurance
|
137,946 | 135,371 | ||||
Federal
Home Loan Bank stock
|
48,797 | 48,797 | ||||
Income
tax receivable
|
53,443 | 42,400 | ||||
Other
assets
|
88,406 | 75,960 | ||||
Total
assets
|
$ | 5,525,287 | $ | 5,432,361 | ||
Liabilities
and Equity
|
||||||
Deposits:
|
||||||
Noninterest-bearing
demand
|
$ | 623,698 | $ | 627,094 | ||
Interest-bearing
demand
|
548,166 | 472,269 | ||||
Savings
and money market
|
1,428,881 | 1,057,881 | ||||
Time
|
1,365,779 | 1,754,322 | ||||
Total
deposits
|
3,966,524 | 3,911,566 | ||||
Short-term
borrowings
|
267,155 | 279,450 | ||||
Long-term
debt
|
608,554 | 649,257 | ||||
Other
liabilities
|
57,970 | 55,748 | ||||
Total
liabilities
|
4,900,203 | 4,896,021 | ||||
Equity:
|
||||||
Preferred
stock, no par value, authorized 1,000,000 shares; issued and
outstanding
|
||||||
135,000
shares at June 30, 2009 and none at December 31, 2008
|
128,239 | - | ||||
Common
stock, no par value, authorized 100,000,000 shares, issued and
outstanding
|
||||||
28,745,214
shares at June 30, 2009 and 28,732,259 shares at December 31,
2008
|
403,219 | 403,176 | ||||
Surplus
|
62,549 | 55,963 | ||||
Retained
earnings
|
28,083 | 63,762 | ||||
Accumulated
other comprehensive income (loss)
|
(7,043 | ) | 3,390 | |||
Total
shareholders' equity
|
615,047 | 526,291 | ||||
Non-controlling
interest
|
10,037 | 10,049 | ||||
Total
equity
|
625,084 | 536,340 | ||||
Total
liabilities and equity
|
$ | 5,525,287 | $ | 5,432,361 | ||
See
accompanying notes to consolidated financial
statements.
|
CENTRAL
PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
|
|||||||||||||||
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|||||||||||||||
(Unaudited)
|
|||||||||||||||
Three
Months Ended
|
Six
Months Ended
|
||||||||||||||
June
30,
|
June
30,
|
||||||||||||||
(Amounts
in thousands, except per share data)
|
2009
|
2008
|
2009
|
2008
|
|||||||||||
Interest
income:
|
|||||||||||||||
Interest
and fees on loans and leases
|
$ | 54,218 | $ | 65,677 | $ | 110,723 | $ | 135,971 | |||||||
Interest
and dividends on investment securities:
|
|||||||||||||||
Taxable
interest
|
9,058 | 9,308 | 17,787 | 18,579 | |||||||||||
Tax-exempt
interest
|
1,146 | 1,416 | 2,317 | 2,805 | |||||||||||
Dividends
|
2 | 11 | 5 | 35 | |||||||||||
Interest
on deposits in other banks
|
11 | 3 | 11 | 7 | |||||||||||
Interest
on Federal funds sold and securities purchased under agreements to
resell
|
6 | 22 | 6 | 43 | |||||||||||
Dividends
on Federal Home Loan Bank stock
|
- | 171 | - | 293 | |||||||||||
Total
interest income
|
64,441 | 76,608 | 130,849 | 157,733 | |||||||||||
Interest
expense:
|
|||||||||||||||
Interest
on deposits:
|
|||||||||||||||
Demand
|
355 | 179 | 676 | 316 | |||||||||||
Savings
and money market
|
3,414 | 2,980 | 6,277 | 6,765 | |||||||||||
Time
|
8,219 | 11,706 | 18,113 | 26,435 | |||||||||||
Interest
on short-term borrowings
|
34 | 2,357 | 272 | 4,280 | |||||||||||
Interest
on long-term debt
|
6,359 | 8,002 | 12,978 | 17,696 | |||||||||||
Total
interest expense
|
18,381 | 25,224 | 38,316 | 55,492 | |||||||||||
Net
interest income
|
46,060 | 51,384 | 92,533 | 102,241 | |||||||||||
Provision
for loan and lease losses
|
74,324 | 87,800 | 101,074 | 122,072 | |||||||||||
Net
interest loss after provision for loan and lease losses
|
(28,264 | ) | (36,416 | ) | (8,541 | ) | (19,831 | ) | |||||||
Other
operating income:
|
|||||||||||||||
Service
charges on deposit accounts
|
3,948 | 3,511 | 7,485 | 7,054 | |||||||||||
Other
service charges and fees
|
3,584 | 3,710 | 6,904 | 7,125 | |||||||||||
Income
from fiduciary activities
|
999 | 990 | 1,969 | 1,995 | |||||||||||
Equity
in earnings of unconsolidated subsidiaries
|
205 | 131 | 479 | 414 | |||||||||||
Fees
on foreign exchange
|
145 | 112 | 261 | 306 | |||||||||||
Investment
securities gains (losses)
|
1 | 253 | (149 | ) | 253 | ||||||||||
Other
than temporary impairment on securities (net of $7,888 recognized in OCI
in 2009)
|
(2,565 | ) | - | (2,565 | ) | - | |||||||||
Loan
placement fees
|
312 | 213 | 560 | 366 | |||||||||||
Net
gain on sales of residential loans
|
4,539 | 2,241 | 8,548 | 4,039 | |||||||||||
Income
from bank-owned life insurance
|
1,514 | 845 | 2,584 | 2,715 | |||||||||||
Other
|
1,917 | (75 | ) | 4,207 | 1,943 | ||||||||||
14,599 | 11,931 | 30,283 | 26,210 | ||||||||||||
Other
operating expense:
|
|||||||||||||||
Salaries
and employee benefits
|
17,684 | 18,648 | 33,944 | 36,012 | |||||||||||
Net
occupancy
|
3,101 | 3,266 | 6,380 | 6,119 | |||||||||||
Equipment
|
1,562 | 1,433 | 3,074 | 2,828 | |||||||||||
Amortization
and impairment of other intangible assets
|
1,550 | 1,281 | 2,971 | 2,450 | |||||||||||
Communication
expense
|
975 | 1,125 | 2,114 | 2,210 | |||||||||||
Legal
and professional services
|
2,846 | 2,615 | 5,562 | 5,028 | |||||||||||
Computer
software expense
|
840 | 809 | 1,752 | 1,672 | |||||||||||
Advertising
expense
|
713 | 700 | 1,468 | 1,382 | |||||||||||
Goodwill
impairment
|
- | 94,279 | - | 94,279 | |||||||||||
Foreclosed
asset expense
|
2,294 | 3,984 | 2,429 | 6,574 | |||||||||||
Loss
on sales of commercial real estate loans
|
- | 1,671 | - | 1,671 | |||||||||||
Write
down of assets
|
904 | 22,424 | 1,339 | 22,424 | |||||||||||
Other
|
13,349 | 8,048 | 22,483 | 9,094 | |||||||||||
Total
other operating expense
|
45,818 | 160,283 | 83,516 | 191,743 | |||||||||||
Loss
before income taxes
|
(59,483 | ) | (184,768 | ) | (61,774 | ) | (185,364 | ) | |||||||
Income
tax benefit
|
(25,041 | ) | (38,510 | ) | (29,961 | ) | (40,764 | ) | |||||||
Net
loss
|
(34,442 | ) | (146,258 | ) | (31,813 | ) | (144,600 | ) | |||||||
Preferred
stock dividends and accretion
|
1,999 | - | 3,866 | - | |||||||||||
Net
loss available to common shareholders
|
$ | (36,441 | ) | $ | (146,258 | ) | $ | (35,679 | ) | $ | (144,600 | ) | |||
Per
common share data:
|
|||||||||||||||
Basic
and diluted loss per share
|
$ | (1.27 | ) | $ | (5.10 | ) | $ | (1.24 | ) | $ | (5.04 | ) | |||
Cash
dividends declared
|
- | 0.25 | - | 0.50 | |||||||||||
Shares
used in computation:
|
|||||||||||||||
Basic
and diluted shares
|
28,687 | 28,652 | 28,684 | 28,670 | |||||||||||
See accompanying
notes to consolidated financial statements.
|
CENTRAL
PACIFIC FINANCIAL CORP. AND SUBSIDIARIES
|
|||||||
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|||||||
(Unaudited)
|
|||||||
Six
Months Ended
|
|||||||
June
30,
|
|||||||
(Dollars
in thousands)
|
2009
|
2008
|
|||||
Cash
flows from operating activities:
|
|||||||
Net
loss
|
$ | (31,813 | ) | $ | (144,600 | ) | |
Adjustments
to reconcile net loss to net cash provided by operating
activities:
|
|||||||
Provision
for loan and lease losses
|
101,074 | 122,072 | |||||
Depreciation
and amortization
|
4,251 | 3,881 | |||||
Gain
on sale of premises and equipment
|
(3,612 | ) | - | ||||
Goodwill
impairment
|
- | 94,279 | |||||
Write
down of assets
|
1,339 | 22,424 | |||||
Foreclosed
asset expense
|
2,429 | 6,574 | |||||
Amortization
and impairment of other intangible assets
|
2,971 | 2,450 | |||||
Net
amortization of investment securities
|
1,580 | 691 | |||||
Share-based
compensation
|
(164 | ) | 1,164 | ||||
Net
(gain) loss on investment securities
|
149 | (253 | ) | ||||
Other
than temporary impairment on securities
|
2,565 | - | |||||
Deferred
income tax benefit
|
(24,815 | ) | (4,504 | ) | |||
Net
gain on sales of residential loans
|
(8,548 | ) | (4,039 | ) | |||
Loss
on sale of commercial real estate loans
|
- | 1,671 | |||||
Ineffective
portion of derivatives
|
(2,106 | ) | - | ||||
Proceeds
from sales of loans held for sale
|
1,056,794 | 817,958 | |||||
Originations
of loans held for sale
|
(1,087,734 | ) | (721,898 | ) | |||
Tax
benefits from share-based compensation
|
- | (40 | ) | ||||
Equity
in earnings of unconsolidated subsidiaries
|
(479 | ) | (414 | ) | |||
Increase
in cash surrender value of bank-owned life insurance
|
(2,574 | ) | (2,706 | ) | |||
Increase
in income tax receivable
|
(11,043 | ) | (48,051 | ) | |||
Net
change in other assets and liabilities
|
5,893 | (13,159 | ) | ||||
Net
cash provided by operating activities
|
6,157 | 133,500 | |||||
Cash
flows from investing activities:
|
|||||||
Proceeds
from maturities of and calls on investment securities available for
sale
|
117,283 | 311,868 | |||||
Proceeds
from sales of investment securities available for sale
|
7,241 | - | |||||
Purchases
of investment securities available for sale
|
(391,916 | ) | (292,694 | ) | |||
Proceeds
from maturities of and calls on investment securities held to
maturity
|
1,839 | 20,058 | |||||
Net
principal repayments (loan originations)
|
112,591 | (351,783 | ) | ||||
Proceeds
from sales of loans originated for investment
|
107,244 | 64,901 | |||||
Proceeds
from sales of securitized residential mortgage loans
|
- | 20,838 | |||||
Proceeds
from sale of other real estate
|
1,406 | - | |||||
Proceeds
from bank-owned life insurance
|
- | 843 | |||||
Proceeds
from sale of premises and equipment
|
7,207 | - | |||||
Purchases
of premises and equipment
|
(3,930 | ) | (3,764 | ) | |||
Distributions
from unconsolidated subsidiaries
|
562 | 632 | |||||
Contributions
to unconsolidated subsidiaries
|
(3,548 | ) | (845 | ) | |||
Acquisition
of businesses and minority interests
|
- | (3,150 | ) | ||||
Net
cash used in investing activities
|
(44,021 | ) | (233,096 | ) | |||
Cash
flows from financing activities:
|
|||||||
Net
increase (decrease) in deposits
|
54,958 | (82,089 | ) | ||||
Proceeds
from long-term debt
|
- | 30,000 | |||||
Repayments
of long-term debt
|
(40,540 | ) | (60,736 | ) | |||
Net
increase (decrease) in short-term borrowings
|
(12,295 | ) | 259,186 | ||||
Cash
dividends paid on common stock
|
- | (14,367 | ) | ||||
Cash
dividends paid on preferred stock
|
(2,362 | ) | - | ||||
Tax
benefits from share-based compensation
|
- | 40 | |||||
Repurchases
of common stock
|
- | (1,824 | ) | ||||
Net
proceeds from issuance of common stock and stock option
exercises
|
85 | 359 | |||||
Net
proceeds from issuance of preferred stock and warrants
|
134,329 | - | |||||
Net
cash provided by financing activities
|
134,175 | 130,569 | |||||
Net
increase in cash and cash equivalents
|
96,311 | 30,973 | |||||
Cash
and cash equivalents at beginning of period
|
107,745 | 82,129 | |||||
Cash
and cash equivalents at end of period
|
$ | 204,056 | $ | 113,102 | |||
Supplemental
disclosure of cash flow information:
|
|||||||
Cash
paid during the period for:
|
|||||||
Interest
|
$ | 39,690 | $ | 61,371 | |||
Income
taxes
|
1,532 | 12,920 | |||||
Cash
received during the period for:
|
|||||||
Income
taxes
|
2,492 | - | |||||
Supplemental
disclosure of noncash investing and financing activities:
|
|||||||
Net
change in common stock held by directors' deferred compensation
plan
|
$ | 42 | $ | 44 | |||
Net
reclassification of loans to other real estate
|
9,761 | 7,401 | |||||
Net
transfer of loans to loans held for sale
|
5,152 | 162,984 | |||||
Securitization
of residential mortgage loans into trading mortgage backed
securities
|
- | 4,995 | |||||
Securitization
of residential mortgage loans into available for sale mortgage backed
securities
|
50,146 | - | |||||
Dividends
accrued on preferred stock
|
844 | - | |||||
Accretion
of preferred stock discount
|
660 | - | |||||
See accompanying
notes to consolidated financial statements.
|
|||||||
·
|
FSP
FAS 157-2 – FASB Staff Position FAS No. 157-2, “Effective Date of
FASB Statement No. 157,”
|
·
|
FSP
FAS 142-3 - FASB Staff Position FAS No. 142-3, “Determination of the
Useful Life of Intangible Assets,”
|
·
|
SFAS
141(R) – Statement of Financial Accounting Standards No. 141(R),
“Business Combinations,”
|
·
|
SFAS
160 – Statement of Financial Accounting Standards No. 160,
“Noncontrolling Interests in Consolidated Financial Statements—an
amendment of ARB No. 51,”
|
·
|
SFAS
161 – Statement of Financial Accounting Standards No. 161,
“Disclosures about Derivative Instruments and Hedging Activities - an
amendment of FASB Statement No. 133,”
and
|
·
|
FSP
EITF 03-6-1 – FASB Staff Position EITF No. 03-6-1, “Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating
Securities.”
|
Gross
|
Gross
|
Estimated
|
||||||||||||
Amortized
|
unrealized
|
unrealized
|
fair
|
|||||||||||
cost
|
gains
|
losses
|
value
|
|||||||||||
(Dollars
in thousands)
|
||||||||||||||
June
30, 2009
|
||||||||||||||
Held to Maturity
|
||||||||||||||
States
and political subdivisions
|
$ | 1,419 | $ | 7 | $ | - | $ | 1,426 | ||||||
U.S.
Government sponsored entities mortgage-backed securities
|
5,411 | 70 | - | 5,481 | ||||||||||
Total
|
$ | 6,830 | $ | 77 | $ | - | $ | 6,907 | ||||||
Available for Sale
|
||||||||||||||
U.S.
Government sponsored entities debt securities
|
$ | 198,414 | $ | 1,412 | $ | (864 | ) | $ | 198,962 | |||||
States
and political subdivisions
|
114,262 | 1,055 | (1,114 | ) | 114,203 | |||||||||
U.S.
Government sponsored entities mortgage-backed securities
|
648,652 | 9,833 | (4,049 | ) | 654,436 | |||||||||
Non-agency
collateralized mortgage obligations
|
91,651 | - | (10,140 | ) | 81,511 | |||||||||
Other
|
983 | - | (146 | ) | 837 | |||||||||
Total
|
$ | 1,053,962 | $ | 12,300 | $ | (16,313 | ) | $ | 1,049,949 | |||||
December
31, 2008
|
||||||||||||||
Held to Maturity
|
||||||||||||||
States
and political subdivisions
|
$ | 1,984 | $ | 8 | $ | - | $ | 1,992 | ||||||
U.S.
Government sponsored entities mortgage-backed securities
|
6,713 | 68 | (14 | ) | 6,767 | |||||||||
Total
|
$ | 8,697 | $ | 76 | $ | (14 | ) | $ | 8,759 | |||||
Available for Sale
|
||||||||||||||
U.S.
Government sponsored entities debt securities
|
$ | 98,819 | $ | 1,335 | $ | (225 | ) | $ | 99,929 | |||||
States
and political subdivisions
|
126,427 | 1,003 | (3,040 | ) | 124,390 | |||||||||
U.S.
Government sponsored entities mortgage-backed securities
|
403,031 | 8,615 | (338 | ) | 411,308 | |||||||||
Non-agency
collateralized mortgage obligations
|
111,308 | - | (5,217 | ) | 106,091 | |||||||||
Other
|
1,106 | - | (224 | ) | 882 | |||||||||
Total
|
$ | 740,691 | $ | 10,953 | $ | (9,044 | ) | $ | 742,600 |
June
30, 2009
|
||||||
Amortized
|
Estimated
|
|||||
Cost
|
Fair
Value
|
|||||
(Dollars
in thousands)
|
||||||
Held
to Maturity
|
||||||
Due
in one year or less
|
$ | 920 | $ | 923 | ||
Due
after one year through five years
|
499 | 503 | ||||
Mortgage-backed
securities
|
5,411 | 5,481 | ||||
Total
|
$ | 6,830 | $ | 6,907 | ||
Available
for Sale
|
||||||
Due
in one year or less
|
$ | 12,304 | $ | 12,697 | ||
Due
after one year through five years
|
136,419 | 136,675 | ||||
Due
after five years through ten years
|
127,787 | 128,648 | ||||
Due
after ten years
|
36,166 | 35,145 | ||||
Mortgage-backed
securities
|
648,652 | 654,436 | ||||
Non-agency
collateralized mortgage obligations
|
91,651 | 81,511 | ||||
Other
|
983 | 837 | ||||
Total
|
$ | 1,053,962 | $ | 1,049,949 |
Less
than 12 months
|
12
months or longer
|
Total
|
|||||||||||||||||||||
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
||||||||||||||||||
Description of Securities
|
Value
|
Losses
|
Value
|
Losses
|
Value
|
Losses
|
|||||||||||||||||
(Dollars
in thousands)
|
|||||||||||||||||||||||
At June 30, 2009:
|
|||||||||||||||||||||||
U.S.
Government sponsored entities
|
|||||||||||||||||||||||
debt
securities
|
$ | 79,017 | $ | (864 | ) | $ | - | $ | - | $ | 79,017 | $ | (864 | ) | |||||||||
States
and political subdivisions
|
32,250 | (1,105 | ) | 545 | (9 | ) | 32,795 | (1,114 | ) | ||||||||||||||
U.S.
Government sponsored entities
|
|||||||||||||||||||||||
mortgage-backed
securities
|
215,573 | (4,018 | ) | 6,029 | (31 | ) | 221,602 | (4,049 | ) | ||||||||||||||
Non-agency
collateralized mortgage obligations
|
2,471 | (37 | ) | 79,040 | (10,103 | ) | 81,511 | (10,140 | ) | ||||||||||||||
Other
|
837 | (146 | ) | - | - | 837 | (146 | ) | |||||||||||||||
Total
temporarily impaired securities
|
$ | 330,148 | $ | (6,170 | ) | $ | 85,614 | $ | (10,143 | ) | $ | 415,762 | $ | (16,313 | ) | ||||||||
At December 31, 2008:
|
|||||||||||||||||||||||
U.S.
Government sponsored entities
|
|||||||||||||||||||||||
debt
securities
|
$ | 9,969 | $ | (31 | ) | $ | 13,598 | $ | (194 | ) | $ | 23,567 | $ | (225 | ) | ||||||||
States
and political subdivisions
|
44,933 | (3,021 | ) | 536 | (19 | ) | 45,469 | (3,040 | ) | ||||||||||||||
U.S.
Government sponsored entities
|
|||||||||||||||||||||||
mortgage-backed
securities
|
7,525 | (30 | ) | 18,956 | (322 | ) | 26,481 | (352 | ) | ||||||||||||||
Non-agency
collateralized mortgage obligations
|
53,388 | (3,343 | ) | 52,703 | (1,874 | ) | 106,091 | (5,217 | ) | ||||||||||||||
Other
|
882 | (224 | ) | - | - | 882 | (224 | ) | |||||||||||||||
Total
temporarily impaired securities
|
$ | 116,697 | $ | (6,649 | ) | $ | 85,793 | $ | (2,409 | ) | $ | 202,490 | $ | (9,058 | ) |
·
|
The
length of time and the extent to which fair value has been less than the
amortized cost basis;
|
·
|
Adverse
conditions specifically related to the security, an industry, or a
geographic area;
|
·
|
The
historical and implied volatility of the fair value of the
security;
|
·
|
The
payment structure of the debt security and the likelihood of the issuer
being able to make payments;
|
·
|
Failure
of the issuer to make scheduled interest or principal
payments;
|
·
|
Any
rating changes by a rating agency;
and
|
·
|
Recoveries
or additional decline in fair value subsequent to the balance sheet
date.
|
Three
Months Ended
|
||
June
30, 2009
|
||
(Dollars
in thousands)
|
||
Balance
at beginning of period
|
$ | - |
Additions:
|
||
Initial
credit impairments
|
2,565 | |
Balance
at end of period
|
$ | 2,565 |
June
30,
|
December
31,
|
||||||
2009
|
2008
|
||||||
(Dollars
in thousands)
|
|||||||
Commercial,
financial and agricultural
|
$ | 312,812 | $ | 384,473 | |||
Real
estate:
|
|||||||
Construction
|
1,089,127 | 1,127,162 | |||||
Mortgage
- residential
|
913,059 | 1,073,039 | |||||
Mortgage
- commercial
|
1,172,860 | 1,215,857 | |||||
Consumer
|
156,886 | 180,131 | |||||
Leases
|
50,694 | 58,411 | |||||
3,695,438 | 4,039,073 | ||||||
Unearned
income
|
(6,919 | ) | (8,807 | ) | |||
Total
loans and leases
|
$ | 3,688,519 | $ | 4,030,266 |
Three
Months Ended
|
Six
Months Ended
|
||||||||||||||
June
30,
|
June
30,
|
||||||||||||||
2009
|
2008
|
2009
|
2008
|
||||||||||||
(Dollars
in thousands)
|
|||||||||||||||
Balance,
beginning of period
|
$ | 122,286 | $ | 72,108 | $ | 119,878 | $ | 92,049 | |||||||
Provision
for loan and lease losses
|
74,324 | 87,800 | 101,074 | 122,072 | |||||||||||
196,610 | 159,908 | 220,952 | 214,121 | ||||||||||||
Charge-offs
|
(30,943 | ) | (74,257 | ) | (55,758 | ) | (129,067 | ) | |||||||
Recoveries
|
404 | 399 | 877 | 996 | |||||||||||
Net
charge-offs
|
(30,539 | ) | (73,858 | ) | (54,881 | ) | (128,071 | ) | |||||||
Balance,
end of period
|
$ | 166,071 | $ | 86,050 | $ | 166,071 | $ | 86,050 |
Core
|
Mortgage
|
||||||||||||||||||
Deposit
|
Servicing
|
Customer
|
Non-Compete
|
||||||||||||||||
Premium
|
Rights
|
Relationships
|
Agreements
|
Total
|
|||||||||||||||
(Dollars
in thousands)
|
|||||||||||||||||||
Balance,
beginning of period
|
$ | 26,076 | $ | 12,107 | $ | 1,330 | $ | 270 | $ | 39,783 | |||||||||
Additions
|
- | 7,901 | - | - | 7,901 | ||||||||||||||
Amortization
|
(1,337 | ) | (1,534 | ) | (70 | ) | (30 | ) | (2,971 | ) | |||||||||
Balance,
end of period
|
$ | 24,739 | $ | 18,474 | $ | 1,260 | $ | 240 | $ | 44,713 |
June
30, 2009
|
December
31, 2008
|
|||||||||||||||||||||
Gross
|
Gross
|
|||||||||||||||||||||
Carrying
|
Accumulated
|
Carrying
|
Accumulated
|
|||||||||||||||||||
Value
|
Amortization
|
Net
|
Value
|
Amortization
|
Net
|
|||||||||||||||||
(Dollars
in thousands)
|
||||||||||||||||||||||
Core
deposit premium
|
$ | 44,642 | $ | (19,903 | ) | $ | 24,739 | $ | 44,642 | $ | (18,566 | ) | $ | 26,076 | ||||||||
Mortgage
servicing rights
|
31,528 | (13,054 | ) | 18,474 | 23,627 | (11,520 | ) | 12,107 | ||||||||||||||
Customer
relationships
|
1,400 | (140 | ) | 1,260 | 1,400 | (70 | ) | 1,330 | ||||||||||||||
Non-compete
agreements
|
300 | (60 | ) | 240 | 300 | (30 | ) | 270 | ||||||||||||||
$ | 77,870 | $ | (33,157 | ) | $ | 44,713 | $ | 69,969 | $ | (30,186 | ) | $ | 39,783 |
Estimated
Amortization Expense
|
||||||||||||||||||
Mortgage
|
||||||||||||||||||
Core
Deposit
|
Servicing
|
Customer
|
Non-Compete
|
|||||||||||||||
Premium
|
Rights
|
Relationships
|
Agreements
|
Total
|
||||||||||||||
(Dollars
in thousands)
|
||||||||||||||||||
2009
(remainder)
|
$ | 1,337 | $ | 1,022 | $ | 70 | $ | 30 | $ | 2,459 | ||||||||
2010
|
2,674 | 2,377 | 140 | 60 | 5,251 | |||||||||||||
2011
|
2,674 | 2,072 | 140 | 60 | 4,946 | |||||||||||||
2012
|
2,674 | 1,822 | 140 | 60 | 4,696 | |||||||||||||
2013
|
2,674 | 1,613 | 140 | 30 | 4,457 | |||||||||||||
2014
|
2,674 | 1,431 | 140 | - | 4,245 | |||||||||||||
Thereafter
|
10,032 | 8,137 | 490 | - | 18,659 | |||||||||||||
$ | 24,739 | $ | 18,474 | $ | 1,260 | $ | 240 | $ | 44,713 |
Asset
Derivatives
|
Liability
Derivatives
|
||||||||||||||||
Derivatives
designated as hedging instruments under SFAS 133
|
Balance
Sheet Location
|
Fair
Value at
June
30, 2009
|
Fair
Value at
December
31, 2008
|
Fair
Value at
June
30, 2009
|
Fair
Value at
December
31, 2008
|
||||||||||||
(Dollars
in thousands)
|
|||||||||||||||||
Interest
rate contracts
|
Other
assets
|
$ | 16,438 | $ | 26,903 | $ | - | $ | - | ||||||||
Derivatives
not designated as hedging instruments under
SFAS
133
|
|||||||||||||||||
Interest
rate contracts
|
Other
assets /
|
$ | 1,372 | $ | 3,815 | $ | 488 | $ | 1,314 | ||||||||
other
liabilities
|
|||||||||||||||||
Total
derivatives
|
$ | 17,810 | $ | 30,718 | $ | 488 | $ | 1,314 |
Derivatives
in SFAS 133
Cash
Flow Hedging Relationship
|
Amount
of Loss Recognized in AOCI on Derivative (Effective
Portion)
|
Amount
of Loss Reclassified from AOCI into Earnings (Effective
Portion)
|
Amount
of Gain Recognized in Earnings on Derivative (Ineffective
Portion)
|
||||||||
(Dollars
in thousands)
|
|||||||||||
Three
Months Ended June 30, 2009
|
|||||||||||
Interest
rate contracts
|
$ | (8,763 | ) | $ | (3,786 | ) | $ | 2,290 | |||
Six
Months Ended June 30, 2009
|
|||||||||||
Interest
rate contracts
|
$ | (7,533 | ) | $ | (1,794 | ) | $ | 2,106 |
Derivatives
not in SFAS 133
Cash
Flow Hedging Relationship
|
Location
of Loss Recognized in Earnings on Derivatives
|
Amount
of Loss Recognized in Earnings on Derivatives
|
||||
(Dollars
in thousands)
|
||||||
Three
Months Ended June 30, 2009
|
||||||
Interest
rate contracts
|
Other
operating income
|
$ | (803 | ) | ||
Six
Months Ended June 30, 2009
|
||||||
Interest
rate contracts
|
Other
operating income
|
$ | (2,497 | ) |
Weighted
Average
|
|||||
Shares
|
Exercise
Price
|
||||
Outstanding
at January 1, 2009
|
902,398 | $ | 26.48 | ||
Changes
during the period:
|
|||||
Granted
|
141,561 | 3.97 | |||
Expired
|
(21,803 | ) | 26.41 | ||
Forfeited
|
(14,252 | ) | 25.22 | ||
Outstanding
at June 30, 2009
|
1,007,904 | 23.29 |
Three
Months Ended
|
Six
Months Ended
|
||||||||||||||
June
30,
|
June
30,
|
||||||||||||||
2009
|
2008
|
2009
|
2008
|
||||||||||||
Expected
volatility
|
58.6 | % | 32.5 | % | 54.7 | % | 32.0 | % | |||||||
Risk
free interest rate
|
3.7 | % | 4.9 | % | 2.6 | % | 2.8 | % | |||||||
Expected
dividends
|
1.0 | % | 8.0 | % | 0.8 | % | 5.4 | % | |||||||
Expected
life (in years)
|
6.5 | 6.5 | 5.5 | 6.5 | |||||||||||
Weighted
average fair value
|
$ | 2.94 | $ | 1.89 | $ | 1.87 | $ | 3.47 |
Weighted
Average
|
|||||
Grant
Date
|
|||||
Shares
|
Fair
Value
|
||||
Nonvested
at January 1, 2009
|
33,620 | $ | 34.23 | ||
Changes
during the period:
|
|||||
Vested
|
(3,500 | ) | 35.21 | ||
Nonvested
at June 30, 2009
|
30,120 | 34.12 |
Weighted
Average
|
|||||
Grant
Date
|
|||||
Shares
|
Fair
Value
|
||||
Nonvested
at January 1, 2009
|
96,054 | $ | 18.88 | ||
Changes
during the period:
|
|||||
Forfeited
|
(4,290 | ) | 18.88 | ||
Nonvested
at June 30, 2009
|
91,764 | 18.88 |
Weighted
Average
|
|||||
Shares
|
Exercise
Price
|
||||
Outstanding
at January 1, 2009
|
237,935 | $ | 20.74 | ||
Changes
during the period:
|
|||||
Vested
|
(22,147 | ) | 35.17 | ||
Forfeited
|
(180 | ) | 35.90 | ||
Outstanding
at June 30, 2009
|
215,608 | 19.25 |
June
30,
|
December
31,
|
||||||
2009
|
2008
|
||||||
(Dollars
in thousands)
|
|||||||
Available
for sale securities:
|
|||||||
Unrealized
losses due to other-than-temporary impairment related to factors other
than credit
|
$ | (7,888 | ) | $ | - | ||
All
other unrealized gains
|
3,875 | 1,909 | |||||
Unrealized
holding gains on derivatives
|
12,234 | 24,806 | |||||
Pension
adjustments
|
(19,977 | ) | (21,058 | ) | |||
Tax
effect
|
4,713 | (2,267 | ) | ||||
Accumulated
other comprehensive income (loss), net of tax
|
$ | (7,043 | ) | $ | 3,390 |
Three
Months Ended
|
Six
Months Ended
|
||||||||||||||
June
30,
|
June
30,
|
||||||||||||||
2009
|
2008
|
2009
|
2008
|
||||||||||||
(Dollars
in thousands)
|
|||||||||||||||
Net
loss
|
$ | (34,442 | ) | $ | (146,258 | ) | $ | (31,813 | ) | $ | (144,600 | ) | |||
Unrealized
gain (loss) on investment securities, net of taxes
|
1,896 | (7,147 | ) | (3,547 | ) | (3,202 | ) | ||||||||
Unrealized
loss on derivatives, net of taxes
|
(8,763 | ) | (7,785 | ) | (7,533 | ) | (5,050 | ) | |||||||
Pension
adjustments, net of taxes
|
324 | 113 | 647 | 224 | |||||||||||
Comprehensive
loss
|
$ | (40,985 | ) | $ | (161,077 | ) | $ | (42,246 | ) | $ | (152,628 | ) |
Three
Months Ended
|
Six
Months Ended
|
||||||||||||||
June
30,
|
June
30,
|
||||||||||||||
2009
|
2008
|
2009
|
2008
|
||||||||||||
(Dollars
in thousands)
|
|||||||||||||||
Interest
cost
|
$ | 450 | $ | 451 | $ | 900 | $ | 902 | |||||||
Expected
return on assets
|
(350 | ) | (574 | ) | (700 | ) | (1,148 | ) | |||||||
Amortization
of unrecognized loss
|
525 | 186 | 1,050 | 372 | |||||||||||
Net
periodic cost
|
$ | 625 | $ | 63 | $ | 1,250 | $ | 126 |
Three
Months Ended
|
Six
Months Ended
|
||||||||||||||
June
30,
|
June
30,
|
||||||||||||||
2009
|
2008
|
2009
|
2008
|
||||||||||||
(Dollars
in thousands)
|
|||||||||||||||
Service
cost
|
$ | 26 | $ | 75 | $ | 52 | $ | 150 | |||||||
Interest
cost
|
116 | 138 | 232 | 276 | |||||||||||
Amortization
of unrecognized transition obligation
|
9 | 5 | 18 | 10 | |||||||||||
Amortization
of prior service cost
|
5 | 5 | 10 | 10 | |||||||||||
Amortization
of unrecognized (gain) loss
|
1 | (8 | ) | 2 | (16 | ) | |||||||||
Net
periodic cost
|
$ | 157 | $ | 215 | $ | 314 | $ | 430 |
Three
Months Ended
|
Six
Months Ended
|
||||||||||||||
June
30,
|
June
30,
|
||||||||||||||
2009
|
2008
|
2009
|
2008
|
||||||||||||
(In
thousands, except per share data)
|
|||||||||||||||
Net
loss
|
$ | (34,442 | ) | $ | (146,258 | ) | $ | (31,813 | ) | $ | (144,600 | ) | |||
Preferred
stock dividends and accretion
|
1,999 | - | 3,866 | - | |||||||||||
Net
loss available to common shareholders
|
$ | (36,441 | ) | $ | (146,258 | ) | $ | (35,679 | ) | $ | (144,600 | ) | |||
Weighted
average shares outstanding - basic
|
28,687 | 28,652 | 28,684 | 28,670 | |||||||||||
Dilutive
effect of employee stock options and awards
|
- | - | - | - | |||||||||||
Weighted
average shares outstanding - diluted
|
28,687 | 28,652 | 28,684 | 28,670 | |||||||||||
Basic
and diluted loss per share
|
$ | (1.27 | ) | $ | (5.10 | ) | $ | (1.24 | ) | $ | (5.04 | ) |
June
30, 2009
|
December
31, 2008
|
||||||||||||||
Carrying/
|
Carrying/
|
||||||||||||||
notional
|
Estimated
|
notional
|
Estimated
|
||||||||||||
amount
|
fair
value
|
amount
|
fair
value
|
||||||||||||
(Dollars
in thousands)
|
|||||||||||||||
Financial
assets
|
|||||||||||||||
Cash
and due from banks
|
$ | 161,985 | $ | 161,985 | $ | 107,270 | $ | 107,270 | |||||||
Interest-bearing
deposits in other banks
|
23,071 | 23,071 | 475 | 475 | |||||||||||
Federal
funds sold
|
19,000 | 19,000 | - | - | |||||||||||
Investment
securities
|
1,056,779 | 1,056,855 | 751,297 | 751,360 | |||||||||||
Net
loans and leases, including loans held for sale
|
3,607,196 | 3,478,781 | 3,950,496 | 3,951,627 | |||||||||||
Accrued
interest receivable
|
18,724 | 18,724 | 20,079 | 20,079 | |||||||||||
Financial
liabilities
|
|||||||||||||||
Deposits:
|
|||||||||||||||
Noninterest-bearing
deposits
|
623,698 | 623,698 | 627,094 | 627,094 | |||||||||||
Interest-bearing
demand and savings deposits
|
1,977,047 | 1,977,047 | 1,530,150 | 1,530,150 | |||||||||||
Time
deposits
|
1,365,779 | 1,371,256 | 1,754,322 | 1,763,388 | |||||||||||
Total
deposits
|
3,966,524 | 3,972,001 | 3,911,566 | 3,920,089 | |||||||||||
Short-term
borrowings
|
267,155 | 267,172 | 279,450 | 279,452 | |||||||||||
Long-term
debt
|
608,554 | 540,713 | 649,257 | 593,492 | |||||||||||
Accrued
interest payable (included in other liabilities)
|
11,487 | 11,487 | 12,861 | 12,861 | |||||||||||
Off-balance
sheet financial instruments
|
|||||||||||||||
Commitments
to extend credit
|
633,785 | 3,169 | 835,579 | 4,178 | |||||||||||
Standby
letters of credit and financial guarantees written
|
46,744 | 351 | 59,147 | 444 | |||||||||||
Interest
rate options
|
95,850 | 226 | 388,934 | 3,574 | |||||||||||
Interest
rate swaps
|
400,000 | 16,438 | 400,000 | 26,903 | |||||||||||
Forward
interest rate contracts
|
86,347 | 658 | 91,378 | (1,074 | ) | ||||||||||
Forward
foreign exchange contracts
|
- | - | 150 | 149 |
·
|
Level
1 – Valuation is based upon quoted prices (unadjusted) for identical
assets or liabilities traded in active markets. A quoted price in an
active market provides the most reliable evidence of fair value and shall
be used to measure fair value whenever
available.
|
·
|
Level
2 – Valuation is based upon quoted prices for similar instruments in
active markets, quoted prices for identical or similar instruments in
markets that are not active, and model-based valuation techniques for
which all significant assumptions are observable in the
market.
|
·
|
Level
3 – Valuation is generated from model-based techniques that use
significant assumptions not observable in the market. These unobservable
assumptions reflect our own estimates of assumptions that market
participants would use in pricing the asset or liability. Valuation
techniques include use of discounted cash flow models and similar
techniques that requires the use of significant judgment or
estimation.
|
Level
1
|
Level
2
|
Level
3
|
Total
|
|||||||||||
(Dollars
in thousands)
|
||||||||||||||
June
30, 2009
|
||||||||||||||
Available
for sale securities:
|
||||||||||||||
U.S.
Government sponsered entities debt securities
|
$ | - | $ | 198,962 | $ | - | $ | 198,962 | ||||||
States
and political subdivisions
|
- | 100,228 | 13,975 | 114,203 | ||||||||||
U.S.
Government sponsered entities mortgage-backed securities
|
- | 654,436 | - | 654,436 | ||||||||||
Non-agency
collateralized mortgage obligations
|
- | - | 81,511 | 81,511 | ||||||||||
Other
|
837 | - | - | 837 | ||||||||||
Net
derivatives
|
- | 17,322 | - | 17,322 | ||||||||||
Total
|
$ | 837 | $ | 970,948 | $ | 95,486 | $ | 1,067,271 | ||||||
December
31, 2008
|
||||||||||||||
Available
for sale securities
|
||||||||||||||
U.S.
Government sponsered entities debt securities
|
$ | - | $ | 99,929 | $ | - | $ | 99,929 | ||||||
States
and political subdivisions
|
- | 110,146 | 14,244 | 124,390 | ||||||||||
U.S.
Government sponsered entities mortgage-backed securities
|
- | 411,308 | - | 411,308 | ||||||||||
Non-agency
collateralized mortgage obligations
|
- | - | 106,091 | 106,091 | ||||||||||
Other
|
882 | - | - | 882 | ||||||||||
Net
derivatives
|
- | 29,403 | - | 29,403 | ||||||||||
Total
|
$ | 882 | $ | 650,786 | $ | 120,335 | $ | 772,003 |
Available
for sale securities
|
Available
for sale non-agency collateralized mortgage obligations
(1)
|
||||||
(Dollars
in thousands)
|
|||||||
Balance
at January 1, 2009
|
$ | 14,244 | $ | 106,091 | |||
Principal
payments received
|
(269 | ) | (19,657 | ) | |||
Unrealized
net losses included in other comprehensive income
|
- | (4,923 | ) | ||||
Balance
at June 30, 2009
|
$ | 13,975 | $ | 81,511 | |||
Balance
at January 1, 2008
|
$ | 14,821 | $ | - | |||
Principal
payments received on mortgage revenue bonds
|
(272 | ) | - | ||||
Balance
at June 30, 2008
|
$ | 14,549 | $ | - | |||
(1) Represents
available for sale non-agency collateralized mortgage oblilgations
previously classified
|
|||||||
as Level 2 for which the market became inactive during 2008; therefore the
fair value measurement
|
|||||||
was derived from discounted cash flow models using unobservable inputs and
assumptions.
|
Level
1
|
Level
2
|
Level
3
|
Total
|
|||||||||||
(Dollars
in thousands)
|
||||||||||||||
June
30, 2009
|
||||||||||||||
Loans
held for sale (1)
|
$ | - | $ | 5,152 | $ | - | $ | 5,152 | ||||||
Impaired
loans (1)
|
- | 210,927 | - | 210,927 | ||||||||||
December
31, 2008
|
||||||||||||||
Loans
held for sale (1)
|
$ | - | $ | 10,450 | $ | - | $ | 10,450 | ||||||
Impaired
loans (1)
|
- | 153,909 | - | 153,909 | ||||||||||
Mortgage
servicing rights (2)
|
- | - | 12,107 | 12,107 | ||||||||||
(1)
Represents carrying value and related write-downs of loans for which
adjustments are based
|
||||||||||||||
on agreed upon purchase prices for the loans or the appraised value of the
collateral.
|
||||||||||||||
(2)
Represents fair market value of mortgage servicing rights, net of an
impairment charge of $3.4
million.
|
Commercial
|
Hawaii
|
||||||||||||||||||
Real
Estate
|
Market
|
Treasury
|
All
Others
|
Total
|
|||||||||||||||
(Dollars
in thousands)
|
|||||||||||||||||||
Three
months ended June 30, 2009:
|
|||||||||||||||||||
Net
interest income
|
$ | 24,155 | $ | 16,473 | $ | 5,432 | $ | - | $ | 46,060 | |||||||||
Intersegment
net interest income (expense)
|
(12,402 | ) | 14,659 | (3,473 | ) | 1,216 | - | ||||||||||||
Provision
for loan and lease losses
|
(62,200 | ) | (12,124 | ) | - | - | (74,324 | ) | |||||||||||
Other
operating income
|
320 | 12,475 | 1,712 | 92 | 14,599 | ||||||||||||||
Other
operating expense
|
(8,884 | ) | (24,364 | ) | (1,123 | ) | (11,447 | ) | (45,818 | ) | |||||||||
Administrative
and overhead expense allocation
|
(1,216 | ) | (8,961 | ) | (87 | ) | 10,264 | - | |||||||||||
Income
taxes
|
21,140 | 4,125 | (531 | ) | 307 | 25,041 | |||||||||||||
Net
income (loss)
|
$ | (39,087 | ) | $ | 2,283 | $ | 1,930 | $ | 432 | $ | (34,442 | ) | |||||||
Three
months ended June 30, 2008:
|
|||||||||||||||||||
Net
interest income
|
$ | 32,025 | $ | 19,969 | $ | (610 | ) | $ | - | $ | 51,384 | ||||||||
Intersegment
net interest income (expense)
|
(20,838 | ) | 14,584 | 2,398 | 3,856 | - | |||||||||||||
Provision
for loan and lease losses
|
(85,600 | ) | (2,200 | ) | - | - | (87,800 | ) | |||||||||||
Other
operating income
|
119 | 10,585 | 1,235 | (8 | ) | 11,931 | |||||||||||||
Goodwill
impairment
|
(94,279 | ) | - | - | - | (94,279 | ) | ||||||||||||
Other
operating expense (excluding goodwill impairment)
|
(33,037 | ) | (20,162 | ) | (665 | ) | (12,140 | ) | (66,004 | ) | |||||||||
Administrative
and overhead expense allocation
|
(916 | ) | (10,598 | ) | (103 | ) | 11,617 | - | |||||||||||
Income
taxes
|
42,187 | (2,522 | ) | (784 | ) | (371 | ) | 38,510 | |||||||||||
Net
income (loss)
|
$ | (160,339 | ) | $ | 9,656 | $ | 1,471 | $ | 2,954 | $ | (146,258 | ) | |||||||
Six
months ended June 30, 2009:
|
|||||||||||||||||||
Net
interest income
|
$ | 49,087 | $ | 33,928 | $ | 9,518 | $ | - | $ | 92,533 | |||||||||
Intersegment
net interest income (expense)
|
(26,199 | ) | 27,509 | (5,026 | ) | 3,716 | - | ||||||||||||
Provision
for loan losses
|
(86,200 | ) | (14,874 | ) | - | - | (101,074 | ) | |||||||||||
Other
operating income
|
501 | 22,883 | 2,989 | 3,910 | 30,283 | ||||||||||||||
Other
operating expense
|
(14,106 | ) | (44,586 | ) | (1,926 | ) | (22,898 | ) | (83,516 | ) | |||||||||
Administrative
and overhead expense allocation
|
(2,413 | ) | (17,550 | ) | (179 | ) | 20,142 | - | |||||||||||
Income
taxes
|
27,887 | 4,259 | (1,212 | ) | (973 | ) | 29,961 | ||||||||||||
Net
income (loss)
|
$ | (51,443 | ) | $ | 11,569 | $ | 4,164 | $ | 3,897 | $ | (31,813 | ) | |||||||
Six
months ended June 30, 2008:
|
|||||||||||||||||||
Net
interest income
|
$ | 69,070 | $ | 37,080 | $ | (3,909 | ) | $ | - | $ | 102,241 | ||||||||
Intersegment
net interest income (expense)
|
(45,301 | ) | 32,982 | 4,524 | 7,795 | - | |||||||||||||
Provision
for loan losses
|
(118,900 | ) | (3,172 | ) | - | - | (122,072 | ) | |||||||||||
Other
operating income
|
177 | 21,543 | 4,214 | 276 | 26,210 | ||||||||||||||
Goodwill
impairment
|
(94,279 | ) | - | - | - | (94,279 | ) | ||||||||||||
Other
operating expense (excluding goodwill impairment)
|
(33,771 | ) | (37,661 | ) | (1,274 | ) | (24,758 | ) | (97,464 | ) | |||||||||
Administrative
and overhead expense allocation
|
(2,773 | ) | (20,126 | ) | (194 | ) | 23,093 | - | |||||||||||
Income
taxes
|
50,325 | (7,696 | ) | (775 | ) | (1,090 | ) | 40,764 | |||||||||||
Net
income (loss)
|
$ | (175,452 | ) | $ | 22,950 | $ | 2,586 | $ | 5,316 | $ | (144,600 | ) | |||||||
At
June 30, 2009:
|
|||||||||||||||||||
Investment
securities
|
$ | - | $ | - | $ | 1,056,779 | $ | - | $ | 1,056,779 | |||||||||
Loans
and leases (including loans held for sale)
|
1,963,025 | 1,810,242 | - | - | 3,773,267 | ||||||||||||||
Other
|
(33,963 | ) | 232,748 | 397,255 | 99,201 | 695,241 | |||||||||||||
Total
assets
|
$ | 1,929,062 | $ | 2,042,990 | $ | 1,454,034 | $ | 99,201 | $ | 5,525,287 | |||||||||
At
December 31, 2008:
|
|||||||||||||||||||
Investment
securities
|
$ | - | $ | - | $ | 751,297 | $ | - | $ | 751,297 | |||||||||
Loans
and leases (including loans held for sale)
|
2,083,543 | 1,986,831 | - | - | 4,070,374 | ||||||||||||||
Other
|
(7,136 | ) | 217,146 | 300,810 | 99,870 | 610,690 | |||||||||||||
Total
assets
|
$ | 2,076,407 | $ | 2,203,977 | $ | 1,052,107 | $ | 99,870 | $ | 5,432,361 |
Three
Months Ended
|
Six
Months Ended
|
||||||||||||||
June
30,
|
June
30,
|
||||||||||||||
2009
|
2008
|
2009
|
2008
|
||||||||||||
Loss
on average assets
|
(2.51 | ) % | (9.96 | ) % | (1.16 | ) % | (4.98 | ) % | |||||||
Loss
on average shareholders' equity
|
(20.88 | ) % | (86.27 | ) % | (9.96 | ) % | (42.27 | ) % | |||||||
Loss
on average tangible equity
|
(28.67 | ) % | (143.86 | ) % | (13.85 | ) % | (70.22 | ) % | |||||||
Basic
and diluted loss per common share
|
$ | (1.27 | ) | $ | (5.10 | ) | $ | (1.24 | ) | $ | (5.04 | ) |
Three
Months Ended
|
Three
Months Ended
|
|||||||||||||||||||||
June
30, 2009
|
June
30, 2008
|
|||||||||||||||||||||
Average
|
Average
|
Amount
|
Average
|
Average
|
Amount
|
|||||||||||||||||
(Dollars
in thousands)
|
Balance
|
Yield/Rate
|
of
Interest
|
Balance
|
Yield/Rate
|
of
Interest
|
||||||||||||||||
Assets
|
||||||||||||||||||||||
Interest
earning assets:
|
||||||||||||||||||||||
Interest-bearing
deposits in other banks
|
$ | 66,158 | 0.07 | % |
|
$ | 11 | $ | 700 | 1.71 | % |
|
$ | 3 | ||||||||
Federal
funds sold & securities purchased
|
||||||||||||||||||||||
under
agreements to resell
|
17,181 | 0.13 | 6 | 4,385 | 2.04 | 22 | ||||||||||||||||
Taxable
investment securities (1)
|
840,598 | 4.31 | 9,060 | 710,653 | 5.25 | 9,319 | ||||||||||||||||
Tax-exempt
investment securities (1)
|
118,863 | 5.94 | 1,764 | 150,796 | 5.78 | 2,179 | ||||||||||||||||
Loans
and leases, net of unearned income (2)
|
3,862,201 | 5.63 | 54,218 | 4,346,980 | 6.07 | 65,677 | ||||||||||||||||
Federal
Home Loan Bank stock
|
48,797 | - | - | 48,797 | 1.40 | 171 | ||||||||||||||||
Total
interest earning assets
|
4,953,798 | 5.26 | 65,059 | 5,262,311 | 5.90 | 77,371 | ||||||||||||||||
Nonearning
assets
|
533,688 | 613,736 | ||||||||||||||||||||
Total
assets
|
$ | 5,487,486 | $ | 5,876,047 | ||||||||||||||||||
Liabilities
and Shareholders' Equity
|
||||||||||||||||||||||
Interest-bearing
liabilities:
|
||||||||||||||||||||||
Interest-bearing
demand deposits
|
$ | 540,416 | 0.26 | % |
|
$ | 355 | $ | 472,037 | 0.15 | % |
|
$ | 179 | ||||||||
Savings
and money market deposits
|
1,345,028 | 1.02 | 3,414 | 1,111,289 | 1.08 | 2,980 | ||||||||||||||||
Time
deposits under $100,000
|
668,096 | 2.62 | 4,364 | 590,750 | 2.81 | 4,126 | ||||||||||||||||
Time
deposits $100,000 and over
|
942,322 | 1.64 | 3,855 | 1,054,284 | 2.89 | 7,580 | ||||||||||||||||
Short-term
borrowings
|
52,895 | 0.25 | 34 | 369,489 | 2.57 | 2,357 | ||||||||||||||||
Long-term
debt
|
615,944 | 4.14 | 6,359 | 897,740 | 3.58 | 8,002 | ||||||||||||||||
Total
interest-bearing liabilities
|
4,164,701 | 1.77 | 18,381 | 4,495,589 | 2.26 | 25,224 | ||||||||||||||||
Noninterest-bearing
deposits
|
583,265 | 607,581 | ||||||||||||||||||||
Other
liabilities
|
69,526 | 84,702 | ||||||||||||||||||||
Shareholders'
equity
|
669,994 | 688,175 | ||||||||||||||||||||
Total
liabilities and shareholders' equity
|
$ | 5,487,486 | $ | 5,876,047 | ||||||||||||||||||
Net
interest income
|
$ | 46,678 | $ | 52,147 | ||||||||||||||||||
Net
interest margin
|
3.77 | % | 3.97 | % |
Six
Months Ended
|
Six
Months Ended
|
|||||||||||||||||||||
June
30, 2009
|
June
30, 2008
|
|||||||||||||||||||||
Average
|
Average
|
Amount
|
Average
|
Average
|
Amount
|
|||||||||||||||||
(Dollars
in thousands)
|
Balance
|
Yield/Rate
|
of
Interest
|
Balance
|
Yield/Rate
|
of
Interest
|
||||||||||||||||
Assets
|
||||||||||||||||||||||
Interest
earning assets:
|
||||||||||||||||||||||
Interest-bearing
deposits in other banks
|
$ | 35,299 | 0.06 | % |
|
$ | 11 | $ | 597 | 2.32 | % |
|
$ | 7 | ||||||||
Federal
funds sold & securities purchased
|
||||||||||||||||||||||
under
agreements to resell
|
8,827 | 0.13 | 6 | 3,513 | 2.48 | 43 | ||||||||||||||||
Taxable
investment securities (1)
|
806,133 | 4.41 | 17,792 | 724,843 | 5.14 | 18,614 | ||||||||||||||||
Tax-exempt
investment securities (1)
|
121,026 | 5.89 | 3,565 | 151,556 | 5.70 | 4,316 | ||||||||||||||||
Loans
and leases, net of unearned income (2)
|
3,938,559 | 5.66 | 110,723 | 4,297,175 | 6.36 | 135,971 | ||||||||||||||||
Federal
Home Loan Bank stock
|
48,797 | - | - | 48,797 | 1.20 | 293 | ||||||||||||||||
Total
interest earning assets
|
4,958,641 | 5.36 | 132,097 | 5,226,481 | 6.12 | 159,244 | ||||||||||||||||
Nonearning
assets
|
524,343 | 585,769 | ||||||||||||||||||||
Total
assets
|
$ | 5,482,984 | $ | 5,812,250 | ||||||||||||||||||
Liabilities
and Equity
|
||||||||||||||||||||||
Interest-bearing
liabilities:
|
||||||||||||||||||||||
Interest-bearing
demand deposits
|
$ | 519,598 | 0.26 | % |
|
$ | 676 | $ | 461,548 | 0.14 | % |
|
$ | 316 | ||||||||
Savings
and money market deposits
|
1,266,405 | 1.00 | 6,277 | 1,126,287 | 1.21 | 6,765 | ||||||||||||||||
Time
deposits under $100,000
|
689,396 | 2.73 | 9,344 | 561,634 | 3.08 | 8,607 | ||||||||||||||||
Time
deposits $100,000 and over
|
939,956 | 1.88 | 8,769 | 1,079,719 | 3.32 | 17,828 | ||||||||||||||||
Short-term
borrowings
|
125,324 | 0.44 | 272 | 299,471 | 2.87 | 4,280 | ||||||||||||||||
Long-term
debt
|
624,391 | 4.19 | 12,978 | 908,873 | 3.92 | 17,696 | ||||||||||||||||
Total
interest-bearing liabilities
|
4,165,070 | 1.86 | 38,316 | 4,437,532 | 2.51 | 55,492 | ||||||||||||||||
Noninterest-bearing
deposits
|
584,491 | 603,313 | ||||||||||||||||||||
Other
liabilities
|
84,293 | 77,195 | ||||||||||||||||||||
Total
equity
|
649,130 | 694,210 | ||||||||||||||||||||
Total
liabilities and equity
|
$ | 5,482,984 | $ | 5,812,250 | ||||||||||||||||||
Net
interest income
|
$ | 93,781 | $ | 103,752 | ||||||||||||||||||
Net
interest margin
|
3.80 | % | 3.98 | % | ||||||||||||||||||
(1)
At amortized cost.
|
||||||||||||||||||||||
(2)
Includes nonaccrual loans.
|
June
30,
|
December
31,
|
||||||
2009
|
2008
|
||||||
(Dollars
in thousands)
|
|||||||
Nonperforming Assets
|
|||||||
Nonaccrual
loans (including loans held for sale):
|
|||||||
Commercial,
financial and agricultural
|
$ | 17,170 | $ | 1,426 | |||
Real
estate:
|
|||||||
Construction
|
189,790 | 119,178 | |||||
Mortgage-residential
|
16,548 | 6,162 | |||||
Mortgage-commercial
|
16,939 | 5,462 | |||||
Leases
|
2,856 | 335 | |||||
Total
non accrual loans
|
243,303 | 132,563 | |||||
Other
real estate
|
17,862 | 11,220 | |||||
Total
nonperforming assets
|
261,165 | 143,783 | |||||
Accruing loans delinquent for 90 days or
more:
|
|||||||
Commercial,
financial and agricultural
|
- | - | |||||
Real
estate:
|
|||||||
Construction
|
318 | - | |||||
Mortgage-residential
|
3,437 | 582 | |||||
Mortgage-commercial
|
- | - | |||||
Consumer
|
692 | 488 | |||||
Total
accruing loans delinquent for 90 days or more
|
4,447 | 1,070 | |||||
Restructured loans still accruing
interest:
|
|||||||
Total
restructured loans still accruing interest
|
- | - | |||||
Total
nonperforming assets, accruing loans delinquent for 90
|
|||||||
days
or more and restructured loans still accruing interest
|
$ | 265,612 | $ | 144,853 | |||
Total
nonperforming assets as a percentage of loans
|
|||||||
and
leases, loans held for sale and other real estate
|
6.89 | % | 3.52 | % | |||
Total
nonperforming assets and accruing loans delinquent for
|
|||||||
90
days or more as a percentage of loans and leases, loans
|
|||||||
held
for sale and other real estate
|
7.01 | % | 3.55 | % | |||
Total
nonperforming assets, accruing loans delinquent for 90
days
|
|||||||
or
more and restructured loans still accruing interest as a
percentage
|
|||||||
of
loans and leases, loans held for sale and other real
estate
|
7.01 | % | 3.55 | % |
Three
Months Ended
|
Six
Months Ended
|
||||||||||||||
June
30,
|
June
30,
|
||||||||||||||
(Dollars
in thousands)
|
2009
|
2008
|
2009
|
2008
|
|||||||||||
Allowance
for loan and lease losses:
|
|||||||||||||||
Balance
at beginning of period
|
$ | 122,286 | $ | 72,108 | $ | 119,878 | $ | 92,049 | |||||||
Provision
for loan and lease losses
|
74,324 | 87,800 | 101,074 | 122,072 | |||||||||||
Charge-offs:
|
|||||||||||||||
Commercial,
financial and agricultural
|
5,057 | 120 | 5,882 | 319 | |||||||||||
Real
estate:
|
|||||||||||||||
Construction
|
18,020 | 73,324 | 40,634 | 127,046 | |||||||||||
Mortgage-residential
|
4,545 | - | 4,907 | - | |||||||||||
Mortgage-commercial
|
2,375 | - | 2,375 | - | |||||||||||
Consumer
|
946 | 794 | 1,960 | 1,683 | |||||||||||
Leases
|
- | 19 | - | 19 | |||||||||||
Total
charge-offs
|
30,943 | 74,257 | 55,758 | 129,067 | |||||||||||
Recoveries:
|
|||||||||||||||
Commercial,
financial and agricultural
|
55 | 82 | 142 | 137 | |||||||||||
Real
estate:
|
|||||||||||||||
Construction
|
- | - | 52 | - | |||||||||||
Mortgage-residential
|
35 | 9 | 54 | 61 | |||||||||||
Mortgage-commercial
|
2 | 4 | 5 | 6 | |||||||||||
Consumer
|
312 | 304 | 624 | 792 | |||||||||||
Leases
|
- | - | - | - | |||||||||||
Total
recoveries
|
404 | 399 | 877 | 996 | |||||||||||
Net
charge-offs
|
30,539 | 73,858 | 54,881 | 128,071 | |||||||||||
Balance
at end of period
|
$ | 166,071 | $ | 86,050 | $ | 166,071 | $ | 86,050 | |||||||
Annualized
ratio of net charge-offs
to average
loans
|
3.16 | % | 6.80 | % | 2.79 | % | 5.96 | % |
Minimum
Required
|
|
|||||||||||||||||||
for
Capital
|
Minimum
Required to
|
|||||||||||||||||||
Actual
|
Adequacy
Purposes
|
be
Well Capitalized
|
||||||||||||||||||
(Dollars
in thousands)
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||||
Company
|
||||||||||||||||||||
At
June 30, 2009:
|
||||||||||||||||||||
Leverage
capital
|
$ | 566,033 | 10.6 | % | $ | 213,381 | 4.0 | % | $ | 266,726 | 5.0 | % | ||||||||
Tier
1 risk-based capital
|
566,033 | 13.3 | 170,462 | 4.0 | 255,693 | 6.0 | ||||||||||||||
Total
risk-based capital
|
620,817 | 14.6 | 340,925 | 8.0 | 426,156 | 10.0 | ||||||||||||||
At
December 31, 2008:
|
||||||||||||||||||||
Leverage
capital
|
$ | 466,465 | 8.8 | % | $ | 211,648 | 4.0 | % | $ | 264,560 | 5.0 | % | ||||||||
Tier
1 risk-based capital
|
466,465 | 10.4 | 178,693 | 4.0 | 268,040 | 6.0 | ||||||||||||||
Total
risk-based capital
|
523,162 | 11.7 | 357,387 | 8.0 | 446,734 | 10.0 | ||||||||||||||
Central
Pacific Bank
|
||||||||||||||||||||
At
June 30, 2009:
|
||||||||||||||||||||
Leverage
capital
|
$ | 555,045 | 10.5 | % | $ | 212,385 | 4.0 | % | $ | 265,481 | 5.0 | % | ||||||||
Tier
1 risk-based capital
|
555,045 | 13.1 | 169,974 | 4.0 | 254,961 | 6.0 | ||||||||||||||
Total
risk-based capital
|
609,678 | 14.4 | 339,947 | 8.0 | 424,934 | 10.0 | ||||||||||||||
At
December 31, 2008:
|
||||||||||||||||||||
Leverage
capital
|
$ | 449,845 | 8.5 | % | $ | 210,707 | 4.0 | % | $ | 263,384 | 5.0 | % | ||||||||
Tier
1 risk-based capital
|
449,845 | 10.1 | 178,323 | 4.0 | 267,485 | 6.0 | ||||||||||||||
Total
risk-based capital
|
506,427 | 11.4 | 356,646 | 8.0 | 445,808 | 10.0 |
·
|
The
capital that must be maintained;
|
·
|
The
kinds of activities that can be engaged
in;
|
·
|
The
kinds and amounts of investments that can be
made;
|
·
|
The
locations of offices;
|
·
|
Insurance
of deposits and the premiums that we must pay for this insurance;
and
|
·
|
How
much cash we must set aside as reserves for
deposits.
|
·
|
actual
or anticipated quarterly fluctuations in our operating results and
financial condition. In particular, further deterioration of asset
quality;
|
·
|
changes
in revenue or earnings estimates or publication of research reports and
recommendations by financial
analysts;
|
·
|
failure
to meet analysts' revenue or earnings
estimates;
|
·
|
speculation
in the press or investment
community;
|
·
|
strategic
actions by us or our competitors, such as acquisitions or
restructurings;
|
·
|
actions
by institutional shareholders;
|
·
|
fluctuations
in the stock price and operating results of our
competitors;
|
·
|
general
market conditions and, in particular, developments related to market
conditions for the financial services
industry;
|
·
|
proposed
or adopted regulatory changes or
developments;
|
·
|
anticipated
or pending investigations, proceedings or litigation that involve or
affect us; or
|
·
|
domestic
and international economic factors unrelated to our
performance.
|
·
|
To
elect four persons to the board of directors for a term of three years and
to serve until their successors are elected and
qualified;
|
·
|
To
ratify the appointment of KPMG LLP as the Company’s independent registered
public accounting firm for the fiscal year ending December 31,
2009;
|
·
|
To
consider an advisory (non-binding) proposal to approve the compensation of
the Company’s executive officers;
|
·
|
A
shareholder proposal requesting the board of directors to eliminate
classification of terms of the board of
directors;
|
·
|
To
transact such other business as may properly come before the Meeting and
at any and all adjournments
thereof.
|
Name
|
For
|
Withheld
|
Abstain
|
|||||
Richard
J. Blangiardi
|
19,526,217 | 972,564 | 3,463,174 | |||||
Paul
J. Kosasa
|
19,379,105 | 1,119,676 | 3,463,174 | |||||
Mike
K. Sayama
|
19,881,670 | 617,112 | 3,463,174 | |||||
Dwight
L. Yoshimura
|
18,758,952 | 1,739,830 | 3,463,174 |
Name
|
Expiration
of Term
|
|
Ronald
K. Migita
|
2010
|
|
Christine
H. H. Camp
|
2010
|
|
Dennis
I. Hirota
|
2010
|
|
Maurice
H. Yamasato
|
2010
|
|
Earl
E. Fry
|
2011
|
|
B.
Jeannie Hedberg
|
2011
|
|
Colbert
M. Matsumoto
|
2011
|
|
Crystal
K. Rose
|
2011
|
Exhibit No.
|
Document
|
|
31.1
|
Rule
13a-14(a) Certification of Chief Executive Officer in accordance with
Section 302 of the Sarbanes-Oxley Act of 2002 *
|
|
31.2
|
Rule
13a-14(a) Certification of Chief Financial Officer in accordance with
Section 302 of the Sarbanes-Oxley Act of 2002 *
|
|
32.1
|
Section
1350 Certification of Chief Executive Officer in accordance with Section
906 of the Sarbanes-Oxley Act of 2002 **
|
|
32.2
|
Section
1350 Certification of Chief Financial Officer in accordance with Section
906 of the Sarbanes-Oxley Act of 2002
**
|
CENTRAL
PACIFIC FINANCIAL CORP.
|
|
(Registrant)
|
|
Date: August
6, 2009
|
/s/ Ronald K. Migita
|
Ronald
K. Migita
|
|
Chairman,
President & Chief Executive Officer
|
|
Date: August
6, 2009
|
/s/ Dean K. Hirata
|
Dean
K. Hirata
|
|
Vice
Chairman and Chief Financial
Officer
|
Exhibit No.
|
Description
|
|
31.1
|
Certification
of the Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
31.2
|
Certification
of the Principal Financial and Accounting Officer Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
|
|
32.1
|
Certification
of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
|
32.2
|
Certification
of the Principal Financial and Accounting Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
|