Central Pacific Financial Corp New · NYSE:CPF
Central Pacific Financial Corp New — Central Pacific Financial — Investor Presentation (September 2020)
39 slides from Central Pacific Financial Corp New's investor presentation, Sep 8, 2020
Slide 1: Central Pacific Financial Corp. September 2020
PAUL YONAMINE Chief Executive Officer CATHERINE NGO President DAVID MORIMOTO Chief Financial Officer SEPTEMBER 2020
Slide 2: Forward Looking Statements
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 finan
Slide 3: Experienced & Prepared Leadership
EXPERIENCED & PREPARED LEADERSHIP Paul Yonamine Catherine Ngo Chairman & CEO President • Over 40 years of executive • Over 27 years of banking management experience experience • As President of IBM Japan, led • Joined CPF/CPB in 2010 and the Company through the 2011 helped lead the Company Tohoku ea
Slide 4: Creating Value Beyond Banking
CREATING VALUE BEYOND BANKING Paul Yonamine, CEO, advocating to the HI State Senate for a “Travel Safety Bubble” with Japan CPB was one of the first members to join the tech focused hub to inspire creativity, technology, innovation and entrepreneurship in Hawaii CPF’s leaders are involved in Transit
Slide 5: Second Quarter 2020 Highlights
SECOND QUARTER 2020 HIGHLIGHTS • Quarterly results impacted by Net Income $9.9 Million provision for credit loss expense due to COVID-19 Diluted EPS $0.35 • Pre-tax, Pre-provision earnings remained strong Pre-Tax, $23.5 Million • Loan growth driven by PPP loans Pre-Provision of over $525 million at
Slide 6: Shareholder Value Drivers
SHAREHOLDER VALUE DRIVERS 1 RISE2020 STRENGTH IN HAWAII SOLID CAPITAL, INVESTING TARGET NICHE MARKET & LIQUIDITY AND FOR THE MARKETS & KEY POSITION CREDIT FUTURE PRODUCT OFFERINGS 6 6
Slide 7: RISE2020 Initiatives
• Launched cpb.bank • Committed to best-in-class website in November 2019 small business and cash management products, with • Launched best-in-class new platform fully rolled out online and mobile banking 1 in July 2020 platforms in August 2020 • Enhanced sales • Full ATM network upgrade DIGITAL REV
Slide 8: COVID-19 Impact on Customer Behavior
COVID-19 IMPACT ON CUSTOMER BEHAVIOR . COVID-19 accelerated the migration to digital banking . Strong momentum and ideal timing for the RISE2020 digital banking strategy new product launch in August 2020 8 8
Slide 9: Newly Upgraded Online/Mobile Platforms & ATMs
NEWLY UPGRADED ONLINE/MOBILE PLATFORMS & ATMS . New online/mobile platform publicly launched late August 2020. New mobile app rating 4.8 & 4.5 out of 5 stars* on Apple and Android respectively . Complete personal financial management (PFM) all in one-site, with account aggregation, budgeting, and go
Slide 10: Branch Consolidation Initiative
BRANCH CONSOLIDATION INITIATIVE • 35 active branches prior to the pandemic, with 27 on the island of Oahu (pictured) • 13 temporarily closed in April 2020; 6 have since re-opened • 4 branches identified in red will be consolidated into neighboring branches and digital channels by year-end 10 10 2020
Slide 11: Shareholder Value Drivers
SHAREHOLDER VALUE DRIVERS 1 RISE2020 STRENGTH IN HAWAII SOLID CAPITAL, INVESTING TARGET NICHE MARKET & LIQUIDITY AND FOR THE MARKETS & KEY POSITION CREDIT FUTURE PRODUCT OFFERINGS 11 11
Slide 12: Target Niche Market Opportunities
TARGET NICHE MARKET OPPORTUNITIES . SBA Lender of the Year Category II, 7 years in a row, with more SMALL loans originated than the 3 other large Hawaii banks combined BUSINESSES . Relationships with physician and dental organizations and CPB leads the Hawaii schools have been successful in growing
Slide 13: Small Business Online Banking Product
SMALL BUSINESS ONLINE BANKING PRODUCT . Best-in-class small business online banking product . Valuable tool for small businesses to automate banking transactions and processing . Multi-user logins . Mobile functionality . No monthly fees . Strong and consistent client enrollments since product launc
Slide 14: Flagship Deposit Product - Exceptional Plan
FLAGSHIP DEPOSIT PRODUCT- EXCEPTIONAL PLAN Plan links personal deposit accounts with a combined minimum balance of $10,000 and offers numerous free benefits and services to the customer PRODUCT SUMMARY* CUSTOMER BENEFITS Total Balances $1.5 Billion ATM fees waived Weighted Average Rate 0.05% Fre
Slide 15: Shareholder Value Drivers
SHAREHOLDER VALUE DRIVERS 1 RISE2020 STRENGTH IN HAWAII SOLID CAPITAL, INVESTING TARGET NICHE MARKET & LIQUIDITY AND FOR THE MARKETS & KEY CPF POSITION CREDIT FUTURE PRODUCT OFFERINGS 15 15
Slide 16: Resilient Hawaii Market Strengths and Recovery Factors
RESILIENT HAWAII MARKET STRENGTHS AND RECOVERY FACTORS • While tourism drives ~20% of GDP, government/defense and real estate makes up another ~40% of GDP • Construction and development in Hawaii continues through the pandemic; including residential high- rise condominiums, airport improvements, mil
Slide 17: Attractive Position in Hawaii Market
ATTRACTIVE POSITION IN HAWAII MARKET LARGE SMALL INSTITUTIONS INSTITUTIONS . First Hawaiian Bank . Territorial Savings . $23B total assets . $2B total assets . . 58 branches $6.6B total assets . 30 branches . 31 branches* . Bank of Hawaii . Hawaii National Bank . $20B total assets . $0.7B total asse
Slide 18: Shareholder Value Drivers
SHAREHOLDER VALUE DRIVERS 1 RISE2020 STRENGTH IN HAWAII SOLID CAPITAL, INVESTING TARGET NICHE MARKET & LIQUIDITY AND FOR THE MARKETS & KEY POSITION CREDIT FUTURE PRODUCT OFFERINGS 18 18
Slide 19: Solid Capital & Liquidity Position
SOLID CAPITAL & LIQUIDITY POSITION Regulatory Capital Ratios As of June 30, 2020 STRONG CAPITAL . 16.0% $150 million capital cushion to the 13.6% Total well-capitalized Total RBC minimum of 14.0% RBC 10% at 6/30/20 1.1% 12.0% 1.1% . 2Q2020 PTPP earnings of $23.5 Tier 2 million 10.0% Tier 1 8.0% CET1
Slide 20: Strong Credit Metrics
STRONG CREDIT METRICS Allowance for Credit Losses Classified Assets (ACL) 15.00% $50 1.90% $70 13.00% $45 $65 1.70% 11.00% $40 $60 $55 9.00% $35 1.50% Incurred Loss Method $50 7.00% $30 1.30% $45 $40 5.00% $25 1.10% $35 3.00% $20 2Q19 3Q19 4Q19 1Q20 2Q20 0.90% $30 2Q19 3Q19 4Q19 1Q20 2Q20* Classifie
Slide 21: Shareholder Value Drivers
SHAREHOLDER VALUE DRIVERS 1 RISE2020 STRENGTH IN HAWAII MARKET SOLID CAPITAL, INVESTING FOR TARGET NICHE & POSITION LIQUIDITY AND THE FUTURE MARKETS & KEY CREDIT PRODUCT OFFERINGS 21 21
Slide 22: Appendix
APPENDIX 22 22
Slide 23: Total Loan Portfolio
TOTAL LOAN PORTFOLIO Total Loan Portfolio of $5,003MM Outstanding Balance as of 6/30/20 Loan Portfolio Highlights $ in Millions • Diversified Loan Portfolio Commercial & – 46% Commercial Consumer Industrial – 54% Consumer $527 / 11% $548 / 11% • Predominantly Hawaii PPP Focused CRE - Investor $526 /
Slide 24: Commercial & Industrial - Industry Composition
COMMERCIAL & INDUSTRIAL – INDUSTRY COMPOSITION Outstanding Balance as of 6/30/20 $ in Millions Healthcare Loan Portfolio Details $95 / 17% • Strong borrowers; many are essential businesses Other Industries • Well established, locally owned $154 / 28% and operated by strong management Foodservice • B
Slide 25: Paycheck Protection Program - Industry Composition
PAYCHECK PROTECTION PROGRAM [PPP] – INDUSTRY COMPOSITION Outstanding Balance as of 6/30/20 $ in Millions Other industries Foodservice $73 / 14% $77 / 15% Loan Portfolio Details • Over 7,200 loans made Transportation • Granular with average & Warehousing outstanding loan amount of $24 / 5% $76,000 •
Slide 26: Commercial Real Estate - Owner Occupied Property Type
COMMERCIAL REAL ESTATE – PROPERTY TYPE COMPOSITION Outstanding Balance as of 6/30/20 $ in Millions Loan Portfolio Details Other $25 / 10% • Strong borrowers that operate out of their own properties Restaurant • Well-collateralized with WA LTV of $12 / 5% 66%1 • 77% secured in Hawaii and 23% in Indus
Slide 27: Commercial Real Estate - Investor Property Type
COMMERCIAL REAL ESTATE – PROPERTY TYPE COMPOSITION Outstanding Balance as of 6/30/20 $ in Millions Self Storage Loan Portfolio Details $25 / 3% All Other • Seasoned real estate investors $23 / 3% Restaurant • Well-collateralized with WA LTV of $27 / 3% 59%1 Hotel • 94% secured in Hawaii and 6% in $5
Slide 28: High Risk Industries
HIGH RISK INDUSTRIES As of 6/30/20 Criticized Outstanding % of as % of Balance Total Loans Total Loans $ Millions (Excl. PPP) (Excl. PPP) (Excl. PPP) C&I CRE PPP Healthcare $ 108 2.4% 0.1% $ 95 $ 13 $ 75 Retail Trade 71 1.6% 0.3% 49 22 32 Manufacturing 69 1.5% 0.3% 48 21 26 Foodservice 65 1.4% 0.2%
Slide 29: Residential Mortgage
RESIDENTIAL MORTGAGE Outstanding Balance as of 6/30/20 $ in Millions Investor & Second Home $319 / 19% Loan Portfolio Details • 100% in Hawaii; 90% on Oahu • 83% of loan balance are loans <$1.0MM • Average outstanding loan amount of $436,000 $1,658MM • WA LTV 61%1 33% • WA FICO 773 1Based on LTV at
Slide 30: Home Equity
HOME EQUITY Outstanding Balance as of 6/30/20 $ in Millions Investor & Loan Portfolio Details Second Home • 100% in Hawaii; 85% on Oahu $69 / 13% • 52% of loan balance are lines/loans <$250 thousand • Average outstanding loan amount of $133,000 • 52% are 1st mortgages • 21% are 2nd mortgages behind
Slide 31: Consumer
CONSUMER Total Consumer Outstanding Balance as of 6/30/20 $ in Millions Loan Portfolio Details • Total Consumer Personal Auto − $274 / 52% $253 / 48% HI 67%; WA FICO 737 − ML 33%; WA FICO 7591 $527MM • Auto 11% − HI WA FICO 729 − ML WA FICO 7501 • Personal − HI WA FICO 755 − ML WA FICO 7641 • Total
Slide 32: Loans Rated Special Mention
LOANS RATED SPECIAL MENTION Outstanding Balance as of 6/30/20 Loan Portfolio Details $ in Millions $116MM Special Mention Loans; 3% of Total Loan Portfolio (excl PPP) Wholesale Trade $2 / 2% Manufacturing Credit Risk Management Healthcare $2 / 2% Approach $4 / 3% Real Estate and Other Industries Ren
Slide 33: Loan Payment Deferrals
LOAN PAYMENT DEFERRALS $ Millions On 1st On 2nd Total Active % of Total Back on Re- As of August 31, Deferral Deferral Deferrals Port- Payment Deferral 2020 folio1 Rate2 $ Count $ Count $ Count $ Count Residential Mortgage 31.9 77 87.6 174 119.5 251 5% 96.1 200 41% Coml Mortgage/Constr 135.4 52 1.2
Slide 34: Corporate Profile
CORPORATE PROFILE Founded in 1954 by Japanese- American MARKET INFORMATION veterans of World War II NYSE TICKER CPF Over 65 years later, Central Assets $6.6B Pacific continues to work for our customers, shareholders, Market Cap $437 Mil employees and the community Share Price $15.49 Dividend Yield 5
Slide 35: Financial Highlights
FINANCIAL HIGHLIGHTS QTD QTD YEAR ENDED DECEMBER 31, ($ in millions) 2Q20 1Q20 2019 2018 2017 2016 2015 2014 Balance Sheet (period end data) Loans and leases $5,003.0 $4,512.0 $4,449.5 $4,078.4 $3,770.6 $3,524.9 $3,211.5 $2,932.2 Total assets 6,633.0 6,108.5 6,012.7 5,807.0 5,623.7 5,384.2 5,131.3 4
Slide 36: Loan Portfolio Trend
LOAN PORTFOLIO TREND (2011- Balances Outstanding 2Q 2020) $6,000 8.5 Yr. CAGR $5,003 $5,000 $4,449$4,512 $4,078 $4,000 $3,771 $3,525 $3,212 $2,932 +11.0% $3,000 $2,631 Millions $2,204 $2,169 $2,064 $2,000 +18.2% +13.9% -5.0% $1,000 +5.8% $0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q20 2Q20
Slide 37: Hawaii Deposit Pricing Advantage
HAWAII DEPOSIT PRICING ADVANTAGE Total Deposit Cost 2.50% 2.35% 2.00% 1.63% 1.59% 1.50% 1.09% 1.05% 0.94% 1.00% 0.89% 0.78% 0.81% 0.64% 0.54% 0.52% 0.52% 0.48% 0.40% 0.34% 0.36% 0.39% 0.36% 0.50% 0.30% 0.33% 0.23% 0.20% 0.14% 0.11% 0.09% 0.09% 0.12% 0.00% 2008 2009 2010 2011 2012 2013 2014 2015 2016
Slide 38: Non-GAAP Financial Measures - Pre-Tax, Pre-Provision Earnings
Non-GAAP Financial Measures- Pre-Tax, Pre-Provision Earnings Three-Months Ended $ Millions % Change Jun. 30, Mar. 31, Jun. 30, 2020 2020 2019 QoQ YoY Net Interest Income $ 49.2 $ 47.8 $ 45.4 3% 8% Other Operating Income 10.7 8.9 10.1 20% 6% Total Revenue 59.9 56.7 55.5 6% 8% Other Operating Expense
Slide 39: Non-GAAP Financial Measures - Excluding PPP
Non-GAAP Financial Measures- Excluding PPP Jun. 30, Jun. 30, 2020 PPP 2020 Actual Exclusions1 Adjusted Net Interest Income2 $ 49.4 $ (2.5) $ 46.9 Total Interest-Earnings Assets $ 6,073.4 $ (379.9) $ 5,693.5 Net Interest Margin3 3.26% 3.31% Tangible Common Equity4 $ 544.3 $ 544.3 Total Assets $ 6,633
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