Central Pacific Financial Corp New · NYSE:CPF

Central Pacific Financial Corp New — Central Pacific Financial — Investor Presentation (February 2021)

40 slides from Central Pacific Financial Corp New's investor presentation, Feb 9, 2021

  1. Slide 1: Investor Presentation February 2021

    Investor Presentation February 2021 PAUL YONAMINE Chief Executive Officer CATHERINE NGO President DAVID MORIMOTO Chief Financial Officer

  2. Slide 2: Forward-Looking Statements

    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, n

  3. Slide 3: Presenting Management Team

    3Central Pacific Financial Corp. Paul Yonamine Chief Executive Officer David Morimoto Chief Financial Officer Catherine Ngo President Kevin Dahlstrom Chief Marketing Officer Arnold Martines Chief Banking Officer

  4. Slide 4: Central Pacific Financial - Corporate Profile

    4Central Pacific Financial Corp. Central Pacific Financial - Corporate Profile MARKET INFORMATION NYSE TICKER CPF SUBSIDIARY CENTRAL PACIFIC BANK (CPB) TOTAL ASSETS $6.6 BILLION MARKET CAP $560 MILLION SHARE PRICE $19.88 DIVIDEND YIELD 4.63% Central Pacific Financial Corp. is a Hawaii-based bank hol

  5. Slide 5: Shareholder Value Drivers

    5Central Pacific Financial Corp. Shareholder Value Drivers 2020 Execution Niche Market Opportunities & Key Products Hawaii Market & CPF Position Solid Credit, Capital & Liquidity 1 2 3 4

  6. Slide 6: Shareholder Value Drivers: 2020 Execution

    6Central Pacific Financial Corp. Shareholder Value Drivers 2020 Execution • RISE2020 Initiative Completed • Full Digital Enhancements • New Branding • Central Pacific Plaza Building Revitalization • Pandemic Response • PPP Leader • Branch Consolidation • Financial Results 1

  7. Slide 7: Digital Banking and Transformation Initiatives

    7Central Pacific Financial Corp Digital Banking • Launched cpb.bank website in November 2019 • Launched new online and mobile banking platforms in August 2020 and an enhanced more intuitive mobile interface in January 2021 • Full ATM network upgrade completed in November 2020 • Online consumer loan/

  8. Slide 8: Newly Upgraded Online/Mobile and ATMs

    8Central Pacific Financial Corp. • New online/mobile platform publicly launched late August 2020. New mobile app rating 4.7 out of 5 stars* on Apple. • Complete personal financial management (PFM) all in one site, with account aggregation, budgeting, and goal setting tools • Open API to leverage oth

  9. Slide 9: A New Look

    9Central Pacific Financial Corp. A New Look Taking cues from mid-century modern design seen across the Islands, CPB’s new brand connects its past to a bold new future. CPB also introduced new signature colors like swell, sand, papaya, and plumeria, and a portfolio of custom illustrations that work t

  10. Slide 10: Grand Reopening of Plaza Headquarters

    10Central 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

  11. Slide 11: Pandemic Response

    11Central Pacific Financial Corp Pandemic Response • Quickly mobilized with remote work, PPE, contingency planning and customer outreach • Community leader through the pandemic with innovative programs to support small businesses and front-line workers

  12. Slide 12: SBA Paycheck Protection Program (PPP)

    12Central Pacific Financial Corp. SBA Paycheck Protection Program (PPP) • Committed to supporting local small businesses; CPB was a PPP leader in the Hawaii market in 2020 • CPB originated over 7,200 PPP loans totaling over $550 million in 2020; #1 bank in the nation originating over 28% of the tota

  13. Slide 13: Branch Consolidation Initiative

    13Central 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

  14. Slide 14: 4th Quarter & Full Year 2020 Highlights

    14Central 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,

  15. Slide 15: Shareholder Value Drivers: Niche Market Opportunities & Key Products

    15Central Pacific Financial Corp. Shareholder Value Drivers Niche Market Opportunities & Key Products • Small Business & Japan • Residential Mortgage Lending • Exceptional Deposit Product • Additional Digital Products in Development 2

  16. Slide 16: Target Niche Market Opportunities

    16Central Pacific Financial Corp. Target Niche Market Opportunities SMALL BUSINESSES  SBA Lender of the Year Category II, 7 years in a row, with more loans originated than the 3 other large Hawaii banks combined  Relationships with physician and dental organizations and schools have been successfu

  17. Slide 17: Residential Mortgage Strength in Hawaii

    17Central Pacific Financial Corp. Residential Mortgage Strength in Hawaii SMALL BUSINESSES • $1.2 Billion in total production in 2020 • #2 lender in Hawaii in total purchase mortgage volume in 2020 • Lead partner with developers on many large condominium developments • Provides significant cross-sal

  18. Slide 18: Exceptional Deposit Plan

    18Central Pacific Financial Corp. Exceptional Deposit Plan * Balances and rates as of December 31, 2020 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 • Total balances $1.6 Billion • Weigh

  19. Slide 19: Shareholder Value Drivers: Hawaii Market & CPF Position

    19Central Pacific Financial Corp. Shareholder Value Drivers Hawaii Market & CPF Position • Resilient Hawaii market • Attractive position in the market 3

  20. Slide 20: Resilient Hawaii Market

    20Central 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, gove

  21. Slide 21: Attractive Position in Hawaii Market

     First Hawaiian Bank  $23B total assets  55 branches  Bank of Hawaii  $21B total assets  64 branches  American Savings Bank  $8B total assets  42 branches  $6.6B total assets  31 branches  Territorial Savings  $2B total assets  30 branches  Hawaii National Bank  $0.8B total assets 

  22. Slide 22: Shareholder Value Drivers: Solid Credit, Capital & Liquidity

    22Central Pacific Financial Corp. Shareholder Value Drivers Solid Credit, Capital & Liquidity • Low non-performing assets and charge-offs • Allowance for credit loss coverage • Subordinated debt issuance completed in 2020 • Ample liquidity sources 4

  23. Slide 23: Strong Credit Metrics

    23Central 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. N

  24. Slide 24: Loan Payment Deferrals Continue to Decline

    24Central Pacific Financial Corp. Loan Payment Deferrals Continue to Decline • Loan deferrals continue to decline down to 2% of the overall portfolio as of 1/31/21 • Residential mortgages were offered extended deferrals as deemed appropriate; these loans have low WA LTV of ~60% • Re-deferral rates i

  25. Slide 25: Solid Liquidity & Capital Position

    25Central 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 Tot

  26. Slide 26: Mahalo

    Mahalo

  27. Slide 27: Appendix

    27Central Pacific Financial Corp. Appendix

  28. Slide 28: Total Loan Portfolio

    28Central 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 bala

  29. Slide 29: C&I – Industry Composition

    29Central 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 • G

  30. Slide 30: Paycheck Protection Program [PPP]

    30Central 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

  31. Slide 31: CRE – Property Type Composition (Owner Occupied)

    31Central 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 1

  32. Slide 32: CRE – Property Type Composition (Investor)

    32Central 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 outstand

  33. Slide 33: High Risk Industries

    33Central 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 $28

  34. Slide 34: Residential Mortgage

    34Central 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 Occupi

  35. Slide 35: Home Equity

    35Central 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 •

  36. Slide 36: Consumer

    36Central 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% $4

  37. Slide 37: Loans Rated Special Mention

    37Central 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 ri

  38. Slide 38: Loans Rated Classified

    38Central 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

  39. Slide 39: Non-GAAP Financial Measures - Excluding PPP

    39Central 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 balanc

  40. Slide 40: Non-GAAP Financial Measures - Excluding One-Time Expenses

    40Central 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

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