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Central Pacific Financial Corp. Reports Results For Fourth Quarter And Full Year Of 2019

Vlad Poptamas

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Central Pacific Financial Corp. (NYSE: CPF) (the “Company”), parent company of Central Pacific Bank, today reported net income in the fourth quarter of 2019 of $14.2 million, or fully diluted earnings per share (“EPS”) of $0.50, compared to net income in the fourth quarter of 2018 of $15.8 million, or EPS of $0.54, and net income in the third quarter of 2019 of $14.6 million, or EPS of $0.51. Net income in the year ended December 31, 2019 totaled $58.3 million, or  EPS of $2.03, compared to net income in the year ended December 31, 2018 of $59.5 million, or EPS of $2.01.

“2019 was a pivotal year for the Company as we embarked on our RISE2020 transformation. We continue to make significant progress and are on schedule to meet our 2020 milestones in our digital banking and branch transformation initiatives. We are pleased with the financial results for 2019 which reflect continued execution on revenue growth while we invest for the future,” said Paul Yonamine, Chairman and Chief Executive Officer.

“We concluded 2019 with strong financial results including solid loan and deposit growth and core margin expansion. We look forward to continuing to transform our bank in 2020 and beyond,” said Catherine Ngo, President.

On January 28, 2020, 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 16, 2020 to shareholders of record at the close of business on February 28, 2020.

During the fourth quarter of 2019, the Company repurchased 165,703 shares of common stock, at a total cost of $4.8 million, or an average cost per share of $29.13. During the year ended December 31, 2019, the Company repurchased 797,003 shares of common stock, or approximately 2.8% of its common stock outstanding as of December 31, 2018. Total cost of the shares repurchased during the year ended December 31, 2019 was $22.8 million, or an average cost per share of $28.60. During the year ended December 31, 2019, the Company returned $48.5 million in capital to its shareholders through cash dividends and share repurchases.

In January 2020, the Company’s Board of Directors also authorized the repurchase of up to $30 million of its outstanding common stock under its share repurchase program (the “Repurchase Plan”). This authorization supersedes the remaining repurchase authority under the prior repurchase program, which had $21.1 million in remaining repurchase authority at December 31, 2019.

Earnings Highlights
Net interest income for the fourth quarter of 2019 was $47.9 million, compared to $44.7 million in the year-ago quarter and $45.6 million in the previous quarter. Net interest margin for the fourth quarter of 2019 was 3.43%, compared to 3.28% in the year-ago quarter and 3.30% in the previous quarter. The increases in net interest income and net interest margin from the year-ago and sequential quarters were primarily due to growth in the loan portfolio, combined with higher non-recurring interest and dividends and lower deposit and borrowing costs compared to the year-ago and sequential quarters. These increases were partially offset by lower interest and dividends on investment securities due to the planned runoff of our investment securities portfolio from the year-ago and sequential quarters. Net interest income in the current quarter included higher non-recurring interest and dividends of $0.9 million and $1.1 million from the year-ago and sequential quarters, respectively, which positively impacted net interest income and net interest margin in the current quarter. The non-recurring amounts included in net interest income primarily related to interest recoveries on nonaccrual loans. The decline in deposit and borrowing costs from the year-ago and sequential quarters were primarily attributable to, and consistent with, the three rate cuts by the Federal Reserve during second half of 2019.

Other operating income for the fourth quarter of 2019 totaled $9.8 million, compared to $9.4 million in the year-ago quarter and $10.3 million in the previous quarter. The increase from the year-ago quarter was primarily due to higher merchant and bank card fees and commission and fees on investment services of $0.3 million and $0.2 million, respectively (both included in other service charges and fees), higher income from bank-owned life insurance of $0.4 million, and net losses on sales of investment securities of $0.3 million recorded the year-ago quarter, partially offset by lower mortgage banking income of $0.6 million. The decrease from the previous quarter was primarily due to lower mortgage banking income of $0.6 million, combined with a net loss on the sale of a foreclosed asset during the current quarter of $0.2 million, partially offset by higher commissions and fees on investment services of $0.1 million (included in other service charges and fees).

Other operating expense for the fourth quarter of 2019 totaled $36.2 million, which increased from $33.6 million in the year-ago quarter and increased from $34.9 million in the previous quarter. The increase from the year-ago quarter was primarily due to higher salaries and employee benefits of $2.2 million and higher computer software expense of $0.3 million. The higher salaries and employee benefits compared to the year-ago quarter was partially attributable to the addition of positions in strategic areas and higher commissions, combined with annual merit increases effective in the second quarter of 2019. The increase from the previous quarter was primarily due to higher salaries and employee benefits of $0.6 million and higher computer software expense of $0.2 million. The increases from the year-ago and sequential quarter were also attributable to a lower credit to the reserve for unfunded loan commitments. During the current quarter the Company recorded a credit to the reserve for unfunded loan commitments of $0.2 million (included in other), compared to a credit to the reserve for unfunded loan commitments during the year-ago and previous quarters of $0.5 million. Other operating expense in the fourth quarter of 2019 included approximately $1.3 million in RISE2020-related expenses.

The efficiency ratio for the fourth quarter of 2019 was 62.81%, compared to 62.21% in the year-ago quarter and 62.48% in the previous quarter.

In the fourth quarter of 2019, the Company recorded income tax expense of $5.2 million, compared to $6.0 million in the year-ago quarter and $4.9 million in the previous quarter. The effective tax rate for the fourth quarter of 2019 was 26.7%, compared to 27.6% in the year-ago quarter and 25.2% in the previous quarter.

Balance Sheet Highlights
Total assets at December 31, 2019 of $6.01 billion increased by $205.6 million, or 3.5% from December 31, 2018, and increased by $36.0 million, or 0.6% from September 30, 2019.

Total loans at December 31, 2019 of $4.45 billion increased by $371.2 million, or 9.1%, and $81.7 million, or 1.9% from December 31, 2018 and September 30, 2019, respectively. The year-over-year increase in total loans were driven by broad-based growth in almost all loan categories. The sequential quarter increase in total loans were primarily due to increases in consumer loans of $43.1 million, residential mortgage loans of $41.1 million, and home equity loans of $15.2 million, partially offset by decreases in commercial mortgage loans of $10.5 million and commercial loans of $6.3 million.

Total deposits at December 31, 2019 of $5.12 billion increased by $173.5 million, or 3.5% from December 31, 2018, and increased by $82.4 million, or 1.6% from September 30, 2019.  The sequential quarter increase in total deposits was primarily attributable to increases in noninterest-bearing demand deposits of $51.3 million, interest-bearing demand deposits of $45.0 million and savings and money market deposits of $6.3 million, partially offset by a decrease in government time deposits of $19.4 million. Core deposits, which include demand deposits, savings and money market deposits, and time deposits less than $100,000, totaled $4.26 billion at December 31, 2019.  This represents an increase of $243.4 million, or 6.1% from December 31, 2018, and $102.7 million, or 2.5% from September 30, 2019. The Company’s loan-to-deposit ratio was 86.9% at December 31, 2019, compared to 82.5% at December 31, 2018 and 86.7% at September 30, 2019.

Asset Quality
Nonperforming assets at December 31, 2019 totaled $1.7 million, or 0.03% of total assets, compared to $2.7 million, or 0.05% of total assets at December 31, 2018, and $1.4 million, or 0.02% of total assets at September 30, 2019.

Loans delinquent for 90 days or more still accruing interest totaled $1.0 million at December 31, 2019, compared to $0.5 million and $0.2 million at December 31, 2018 and September 30, 2019, respectively.

Net charge-offs in the fourth quarter of 2019 totaled $2.3 million, compared to net recoveries of $2.5 million in the year-ago quarter, and net charge-offs of $1.6 million in the previous quarter.

In the fourth quarter of 2019, the Company recorded a provision for loan and lease losses of $2.1 million, compared to a credit of $1.4 million in the year-ago quarter and a provision of $1.5 million in the previous quarter. The increases in the provision from the year-ago and sequential quarters were primarily due to growth in our loan portfolio, combined with increases in net charge-offs. The allowance for loan and lease losses, as a percentage of total loans and leases at December 31, 2019 was 1.08%, compared to 1.17% at December 31, 2018 and 1.10% at September 30, 2019.

Capital
Total shareholders’ equity was $528.5 million at December 31, 2019, compared to $491.7 million and $525.2 million at December 31, 2018 and September 30, 2019, 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, 2019, the Company’s leverage capital, tier 1 risk-based capital, total risk-based capital, and common equity tier 1 ratios were 9.5%, 12.6%, 13.6%, and 11.5%, respectively, compared to 9.5%, 12.6%, 13.7%, and 11.5%, respectively, at September 30, 2019.

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.centralpacificbank.com. Alternatively, investors may participate in the live call by dialing 1-877-505-7644. A playback of the call will be available through February 29, 2020 by dialing 1-877-344-7529 (passcode: 10138495) and on the Company’s website.

 

SOURCE Central Pacific Financial Corp.

Fintech

Chinese fintech attracted investments of USD 962.2 million in 2H 2019

Vlad Poptamas

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Fintech companies in China attracted USD 962.2 million in investments from venture capital, private equity and M&A in 2H 2019, resulting in a total of USD 4,479 million in investments for the whole of 2019, according to KPMG’s Pulse of Fintech H2’19 bi-annual report on global fintech investment trends.

Fintech investment in China took a breather after a massive 2018, but the country’s fintech market continued to see substantial activity and Chinese companies still ranked among the largest fintech deals in Asia Pacific for the whole of 2019. China’s large technology giants continued to focus on growing their reach geographically, making investments or plays well outside of Greater China. Ant Financial, for example, submitted an application for a digital banking license in Singapore in late 2019, while Tencent made a number of significant investments in fintech companies in other regions throughout the year, including Ualá in Argentina.

Investors in China also began to turn their attention to up-and-coming areas of fintech. These include regtech, which has appeal among VC investors because of its ability to leverage artificial intelligence and machine learning to assess risk and identify fraud. China-based investors are also interested in fintech companies that use these technologies more broadly to improve the operations of banks and financial institutions, such as improving operational efficiencies, generate and analyse data, as well as support wealth management.

The third quarter of 2019 saw the People’s Bank of China unveiled a three-year plan to support the development of the fintech industry. Since then, there has already been a number of moves focused on implementation. For example, a fintech sandbox is in development, with testing currently being concluded in Beijing. It is expected that this plan will help fuel future investment in fintech, particularly in key areas like risk management, cybersecurity, big data, artificial intelligence, distributed databases and authentication.

Chris Wang, Partner, Head of Fintech, KPMG China, commented, “China’s central bank and other authority bodies are working to move fintech in the country to ‘2nd half’ as part of their three-year fintech development plan. We anticipate an increased regulation and guidance for the industry and an enhanced infrastructure to support fintech development. For example, sandbox mechanism is being designed and may soon roll out to test the concept of different fintech to make sure they comply with regulations and will achieve the desired results before they enter the market.”

The fintech market in Hong Kong saw some resilience in the fourth quarter of 2019, particularly on the back of Alibaba’s decision to do a secondary listing on the Hong Kong Stock Exchange, which raised USD 11.2 billion, making it the largest listing of the year globally.

Earlier in 2019, Hong Kong issued the first batch of eight digital banking licenses. ZhongAn was the first to launch a digital bank pilot, with others expected to follow suit in 2020. As the licensees continue to formulate their digital bank offerings, Hong Kong could see an upswing in investments in related areas, like KYC, regtech, digital onboarding and communications, and digital banking infrastructure. The issuance of digital banking licences has also spurred traditional banks to improve their own digital offerings and experience.

Avril Rae, Director, Head of Fintech, Hong Kong, KPMG China, said, “We’re starting to see ecosystems evolving with respect to digital banks. Partners are coming together to get digital banking licenses. Once they have their pilot projects underway, and they have proven their technology both internally and to the Hong Kong Monetary Authority, we’ll start to see them leveraging those partnerships more deeply – integrating banking services with other offerings like travel bookings or insurance to provide their customers with a seamless experience.”

 

SOURCE KPMG China

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Fintech

Chinese fintech attracted investments of USD 962.2 million in 2H 2019

Vlad Poptamas

Published

on

 

Fintech companies in China attracted USD 962.2 million in investments from venture capital, private equity and M&A in 2H 2019, resulting in a total of USD 4,479 million in investments for the whole of 2019, according to KPMG’s Pulse of Fintech H2’19 bi-annual report on global fintech investment trends.

Fintech investment in China took a breather after a massive 2018, but the country’s fintech market continued to see substantial activity and Chinese companies still ranked among the largest fintech deals in Asia Pacific for the whole of 2019. China’s large technology giants continued to focus on growing their reach geographically, making investments or plays well outside of Greater China. Ant Financial, for example, submitted an application for a digital banking license in Singapore in late 2019, while Tencent made a number of significant investments in fintech companies in other regions throughout the year, including Ualá in Argentina.

Investors in China also began to turn their attention to up-and-coming areas of fintech. These include regtech, which has appeal among VC investors because of its ability to leverage artificial intelligence and machine learning to assess risk and identify fraud. China-based investors are also interested in fintech companies that use these technologies more broadly to improve the operations of banks and financial institutions, such as improving operational efficiencies, generate and analyse data, as well as support wealth management.

The third quarter of 2019 saw the People’s Bank of China unveiled a three-year plan to support the development of the fintech industry. Since then, there has already been a number of moves focused on implementation. For example, a fintech sandbox is in development, with testing currently being concluded in Beijing. It is expected that this plan will help fuel future investment in fintech, particularly in key areas like risk management, cybersecurity, big data, artificial intelligence, distributed databases and authentication.

Chris Wang, Partner, Head of Fintech, KPMG China, commented, “China’s central bank and other authority bodies are working to move fintech in the country to ‘2nd half’ as part of their three-year fintech development plan. We anticipate an increased regulation and guidance for the industry and an enhanced infrastructure to support fintech development. For example, sandbox mechanism is being designed and may soon roll out to test the concept of different fintech to make sure they comply with regulations and will achieve the desired results before they enter the market.”

The fintech market in Hong Kong saw some resilience in the fourth quarter of 2019, particularly on the back of Alibaba’s decision to do a secondary listing on the Hong Kong Stock Exchange, which raised USD 11.2 billion, making it the largest listing of the year globally.

Earlier in 2019, Hong Kong issued the first batch of eight digital banking licenses. ZhongAn was the first to launch a digital bank pilot, with others expected to follow suit in 2020. As the licensees continue to formulate their digital bank offerings, Hong Kong could see an upswing in investments in related areas, like KYC, regtech, digital onboarding and communications, and digital banking infrastructure. The issuance of digital banking licences has also spurred traditional banks to improve their own digital offerings and experience.

Avril Rae, Director, Head of Fintech, Hong Kong, KPMG China, said, “We’re starting to see ecosystems evolving with respect to digital banks. Partners are coming together to get digital banking licenses. Once they have their pilot projects underway, and they have proven their technology both internally and to the Hong Kong Monetary Authority, we’ll start to see them leveraging those partnerships more deeply – integrating banking services with other offerings like travel bookings or insurance to provide their customers with a seamless experience.”

 

SOURCE KPMG China

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CFP Board Center for Financial Planning Announces Best Paper Winners for 2020 Academic Research Colloquium

Vlad Poptamas

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The CFP Board Center for Financial Planning is pleased to announce the recipients of the 2020 Best Paper Awards that were presented last week in Arlington, Va., during the Center’s fourth annual Academic Research Colloquium for Financial Planning and Related Disciplines.

  • The TD Ameritrade Best Paper Award in Behavioral Finance – Sung Lee of Stern School of Business, New York University, for “Fintech Nudges: Overspending Messages and Personal Finance Management”
  • The Northwestern Mutual Best Paper Award in Insurance/Risk Management – Hossein Salehi, CFP® of California Lutheran University, and Charlene Kalenkoski, CFP® of Texas Tech University, for “The Relationship Between Ownership of Insurance Products and Retirement Satisfaction”
  • The Emerging Scholar Best Paper Award – Derek Tharp, CFP® of University of Southern Maine, for “Consumer Perceptions of Financial Advisory Titles and Implications for Title Regulation”
  • The Best Paper Award in Investments – Da Ke of University of South Carolina, for “Left Behind: Partisan Identity and Wealth Inequality”
  • The Best Paper Award in Household Finance – Nick PretnarAlan Montgomery, and Christopher Olivola of Tepper School of Business, Carnegie Mellon University, for “A Structural Model of Mental Accounting”

A full list of 2020 accepted papers is available here.

“We received many compelling paper submissions this year, but the committee selected those that they felt demonstrated the highest research standards,” said Charles R. Chaffin, Ed.D., director of Academic Initiatives, CFP Board Center for Financial Planning. “We congratulate the winners for their contributions to knowledge and innovation in the financial planning industry.”

The Best Paper series of awards recognizes authors from a variety of disciplines and sub-disciplines that relate to financial planning. The award carries a $2,500 cash prize for the author(s) of each winning paper.

The colloquium gathers the global academic community to showcase rigorous and relevant research within financial planning and related disciplines that directly or indirectly relates to the global financial planning practice and the body of knowledge. The CFP Board Center for Financial Planning hosts the colloquium in collaboration with FP Canada and the Financial Planning Standards Board Ltd., owner of the international CERTIFIED FINANCIAL PLANNER certification program outside the United States.

The colloquium is made possible with support from the Center’s Lead Founding Sponsor, TD Ameritrade Institutional, and Founding Sponsors Northwestern Mutual, Envestnet and Charles Schwab Foundation, in partnership with Schwab Advisor Services.

 

SOURCE Certified Financial Planner Board of Standards, Inc.

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