Central Pacific Financial (CPF)

Risks

• The COVID-19 pandemic has significantly impacted the State of Hawaii and our business. The ultimate impact on our business and financial results will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities in response to the pandemic.
• Difficult economic and market conditions in Hawaii would result in significant adverse effects on us because of the geographic concentration of our business.
• Our real estate loan operations have a considerable effect on our results of operations.
• Our ability to maintain adequate sources of funding and liquidity and required capital levels may be negatively impacted by uncertainty in the economic environment which may, among other things, impact our ability to satisfy our obligations.
• Our Banking-as-a-Service ("BaaS") collaboration agreements may expose us to credit risk.
• A large percentage of our loans are collateralized by real estate and any deterioration in the real estate market may result in additional losses and adversely affect our financial results.
• Our allowance for credit loss methodology resulted in a credit to our provision for credit losses but the credit provision may not continue.
• Our allowance for credit losses may not be sufficient to cover actual credit losses, which could adversely affect our results of operations. Additional credit losses may occur in the future and may occur at a rate greater than we have experienced to date.
• Our commercial, financial and agricultural loan and commercial real estate loan portfolios expose us to risks that may be greater than the risks related to our other loans.
• We may incur future losses in connection with certain representations and warranties we have made with respect to mortgages that we have sold in the secondary market.
• Our business is subject to interest rate risk and fluctuations in interest rates may adversely affect our earnings.
• If we are unable to effectively manage the composition and risk of our investment securities portfolio, which we expect will continue to comprise a significant portion of our earning assets, our net interest income and net interest margin could be adversely affected.
• We may be adversely impacted by the transition from LIBOR as a reference rate
• Our RISE2020 initiative may not be successful.
• Our agreements with BaaS partners may produce limited revenue and may expose us to liability for compliance violations by BaaS partners.
• Our strategy of offering BaaS has been adopted by other institutions with which we compete.
• Managing reputational risk is important to attracting and maintaining customers, investors and employees
• The ongoing design and maintenance of data and related internal controls over financial reporting related to Current Expected Credit Losses ("CECL") will require a significant amount of time and resources which may have a material impact on our results of operations.
• Consumer protection initiatives related to the foreclosure process could materially affect our ability as a creditor to obtain remedies.
• Our deposit customers may pursue alternatives to deposits at our bank or seek higher yielding deposits causing us to incur increased funding costs.
• Failure to maintain effective internal control over financial reporting or disclosure controls and procedures could adversely affect our ability to report our financial condition and results of operations accurately and on a timely basis.
• Changes in our accounting policies or in accounting standards could materially affect how we report our financial results and condition.
• Financial services companies depend on the accuracy and completeness of information about customers and counterparties.
• We operate in a highly competitive industry and market area.
• We are subject to environmental liability risk associated with our bank branches and any real estate collateral we acquire upon foreclosure.
• Our business could be adversely affected by unfavorable actions from rating agencies.
• Governmental regulation and regulatory actions against us may impair our operations or restrict our growth.
• We face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations.
• Regulatory capital standards impose enhanced capital adequacy requirements on us.
• We are subject to various legal claims and litigation.
• The market price of our common stock could decline.
• Anti-takeover provisions in our restated articles of incorporation and bylaws and applicable federal and state law may limit the ability of another party to acquire us or a significant block of common stock, which could cause our stock price to decline.
• Our common stock is equity and therefore is subordinate to our subsidiaries' indebtedness and preferred stock.
• There is a limited trading market for our common stock and as a result, you may not be able to resell your shares at or above the price you pay for them at the time you otherwise may desire.
• The soundness of other financial institutions could adversely affect us.
• Our common stock is not insured and you could lose the value of your entire investment.
• We continually encounter technological change.
• We are dependent on key personnel and the loss of one or more of those key personnel may materially and adversely affect our prospects.
• Natural disasters and other external events (including pandemic viruses or disease) could have a material adverse affect on our financial condition and results of operations.