CENTRAL PACIFIC FINANCIAL CORPCPF
CENTRAL PACIFIC FINANCIAL CORP Segments Disclosure
26. SEGMENT INFORMATION
We have the following three reportable segments: Banking Operations, Treasury and All Others. The segments are consistent with our internal functional reporting lines and are managed separately because each unit has different target markets, technological requirements, marketing strategies and specialized skills.
The Banking Operations segment includes construction and real estate development lending, commercial lending, residential mortgage lending, consumer lending, trust services, retail brokerage services and our retail branch offices, which provide a full range of deposit and loan products, as well as various other banking services. The Treasury segment is responsible for managing the Company’s investment securities portfolio and wholesale funding activities. The All Others segment includes activities not captured by the Banking Operations or Treasury segments described above and includes activities such as electronic banking, data processing and management of bank owned properties.
The accounting policies of the segments are consistent with those described in Note 1 - Summary of Significant Accounting Policies. The majority of the Company’s net income is derived from net interest income. Accordingly, management focuses primarily on net interest income, rather than gross interest income and expense amounts, in evaluating segment profitability.
Intersegment net interest income (expense) was allocated to each segment based upon a funds transfer pricing process that assigns costs of funds to assets and earnings credits to liabilities based on market interest rates that reflect interest rate sensitivity and maturity characteristics. All administrative and overhead expenses are allocated to the segments at cost. Cash, investment securities, loans and leases and their related balances are allocated to the segment responsible for acquisition and maintenance of those assets. Segment assets also include all premises and equipment used directly in segment operations.
Segment net income (loss) and total assets are provided in the following table for the periods indicated:
Banking Operations | Treasury | All Others | Total | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Year ended December 31, 2019 | |||||||||||||||
Net interest income | $ | 171,716 | $ | 12,358 | $ | — | $ | 184,074 | |||||||
Intersegment net interest income (expense) | 22,907 | (11,448 | ) | (11,459 | ) | — | |||||||||
Credit (provision) for loan and lease losses | (6,317 | ) | — | — | (6,317 | ) | |||||||||
Other Operating income: | |||||||||||||||
Mortgage banking income | 4,191 | — | 1,792 | 5,983 | |||||||||||
Service charges on deposit accounts | 8,406 | — | — | 8,406 | |||||||||||
Other service charges and fees | 5,685 | — | 8,673 | 14,358 | |||||||||||
Income from fiduciary activities | 4,395 | — | — | 4,395 | |||||||||||
Equity in earnings of unconsolidated subsidiaries | 257 | — | — | 257 | |||||||||||
Fees on foreign exchange | 91 | 664 | — | 755 | |||||||||||
Investments securities gains (losses) | — | 36 | — | 36 | |||||||||||
Income from bank-owned life insurance | — | 3,105 | — | 3,105 | |||||||||||
Loan placement fees | 702 | — | — | 702 | |||||||||||
Net gain (loss) sale of foreclosed assets | — | — | (145 | ) | (145 | ) | |||||||||
Other | 632 | 2,585 | 732 | 3,949 | |||||||||||
Total other operating income | 24,359 | 6,390 | 11,052 | 41,801 | |||||||||||
Total other operating expense | (64,940 | ) | (1,487 | ) | (75,204 | ) | (141,631 | ) | |||||||
Administrative and overhead expense allocation | (69,039 | ) | (841 | ) | 69,880 | — | |||||||||
Income before taxes | 78,686 | 4,972 | (5,731 | ) | 77,927 | ||||||||||
Income tax (expense) benefit | (19,796 | ) | (1,251 | ) | 1,442 | (19,605 | ) | ||||||||
Net income (loss) | $ | 58,890 | $ | 3,721 | $ | (4,289 | ) | $ | 58,322 | ||||||
Banking Operations | Treasury | All Others | Total | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Balance as of December 31, 2019 | |||||||||||||||
Investment securities | $ | — | $ | 1,128,110 | $ | — | $ | 1,128,110 | |||||||
Loans and leases (including loans held for sale) | 4,458,623 | — | — | 4,458,623 | |||||||||||
Other | 24,813 | 251,151 | 149,975 | 425,939 | |||||||||||
Total assets | $ | 4,483,436 | $ | 1,379,261 | $ | 149,975 | $ | 6,012,672 | |||||||
Banking Operations | Treasury | All Others | Total | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Year ended December 31, 2018 | |||||||||||||||
Net interest income | $ | 153,314 | $ | 19,684 | $ | — | $ | 172,998 | |||||||
Intersegment net interest income (expense) | 28,691 | (18,284 | ) | (10,407 | ) | — | |||||||||
Credit (provision) for loan and lease losses | 1,124 | — | — | 1,124 | |||||||||||
Other operating income: | |||||||||||||||
Mortgage banking income | 4,015 | — | 3,300 | 7,315 | |||||||||||
Service charges on deposit accounts | 8,406 | — | — | 8,406 | |||||||||||
Other service charges and fees | 5,154 | 23 | 7,946 | 13,123 | |||||||||||
Income from fiduciary activities | 4,245 | — | — | 4,245 | |||||||||||
Equity in earnings of unconsolidated subsidiaries | 233 | — | — | 233 | |||||||||||
Fees on foreign exchange | 98 | 807 | — | 905 | |||||||||||
Investments securities gains (losses) | — | (279 | ) | — | (279 | ) | |||||||||
Income from bank-owned life insurance | — | 2,117 | — | 2,117 | |||||||||||
Loan placement fees | 747 | — | — | 747 | |||||||||||
Other | 981 | 65 | 946 | 1,992 | |||||||||||
Total other operating income | 23,879 | 2,733 | 12,192 | 38,804 | |||||||||||
Total other operating expense | (63,649 | ) | (1,472 | ) | (69,561 | ) | (134,682 | ) | |||||||
Administrative and overhead expense allocation | (60,636 | ) | (874 | ) | 61,510 | — | |||||||||
Income before taxes | 82,723 | 1,787 | (6,266 | ) | 78,244 | ||||||||||
Income tax (expense) benefit | (19,832 | ) | (428 | ) | 1,502 | (18,758 | ) | ||||||||
Net income (loss) | $ | 62,891 | $ | 1,359 | $ | (4,764 | ) | $ | 59,486 | ||||||
Banking Operations | Treasury | All Others | Total | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Balance as of December 31, 2018 | |||||||||||||||
Investment securities | $ | — | $ | 1,354,812 | $ | — | $ | 1,354,812 | |||||||
Loans and leases (including loans held for sale) | 4,085,013 | — | — | 4,085,013 | |||||||||||
Other | 36,905 | 256,652 | 73,644 | 367,201 | |||||||||||
Total assets | $ | 4,121,918 | $ | 1,611,464 | $ | 73,644 | $ | 5,807,026 | |||||||
Banking Operations | Treasury | All Others | Total | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Year ended December 31, 2017 | |||||||||||||||
Net interest income | $ | 140,077 | $ | 27,626 | $ | — | $ | 167,703 | |||||||
Intersegment net interest income (expense) | 32,977 | (25,000 | ) | (7,977 | ) | — | |||||||||
Credit (provision) for loan and lease losses | 2,674 | — | — | 2,674 | |||||||||||
Total other operating income | 22,511 | 2,448 | 11,537 | 36,496 | |||||||||||
Total other operating expense | (60,939 | ) | (1,433 | ) | (68,701 | ) | (131,073 | ) | |||||||
Administrative and overhead expense allocation | (61,082 | ) | (972 | ) | 62,054 | — | |||||||||
Income before taxes | 76,218 | 2,669 | (3,087 | ) | 75,800 | ||||||||||
Income taxes | (34,376 | ) | (1,204 | ) | 984 | (34,596 | ) | ||||||||
Net income (loss) | $ | 41,842 | $ | 1,465 | $ | (2,103 | ) | $ | 41,204 | ||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2019 | Feb 25, 2020 | Showing above |
| 2018 | Feb 28, 2019 | |
| 2017 | Feb 28, 2018 | |
| 2016 | Mar 1, 2017 | |
| 2015 | Feb 25, 2016 | |
About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.