Good afternoon, ladies and gentlemen. Thank you for standing by and welcome to the Central Pacific Financial Corp first quarter 2012 conference call. [Operator instructions] This call is being recorded and will be available for replay shortly after its completion on the company's website at www.centralpacificbank.com. I would like to turn the call over to Mr. David Morimoto, Senior Vice President, Investor Relations.

Thank you, Amy, and thank you all for joining us as we review our financial results for the first quarter of 2012. With us today are John Dean, President and Chief Executive Officer; Denis Isono, Executive Vice President and Chief Financial Officer; and Bill Wilson, Executive Vice President and Chief Credit Officer. During the course of today's call, management may make forward-looking statements. While we believe these statements are based on reasonable assumptions, they involve risks that may cause actual results to differ materially from those projected. For a complete discussion of the risks related to forward-looking statements, please see our recent filings with the SEC. And now I'll turn the call over to John.

Thank you, David, and good morning, everyone. I am pleased to report that the positive momentum we generated in 2011 was sustained in the first quarter of this year. We recorded our fifth consecutive quarter profitability since the company’s turnaround began with its recapitalization a year ago. The continued stabilization of our credit risk profile allowed us to further reduce our allowance for loan and lease losses which resulted in a positive contribution to our net income for the quarter. Our balance sheet has shown stable growth in both total loans and total deposits and especially in our core deposit base. Our capital position remained strong and well in excess of the minimum regulatory levels of a well capitalized financial institution. The U.S. Department of Treasury recently announced the sale of their remaining common stock held in our company and as a result we have exit the Troubled Asset Relief Program or TARP earlier this month. Our management team and employees continue to perform at an outstanding level throughout all areas of our organization. We could not have made such significant progress in the company’s turnaround without their commitment to our customers and dedication to a total team effort. Turning to our local economy, the activity in our visitor industry spiked at the end of 2011 and year-over-year visitor arrivals increased by 3.5% and visitor spending by 15.6%. Through the first 2 months of 2012, visitor arrivals increased 6.7% and visitor spending increased 11.4% over the same period last year. The growth in arrivals has been primarily driven by visitors from Canada and other international segments, Australia, New Zealand, Korea and China. We expect the steady economic recovery NOI to continue primarily due to moderate increases in visitor arrivals and spending. Construction activity is projected to pick up in 2012 led by high-rise condominium projects, rail construction and infrastructure improvements. The total value of real non-residential permits is expected to grow by 40% over last year to more than $1.4 billion. Construction jobs counts and income are projected to increase by 2.1% and 3.1% in 2012 respectfully and further increase in the next few years. Rise in unemployment rate was 6.4% in March and is projected to remain flat throughout the year. A slow economic recovery is expected for the state with payroll jobs increasing by 1.8%, real personal income increasing by 1.8% and real GDP increasing by 2.3%. We continue to be cautiously optimistic of a modest growth projected in 2012. At this time I would like to ask Denis Isono, our Chief Financial Officer to review the highlights of our first quarter financial performance. Denis?

Thank you, John. For the first quarter of 2012, we reported net income of $13.5 million or $0.32 per diluted share compared to net income of $12.1 million or $0.29 per diluted share reported last quarter. As John previously mentioned, we benefited from a reduction in our allowance for loan and lease losses which resulted in a credit to the provision for loan and lease losses of $5.0 million compared to a credit of $11.2 million in the previous quarter. The reduction in our allowance was primarily impacted by 3 elements. First lower net charge-offs of $2.8 million for the quarter compared to $10.1 million last quarter. Second, the trailing 8 quarters of charge-off data used to allocate the reserve for loan and lease losses continues to improve and finally improvement in others factors of overall risk profile such as declining troubled debt restructuring continues to improve. All 3 factors contributed to the reduction in our allowance. Bill Wilson will provide more details about our credit risk profile later in this call. Net interest income for the quarter was $30.5 million compared to $30.8 million in the previous quarter and our net interest margin was 3.23% and 3.25% for the same respective quarters, primarily due to lower yields on the company's interest earning assets. Improvement in yield on earning assets will need to come from quality loan growth, continued reduction in NPAs and higher yields from our investment portfolios. During the quarter, our investment securities portfolio increased by $153 million to approximately $1.6 billion while our investment strategy concentrates primarily on the purchasing of agency debentures and MBS securities with relatively short durations. During the quarter, we increased our ownership of municipal and corporate securities by $33.3 million. At March 31, 2012 our municipal and corporate securities accounted for less…

Thank you, Denis. We continue to realize improvements in most areas of our credit risk profile in the first quarter of 2012. Net charge-offs totaled $2.8 million in the first quarter as compared to $10.1 million in the fourth quarter of 2011 and $13.3 million in the first quarter of 2011. However, non-performing assets totaled $205.6 million at the end of the first quarter compared to $195.6 million in the fourth quarter of 2011, and $284.9 million in the first quarter of 2011, or year-over-year decrease of 27.8%. The first quarter increase in non-performing assets was primarily attributable to $38.4 million in additions, which were partially offset by $28.4 million in reductions. The reductions are represented by $15.2 million in repayments, $9.4 million in sales of foreclosed properties, $1.8 million in write-downs, $1.3 million in charge-offs and $600,000 in returned to accrual status. The principal contributor to the NPA additions for the quarter was one of our last remaining larger construction and development exposures. It is located on the mainland. We believe that this loan as with all of our loans is appropriately reserved. Non-performing construction development loans totaled $123.1 million at the end of the first quarter, which comprised 62.9% of the total non-performing assets, and decreased from $146.5 million in the fourth quarter of 2011. Troubled debt restructuring has totaled $80.8 million for the first quarter, a decrease of 3.6 million from the fourth quarter of 2011. Our TDRs are comprised of $40.9 million in residential mortgages, $33.7 million in Hawaii commercial real estate and $6.2 million in other loans. Loans delinquent for 90 days are more still accruing interest, totaled $208,000 in the first quarter compared to $28,000 in the fourth quarter of 2011. Loans delinquent for 30 days are more still accruing interest, increased to $6.2 million in the first quarter from $5.4 million in the fourth quarter of 2011. The allowance for loan and lease losses as a percentage of total loans and leases decreased to 5.49% at the end of the first quarter from 5.91% in the fourth quarter of 2011. The allowance for loan and lease losses as a percentage of non-accrual loans was 80.4% at the end of the first quarter compared to 100% at the fourth quarter 2011 and 91.5% at first quarter 2011. As noted earlier in my remarks, our ongoing program to reduce non-performing assets and reduce our construction and development, credit risk exposure continue to show positive progress through the first quarter despite the net increase in non-performing assets. We anticipate that we will be able to continue our progress in improving asset quality over the balance of the coming year. That completes our credit quality review. And I would now like to turn the call back to John.

Thanks, Joe. In summary our entire organization is proud of the significant milestones achieved in 2011 and in the first quarter of this year. While it will take some time, we are committed to returning this bank to a high performing institution that it once was. We look forward to the challenges ahead with a continued focus on strengthening customer relationships, developing new business and improving core earnings. At this time, we would be happy to answer any questions you may have.

[Operator Instructions] Our first question comes from Joe Morford at RBC Capital Markets.

I guess, first couple of questions on credit for Bill. If you can talk a little bit more about the inflows this quarter. It sounds like it was largely concentrated in one mainland credit but you know what exactly happened this quarter? Did you take any additional write-downs and what's the prospect for resolution? And then more broadly speaking, I know you don’t comment directly on classified asset levels but you know, maybe directionally you can talk about how -- does the trend continue to improve?

Okay, I think I’ll talk first to the NPA increase. It was primarily related to a single asset and as I noted in the remarks, the net increase -- the gross increase was $38 million and the vast majority of that is represented by a single account. It is one of the last of the remaining last CD exposures we had on the mainland. We have been involved in negotiations for resolution for some time. It was merely the circumstances that as it stood at the end of the quarter that required the reclassification, but as I noted we believe we are appropriately reserved for this one for resolution. Classified assets, I think we now actually end up reporting those in our SEC filings. So, I can tell you that they are continuing to trend downward and as they have consistently over prior quarters.

Okay, then, a question for John. It was encouraging to see the loan growth this quarter and maybe if you could just talk about your outlook for that and do you expect to continue to broaden throughout the portfolio?

Yes. Joe, I think almost the loan growth we got in the last half of 2011 was the resi mortgages and the growth now is broadening, both in for C&D but also in CRE. So as you are well aware especially on the corporate or commercial side, we had built a pipeline and Lance Mizumoto, our Chief Banking Officer and his team have worked really hard in terms of building the pipeline. We are starting to see in the first quarter some of those results. So going forward, we are cautiously optimistic that we should be seeing modest but good loan growth coming to the bank.

Next question comes from Aaron Deer of Sandler O'Neill & Partners.

A quick follow-up on Joe’s question with respect to classifieds. Can you provide what the classified asset ratio was at March 31?

The classified asset ratio at March 31 was …

Give him 12:31, too.

Was just about 38%.

Okay. And December 31?

I think it was 45%.

Okay. That is continuing to move forward in the right direction.

No, it is definitely moving in the right direction.

And then with respect to the DTA, I was wondering if you could give what the recoverable balance that where that stood at March 31 if your accountants or auditors are giving you any sort of insight to what the timing of the whole recovery might be at this point?

Yes. It’s about 159. The net DTA is obviously net to zero on the books but its 159 and we’re still talking to our auditors about how we would bring it back. So the expectation for the year is pretty much ongoing, recorded as we earn it.

Next question comes from Joe Gladue at B. Riley.

Just noticed on the mix of assets that you had a pretty significant shift from cash and interest baring balances with banks into securities. Just wondering when that occurred and if any impact in the net interest margin from that was sort of already reflected in the first quarter if we might see some benefit from that in the second quarter?

Joe, it's spread out pretty much during the whole quarter. We expect to see the margin kind of stay flat where it is.

And I guess just on the other side of that on the deposit side you still have -- you still think there is much potential for declines in funding cost?

Not significant, but I guess 1 or 2 basis points is makes a difference. It’s getting out at pretty low levels.

Hey Joe, it is John. Just on the deposit side, we are still seeing good growth in core deposits, but as Denis mentioned, we are at levels now, we’re not going to pick-up that much more.

And just wondering if you could remind us where the, I guess, total exposure to Mainland loans stand?

Total exposure on the Mainland is $281 million at the end of the quarter and of that $60 million is non-accrual.

And I guess lastly just ask, I guess if you can remind us when next regulatory exam is and what thoughts are on the progress towards the MOU?

There is no set date and obviously the regulators decide that. So, but obviously a bank with a MOU, they are going to be coming in at least once a year. If not more frequently. So we will be seeing them again this year and we feel we made good progress and ultimately it’s going to be up to them to decide when they are comfortable with lifting the MOU. We don’t see that negatively impacting us today in terms of executing under the plan. So we think we are working well with the regulators. I think I may speak for them, it’s dangerous; but I think they are pleased with us raising capital and the financial improvement. I think we just got to focus on doing the right things in the bank and eventually that MOU will go away.

The next question comes from Jacquelynne Chimera with KBW

I just have a quick housekeeping item. Following the government sale of your common shares does that mean that you are no longer beholden to any of the TARP restrictions?

That is correct.

And then also I am sorry Denis, I missed the amount of the unfunded commitments in your prepared remarks, so if you just may answer my question; excluding the effect of the charitable contribution in the fourth quarter, if I am looking to the other expense line item in non-interest expenses, it looks like there was a substantial linked quarter decline; you'd mentioned some credit cost, but I was curious as to what credit cost were incorporated into that item?

Going to pull that number out now, if you give us a minute.

Those will be write-downs for OREO.

That’s included in the category labeled other?

Yes, and then the reserve for unfunded commitments for the fourth quarter actually went up $2.1 million and first quarter went down $1.7 million and that’s what’s driving that significant difference.

And then just lastly, I notice that the Mainland portfolio actually increased on a linked quarter basis, what was it that drove that?

There has been some new lending on the Mainland to existing customers. It looks like it went up by about $9 million with on the commercial mortgage side.

This is John speaking here. While we are not looking for new business on the Mainland and I’ve said that publicly, obviously we made a huge investment. If you look at our losses over the last 3-4 years in terms of lending there, but we do have a core base, a little over $200 million let's say of clients that have been good clients and served us well and we believe it's in the bank’s best interest to continue to serve those clients going forward.

So it’s just all existing clients that you have really strong relationship that's just kind of keeping them happy?

Yes, that's exactly correct. There is no new marketing to new -- there is no prospecting going on in the Mainland by CPB today.

[Operator Instructions] And our next question comes from Aaron Deer of Sandler O'Neill.

Not to get the cart ahead of the horse, but clearly your regulatory capital ratios have come up and are continuing to come up and I would expect them to advance higher still once the DTA comes back. What are your thoughts kind of longer-term, obviously you’re growing organically, but beyond that what are your thoughts in terms of how to deploy what's going to be a pretty heavy level of excess capital at some point later this year and next year?

John here, Aaron. At this point in time, obviously especially when the DTA, or deferred tax asset comes back, we are going to be well beyond well capitalized. And at that point in time you know there's different choices for us that we need to consider. Obviously, you know them as well as I, whether we buy back shares, whether we initiate a cash dividend, so we'll look at all the alternatives out there. But to date, we really not that focused, again we’re back to blocking-tackling getting the bank were it needs to be; getting out from under the MOU and continuing to improve earnings. So we’ll probably be looking at that at the end of this year, early next year roughly speaking.

This concludes our question-and-answer session. I would like to turn the conference back over to John Dean for any closing remarks.

If there is no other questions and I just want to thank you very much everyone that’s on line for participating in our earnings call for the first quarter of 2012 and we look forward for future opportunities to update you on our progress. Thank you.

This conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.