Hello, ladies and gentlemen. Thank you for standing by and welcome to Central Pacific Financial Corp. First Quarter 2015 Conference Call. During today’s presentation all parties will be in listen-only mode. Following the presentation, the conference will be opened for questions. This call is being recorded and will be available for replay shortly after its completion at the company’s website at www.centralpacificbank.com. I’d like to turn the call over to Mr. David Morimoto, Senior Vice President, Investor Relations. Please go ahead, sir.

Thank you, Keith, and thank you all for joining us as we review our financial results for the first quarter of 2015. Highlights and comments will be provided by John Dean, Chairman and Chief Executive Officer; Lance Mizumoto, President and Chief Banking Officer; and Denis Isono, Executive Vice President and Chief Financial Officer, also present and available for questions are Catherine Ngo, President and Chief Operating Officer; and Bill Wilson, Executive Vice President and Chief Risk 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 refer to our recent filings with the SEC. And now, I will turn the call over to John

Thank, you, David, and good morning, everyone. The overall financial performance for our company in the first quarter of this year was on track with business plans, resulting in net income of $10.4 million, loan and deposit balances continue to grow at a stable rate quarter-over-quarter, as we maintained our focus on expanding our client relationships and supporting the business activity in our marketplace. Our credit risk profile has remained stable and we were again able to record a credit to our provisions for loan losses in the quarter. Denis Isono and Lance Mizumoto will provide more details later in this call. I am pleased to report that we made good progress in our stock repurchase program, which we initiated in 2014 as part of our strategy to deploy excess capital for the benefit of our shareholder. Last year, we reduced the total number of issued and outstanding CPF shares by 16.7%, which included purchases of 3.4 million shares by auction, 2.8 million shares via private transactions and almost 860,000 shares in the open market. In the first quarter of this year, we purchased nearly 475,000 shares in the open market. On April 1st of this year, we closed on the purchase of approximately 3.3 million shares for $75 million from our two largest shareholders as part of their underwritten secondary offering to sell an aggregate total of 7.6 million shares. This $75 million stock repurchase further reduced our total issued and outstanding shares by 9.4% and will be reflected in our next quarterly financial results. The remaining buyback authorization and our current stock repurchase program is $29.2 million and we project our capital ratios to remain in excess of the regulatory well-capitalized minimum levels as designated by Basel III, which became effective in the first quarter of this year.…

Thank you, John. For the first quarter of 2015, we reported net income of $10.4 million or $0.29 per diluted share compared to net income of $13.3 million or $0.37 per diluted share reported last quarter. The sequential quarter decline in net income was primarily due to a lower credit to the provision for loan and lease losses of $2.7 million in the current quarter compared with $5.4 million credit reported last quarter. Net interest income for the quarter remains relatively unchanged from the last quarter at $36.2 million. Our net interest margin decreased to 3.28% from 3.33% last quarter. The sequential quarter decrease in our net interest margin was primarily due to the decreases in yields on interest-earning assets. In the quarter, the taxable equivalent yield on our investment securities portfolio declined 3 basis points to 2.61%. The taxable equivalent yield on the loans and leases portfolio declined 4 basis to 3.90%. Our loan and lease portfolio ended the quarter at $2.97 billion, an increase of $35.6 million from the end of the fourth quarter. The growth primarily came from our commercial and industrial and residential mortgage loan portfolios. Lance Mizumoto will provide more insight to the loan portfolio later in this call. Our investment securities portfolio ended the quarter at $1.55 billion, an increase of $86.8 million from the end of the fourth quarter. During the quarter, we chose to reinvest investment cash flow and growth portfolio slightly to support net interest income. Non-interest income for the quarter totaled $11.2 million, up from $10.2 million in the previous quarter. The increase in other operating income last quarter was primarily due to higher unrealized gains on loans held for sale and interest rate locks of $600,000, higher service charges and fees of $300,000, the additional recovery of a counterparty…

Thank you, Denis. And good morning, everyone. As John mentioned, our business development initiatives remain on track with our plans and continue to be supported by the strength in business and economic activity in Hawaii. As of March 31, 2015, total loans increased by 10% or by $270.3 million on a year-over-year basis. During the same period, construction loan balances were up by 30%, commercial and industrial loans as well as our consumer loans were up 15%, and residential mortgages increased by 10%. Compared to the prior quarter end balances, commercial and industrial loans increased by 8% and residential mortgages were up 1.4%. Commercial mortgage loans were relatively flat as we experienced some challenges during the first quarter with heightened level of loan payoffs. The overall loan growth was offset by decline in consumer loans by 4%. However, we remain committed to achieving our growth targets going forward. The year-over-year increase in total deposits was 5.1% or $203 million, of which $155 million was in core deposit growth. Noninterest demand deposits increased by 11%. Interest-bearing demand deposits increased by 8%, while savings and time deposits increased by less than 2%. Compared to previous quarter end balances, total deposits were up by 1.9% or by $78.3 million. The growth in our loan and deposit balances is a reflection of our continued focus on strengthening customer relationships and generating quality new business. We have made good progress in enhancing our supporting infrastructure in areas of delivery channel integration, customer data analytics, and operational efficiencies. While there is more work to be done, we are confident that these initiatives will progressively add value to our business development efforts throughout the year. That completes my summary and our business development activity. And I will now turn the call back to John for his closing remarks. John?

Thanks, Lance. In summary, we are pleased with the consistency of progress being made by our company as reflected in the first quarter financial results. We will continue to focus on our 2015 business plan and our long-term strategic initiatives, which are premised on strengthening relationships with our customers, streamlining operational efficiencies, and expanding our balance sheet with quality assets going forward. I would like to take this opportunity to thank our shareholders and customers for their continued support and confidence as we work towards achieving our goals. At this time, we are happy to address any questions you may have.

[Operator Instructions] And the first question comes from Joe Morford with RBC Capital Markets.

Thanks. Good morning, everyone.

Good morning, Joe.

I guess first question for Lance on the loan. Seem like a little bit slower growth this quarter has contributed to some of the paydown activity on the CRE side. Do you see that activity continuing, or is this kind of largely tied up with a couple larger credits? And just in general, how does the pipeline look going forward in the loan portfolio?

Good morning, Joe. This is Lance. There were a couple of mortgage loans that did pay down during the quarter. What we’re seeing in the second quarter probably be some paydowns on drawdowns on some construction loans that were made in the prior year. But we’re still pretty confident, cautiously optimistic that our loan pipeline is robust enough and that we will see further growth in the second quarter.

And do you see any need to do anymore of the kind of purchases or increase syndicated participations that you’ve done in the past to kind of get to that year end or full year target?

We will look at those purchases as an opportunity arises, but we’re focused on organic growth. And if you notice in the first quarter, a 100% of our growth was organic.

Right. Okay. That’s great. I guess the other question is, just on the margin, a little bit weaker this quarter, looks like mostly due to mix issues. But I was just kind of curious how do you feel about your ability to continue to hold the margin here through to the balance of the year? Are you expecting any greater compression? Thanks.

Hey, Joe, I’m going to pass this one to David if I may. David Morimoto.

Hey, Joe. Yes. The first quarter we did experience a little bit of compression on the net interest margin. It was both on the investment portfolio and on the loan portfolio. As Denis mentioned, we did have sequential [defis] [ph] in both. We’re hopeful that with additional loan growth that we can remix the balance sheet from investment, start to remix the balance sheet from the investments to loans again. And hopefully, we’re hopeful that will support the net interest margin going forward. In the first quarter, we did grow the investment portfolio slightly. We’re hopeful that we can keep it at this pace and at this level or shrink it from here with incremental loan growth.

Okay. That’s helpful. Thanks so much.

Thank you, Joe.

Thank you. And the next question comes from Aaron Deer with Sandler O'Neill.

Hi. Good morning, everyone.

Good morning, Aaron.

If I can follow-up on Joe’s point of questioning with respect to the margin. Denis, I know you provided some indication in terms of what the basic point movement was in the average yields on the loans from securities. Could you give sense of where the new loans maybe even amongst the various types were on-boarded during the quarter, or what rates or yields relative to the existing portfolio?

Lance, you take if that’s fine?

Aaron, this is Lance. During the first quarter, weighted average new loan origination yields, 3.77%.

And that was on the new production?

Correct.

Okay.

And Aaron, this is David. From a add on, so on the loan side there was 3.77% on the new loan origination and that compares to the end of quarter loan portfolio yield of 3.90%. On the investment portfolio, the new purchases during the quarter had a weighted average rate of 2.35%, which compares to the end of quarter or portfolio yield of 2.60%. So while the new earning assets were coming in at lower yield levels, the disparity is quite close. And that’s another reason that gives us comfort or hope that we can stabilize the net interest margin as we go forward through the year.

Well I would think too that they’ve given that the volume of growth this quarter that came from C&I that those credits probably have lower yields being what I presume are variable rate product now?

Yes, that's correct.

Okay. And then I guess related to that can you -- Lance, can you talked a little bit about the strength that you did see in C&I this quarter, what -- if there were any larger credits that help drive that or what types of businesses supported that growth?

Hey Aaron, there were a couple of larger credits that we saw that were fortunate enough to originate but we did have also a number of small loans that helped drive growth.

Okay. Great. Thanks for taking my questions.

Thank you.

Thank you Aaron.

Thank you. And the next question comes from John Moran with Macquarie Capital.

Hey guys, how is it going?

Good.

Good. Just a real quick question on the OpEx run rate. Do you think last quarter you guys had referenced an expected decrease in the comp line and I think things maybe came in a little bit heavy? And then related to that, just if you provide a quick update on the IP initiative, the spend versus the cost saves that you might expect as the quarters kind of progress here in the ‘15?

It’s John here. And I’m going to pass that one to Catherine, if I may.

Good morning, John. So on the OpEx on -- so as you noted on comp expense, we did see a decline from the prior quarter and then also from a year ago, Q1 2014. And we expect that comp expense line to pretty much hold that what you are seeing at Q1 so in that $17 million range. In regard to the software expense where we did see an increase of a prior quarter and then over the prior year as we’ve mentioned in earlier calls, we have made significant investments in technology in the prior quarters, most significantly in our enterprise data warehouse. We are confident that we will see the benefit from the technology investment last spoke to that a bit earlier. But certainly with our better understanding of our customers and added with the enterprise data warehouse point information from all the parent systems across the organizations, we do expect in the coming quarters to see the list.

Okay, that's helpful. But then the -- that computer software expense line at 21 or so, it would be fair to say that that’s going to kind of stay around that level for the rest of this year?

That is fair. The expense of course is being amortized over the coming quarters.

Got you. And the only other one that I had was just kind of a housekeeping item. And I am not sure if you guys mentioned it or not. But it looked like in the fee lines some income on mortgage banking with the little bit stronger linked quarter wondering obviously rates doing what they’ve done over the course of the quarter if you guys saw a benefit from refi and if had what the split was in terms of refi versus purchase?

I will pass it to Lance, John.

Hey John, our purchase activity compared to refund exactly with a split was about 55% to 45%, so 55% purchase 45 % refi.

Great. Thanks very much guys.

Thank you.

Thank you. And the next question comes from Don Worthington with Raymond James.

Good morning.

Good morning Don.

Just noticed that the borrowings were up little over $13 million in the quarter. I’m not trying to trace the dollars, but it looks like may have been used to support the growth in securities. So, I’m just kind of curious about that increase in the type of borrowing that it was?

David?

Hey, Don. It’s David. Yeah. You’re correct. During the first quarter, we did add a little bit of wholesale leverage to the balance sheet to support the dollar net interest income. And again, we saw an opportunity. The majority of the purchases that were investment purchases that were done in the first quarter were the purchases were focused during the month of February where we did see an uptick in rates. So, I think when we took a look at -- when we look back on our purchases, two-thirds of our investment purchase were done, when the five year treasury was north of 145, which was the average for the first quarter. So there was a little bit of wholesale leverage added to the balance sheet. But again, we don’t anticipate that to be continued in future quarters. We expect to be running that down over time.

Okay. Great. Thank you. And then also saw that performing TDRs were down about $10 million. Looks like it was on -- pretty much on the commercial real estate area, was that due to the payoff or did something moved back to a performing status?

Bill. Bill Wilson?

Good morning, Don. That was actually -- the movement was represented largely by the single transaction, was without the category for sustained performance.

Okay. Great. Thank you.

Thank you.

Thank you.

Thank you. [Operator Instructions] And we do have a question from Jackie Chimera with KBW.

Hi. Good morning, everyone.

Good morning.

Good morning.

So looking out at the provision expense for the quarter, was there an impact from the rollover from 4Q into 1Q?

We will go to Bill again Jackie.

Good morning, Jackie. I’m not sure I understand the question.

Was there any period of time, perhaps sell-off between the 4Q to the1Q rollover that would an impact on the provision or was it pretty similar to the methodology in 4Q?

Well. Methodology was the same. The large driver on quarter-over-quarter change was just improvement in the economic factors we used and these qualitative factors of the methodology.

Okay. So it’s driven more by current factors than it was by any change in historical charge-offs?

Right. Exactly. In this current improvement and in those actual economic factors that we employ.

Okay. Great. Everything else I had was already asked. So thank you very much.

Thank you, Jackie.

Thank you. And as there are no more questions at the present time, I would like to turn the call back over to John Dean for any closing comments.

Thanks, Keith. I’d like to thank everyone who joined us today for participating in our earnings call for the first quarter of 2015. And we look forward to future opportunity to update you on our progress. Thank you.

Thank you. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect. Have a nice day.