Good day, ladies and gentlemen. Thank you for standing by and welcome to the Central Pacific Financial Corporation 2017 First Quarter Earnings Conference Call and Webcast. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. 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'd now like to turn the call over to David Morimoto, Executive Vice President and Chief Financial Officer. Please go ahead sir.

Thank you, William, and thank you all for joining us as we review our financial results for the first quarter of 2017. With me this morning are Catherine Ngo, President and Chief Executive Officer and Anna Hu, 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 risks related to forward-looking statements, please refer to our recent filings with the SEC. And now I’ll turn the call over to Catherine.

Thank you, David, and good morning, everyone. We are off to a strong start for the new year with net income in the first quarter of $13.1 million and diluted earnings per share of $0.42. The current quarter did not include a large price to the provision for loan and lease losses. However, the quarter did include a couple of non-recurring revenue items. David will provide more details on our financial results later in the call. Deposit growth for the quarter was very strong which reflects our focus on building stronger relationship with our customers. Total deposits increased by 3.7% on sequential quarter basis and by 6.2% on year-over-year basis. Total loans increased by 0.6% over the previous quarter and by 7.2% year-over-year. During the first quarter, we grew the Hawaii loan portfolio by $45.1 million which was partially offset by a $24.3 million reduction in the mainland loan portfolio. We continue to expect net loan growth for the full year of 2017 to be in the mid to high single digit range. Asset quality continues to improve albeit we have reached a near normalized level in outstanding nonperforming assets. On April 14, 2017, we entered into memorandums of understanding with each of the six regional banks in Japan that comprise the TSUBASA alliance, which was established to explore advanced IT technology in the Fintech industry. The agreement with the Japanese bank which range in size from $47 billion to $118 billion in asset open the venue for mutual business development and a sharing of business referrals and contacts between Hawaii and Japan. Although the full engagement of this relationship will take some time to develop, we are optimistic of the potential for new business both for our bank and for the state of Hawaii. I am also pleased to…

Thank you, Catherine. And good morning, everyone. Net income for the first quarter of 2017 was $13.1 million or $0.42 per share compared to net income of $12.2 million or a $0.39 per share reported last quarter. Return on average assets in the first quarter was 0.96% and return on average equity was 10.24%. Net interest income increased by $1.6 million sequential quarter and our net interest margin rose by 8 basis points to 3.30%. The sequential quarter increases in net interest income and net interest margin were primarily the result of $1 million in interest recoveries on non-accrual loans at $0.7 million decrease in premium amortization on investment securities. Excluding the non-recurring loan interest recoveries, the normalized first quarter 2017 net interest margin was 3.22%. During the first quarter, we reported a credit to the provision for loan and lease losses of $0.1 million, compared to a credit of $2.6 million recorded in the prior quarter. Net charge-offs in the first quarter totaled $1.2 million. At March 31, our allowance for loan and lease losses was $55.4 million or 1.56% of outstanding loans and leases. First quarter 2017 other operating income totaled $10 million. The first quarter results included $0.6 million in death benefit income on bank loan life insurance. Other operating expense for the first quarter totaled $31.5 million. The reported efficiency ratio for the first quarter was 61.4%. Normalizing for the non-recurring loan interest recoveries and bank loan life insurance proceeds would result in an efficiency ratio for the first quarter of 63.3%. In the first quarter, our effective tax rate was 34.2% versus 34.5% in the fourth quarter. We expect our normalized effective tax rate to approximate 34% to 36% going forward. During the first quarter of 2017, we repurchased 113,750 of common stock at an average cost per share of $31.03. We've also repurchased an additional 60,000 shares of common stock month-to-date in April at an average of cost of $29.94. That completes the financial summary, and now, I'll return the call over to Catherine.

Thank you, David. I believe we are well positioned to sustain our financial performance with the clearly defined business plan for 2017. And with the continued focus on strengthening customer relationship, growing quality asset and improving operational efficiencies. I'd like to take this opportunity to thank our employees, customers and shareholders for their continued support and confidence in our organization as we work towards achieving our 2017 goal. At this time, we'll be happy to address any questions you may have.

[Operator Instructions] And our first questioner today is Aaron Deer with Sandler O'Neill and Partners. Please go ahead with your question.

Good morning, everyone. I had a question on the expense line. The operating expenses came in a bit below where I had anticipated, looks like you saw lower occupancy, lower equipment and lower other costs, is this run rate a good sustainable level to build off or are there any unusual items that were in the first quarter?

I'll start at a high level and then may turn to David for some detail. But as far as what you can expect to see in the coming quarters, I was planned on quarterly $31 million to $33 million for other op expense.

Yes. I can add to that Aaron, the first quarter, it was a clean quarter so the $31.5 million was a clean number. However, there are some expenses that coming in a little lumpy like say advertising expense. That line was a little late in the first quarter. So that's why we are sticking with the guidance of $31 million to $33 million and I think for the full year it's going to probably workout to something relatively flat to the normalized full year 2016 number.

Okay. That's helpful. And then I guess backing out the interest recovered in the quarter, the core margin been kind of flattish. I had anticipated maybe a little bit of lift given the December rate hike. Can you talk about kind of the dynamics that we should expect going forward particularly in light of the additional rate hike in March? And how do you expect to impact your asset yields and your liability costs?

David?

Yes. As you know, the balance sheet is positioned in a relative -- in a slightly asset sensitive fashion. So we do expect some benefit from the rising rate environment. It's rather muted as a result of -- we've seen some deposit cost increases. So we do have some short term CD that they are repricing rather quickly. But we do expect some flow through on the interest asset side to help us going forward.

Okay. I guess related to that I saw the CD balances kicked up in the quarter. I don't know if those were public deposit or something but it was surprising just given that you don't seemed to need the funding necessarily to see you kind of paying up for those deposits. Can you talk about what was happening there?

Yes. We did have a large customer deposit. So the government balances were relatively flat sequential quarter. But we did have good relationship that we've been working with and they did bring in sizable CD deposit at relatively reasonable cost.

The next questioner today is Brett Rabatin with Piper Jaffray. Please go ahead with your questions.

Hi, good morning. I wanted just to first ask you, you talked about still thinking about mid to high single digit growth in the loan portfolio. Your, obviously. 1Q is a still little soft and that's little bit more seasonal but maybe you can give us some thoughts on kind of what grows in the next few quarters and are you optimistic in the portfolio and just back on the margin question is the pricing getting a little bit on a spread basis.

Sure. Brett, this is Catherine. The growth in the first quarter was strong in our Hawaii portfolio. So if you look at the lines in the Hawaii portfolio we saw growth virtually across all asset classes and so for the quarter we saw -- for Hawaii we saw 1.4% growth but that would offset by a decline in our mainland portfolio. And the primary driver for the decline in mainland portfolio was in the C&I line. As far as for the year, we continue to see good loan demand here in Hawaii so I would expect to see that continued kind of growth at the pace we saw in Q1. As far as the mainland portfolio goes, we do expect as there are paydowns in the SNCs and other purchase portfolio, we will get opportunity to replace that rundown. So by the end of the year you still will see that mainland portfolio in the 11 percent-ish ranges.

Okay. And then the other thing I want to ask was just mortgage banking and like how -- what were the gain on sales margin for the quarter? How do you see that business trending after the first quarter and obviously lower volumes in 1Q a bit kind of just that rebound in 2Q?

Catherine again, Brett. The resi production in Q1 within $140 million range. We do expect that production level to increase in the second quarter probably be more in the $175 million to $200 million range. But as far as the gains on sales, Q1 it was about $1.3 million. And for the second quarter I'd see that moving up to the $1.7 million range.

And the next questioner is Jackie Boland with KBW. Please go ahead with your question.

Hi, good morning, everyone. First one is just clarification question. It was $0.7 million linked quarter decrease in premium amortization, correct?

That's correct, Jackie.

Okay. Thank you. And then looking to the provision, this is still obviously reverse one, but the first time in a long time that it has been as small as it's been. Have we hit an inflection point in the portfolio where we could start to see a positive level based on loan growth?

Hi, Jackie. This is Anna. I'd say that yes we have hit an inflection point. We have obviously in a many several quarters in the past years have made large provision credit. We are expecting going forward for this to be normalized and of course at some point to start seeing addition again to the provision.

It looks like we have no further question. So as we conclude the question-and-answer session. I'd like to the conference back over to Ms Catherine Ngo, President and Chief Executive Officer for any closing remarks.

Thank you, William. And thank to all for participating in our earnings call for the first quarter of 2017. We look forward to future opportunities to update you on our progress.

The conference is now concluded. Thank you all for attending today's presentation. You may now disconnect your lines.