Central Pacific Financial Corp. warned it will take a loss of $33 million to $37 million in the second quarter and said it has initiated a secondary public offering to raise $100 million as a result of deterioration in the Hawaii and California commercial real estate markets.

The parent of Central Pacific Bank, which officially will report its earnings on July 31, saw its stock lose one-fourth of its value yesterday and fall to its lowest level in more than 21 years. The stock closed down 91 cents, or 25.8 percent, at $2.62 on the New York Stock Exchange.

“;Although we are well capitalized for regulatory purposes, the proposed public offering is a prudent measure based on our expectation that the tough economic climate in Hawaii and California will continue in the coming quarters,”; said Ronald Migita, Central Pacific's chairman, president and chief executive.

Central Pacific said the offering will be underwritten by Sandler O'Neill + Partners LP and that the proceeds will be used to further strengthen the bank's capital position and for general corporate purposes.

The bank, which over the previous seven quarters set aside $247.9 million to cover potential losses, suspended its dividend in January and also issued $135 million in senior preferred stock to the U.S. Treasury through its participation in the federal Troubled Asset Relief Program, or TARP.

Central Pacific ran into trouble through its exposure to subprime loans in the California residential construction market.

“;They've had a lot of missteps,”; said analyst Brett Rabatin, of Birmingham, Ala.-based Sterne Agee.

Central Pacific also said its second-quarter loss will include total credit costs of about $77 million to $83 million versus $29.6 million in the first quarter. Those credit costs include a provision for loan and lease losses, foreclosed asset expense, the write-down of loans held for sale and any increase to the reserve for unfunded commitments (loans that have been made but have yet to be put on the balance sheet).

Rabatin said loan-loss provisions will make up the majority of the bank's credit costs in the second quarter.

“;They're taking a more proactive approach in raising capital, but it's very expensive insurance because it will dilute everything,”; he said. “;But it's certainly the more conservative thing to do as a well-capitalized bank so it doesn't have a question of its viability—even assuming continued loan difficulty and a soft economy for at least the next year or two.”;

Central Pacific said its allowance for loan and lease losses as a percentage of total loans was approximately 4.4 percent to 4.6 percent at the end of the second quarter. That equates to $165 million to $170 million, Rabatin said. The company also said it expects net charge-offs in the second quarter to be $28 million to $33 million versus $24.3 million in the first quarter, and nonperforming assets to be $256 million to $266 million compared with $159.9 million in the first quarter.

“;While we are actively managing our credit portfolio in a diligent and focused manner, the ongoing economic downturn and the resultant deterioration in the Hawaii and California commercial real estate markets is adversely impacting our quarterly results,”; Migita said.

“;The actions we are taking are designed to identify and address potential credit issues.”;

Migita said he expects these conditions to persist over the coming quarters and that the bank's credit costs will remain elevated during this period.

Rabatin said the move by Central Pacific to raise capital signifies it is concerned the economy might affect other pieces of its loan portfolio that have yet to experience the same type of deterioration as the residential construction market, which plagued the bank over the last two years. Rabatin cited potential problem areas such as commercial real estate; commercial and industrial loans, which are loans collateralized by inventory rather than real estate; and commercial construction.