Central Pacific Financial Corp., expecting enforcement action to be levied against it by federal and state regulators, staggered to a $183.1 million loss in the third quarter as it took two big charges tied to the bank's exposure to the struggling California and Hawaii commercial real estate markets.

Ron Migita, chairman and chief executive officer of Central Pacific Bank's parent company, disclosed during a conference call yesterday that the Federal Deposit Insurance Corp. and Hawaii Division of Financial Institutions reviewed the bank's financials in August and that he expects the bank will need to enter into a formal agreement with the two agencies requiring the company to address its asset quality, capital needs and liquidity.

Migita said the bank has been trying to get those issues under control.

“;We're focusing on three things,”; he said. “;One is to maintain our liquidity. Secondly is strengthening our capital position, and that's why we recently had our shareholder meeting to increase the number of shares outstanding. And then thirdly it's to work on our asset quality and to bring the level of our nonperforming assets down.”;

Nick Griffin, commissioner of the state Division of Financial Institutions, said it was the agency's policy not to talk about individual banks.

“;We do periodic reviews of all licensed financial institutions that accept deposits, at a time scheduled individually by the bank,”; Griffin said. “;There's a minimum of at least every two years, but depending on the bank's size, the economy and the bank's operations, that time frame can be shortened.”;

Migita said the bank is exploring all options to raise additional capital, including a public offering and selling shares to private-equity investors. The bank also has a $15 million equity-issuance plan that is ongoing. In July, however, the bank was forced to suspend its plan for a $100 million secondary offering because it didn't have enough authorized shares to disseminate to reach $100 million because of the company's low stock price. Last week, shareholders voted in a special meeting to increase the amount of stock Central Pacific is authorized to issue to 185 million shares from 100 million shares. The bank's stock plunged 35.3 percent, or 83 cents, to an all-time closing low of $1.52 yesterday.

Central Pacific, the state's third-largest bank with $5.2 billion in assets, wrote off $111.4 million in noncash charges last quarter. It took a goodwill impairment charge of $50 million related to its low stock price and the valuation of its Hawaii operations, and took a charge of $61.4 million related to past net losses that the bank has determined will be unlikely to be offset with future earnings.

Also during the quarter, the bank set aside $142.5 million for potential loan losses, a 522 percent jump from $22.9 million a year ago and nearly double the $74.3 million that was set aside in the second quarter of this year. Net loan charge-offs in the quarter were $103.7 million compared with $8.7 million in the year-ago quarter and $30.5 million in the previous quarter. Nonperforming assets as of Sept. 30 totaled $418.5 million, or 8.1 percent of total assets, compared with $261.2 million, or 4.7 percent, of total assets as of June 30.

In addition, the bank deferred a $1.9 million interest payment owed last quarter to the U.S. Treasury for the $135 million it received in December as part of a federal bailout through the Troubled Asset Relief Program, or TARP.

“;Our quarterly results continue to be adversely impacted by increased credit costs resulting from further deterioration in the Hawaii and California commercial real estate markets and the resultant decline in property values in those sectors,”; Migita said. “;We continue to expect these challenging economic conditions to persist over the coming quarters and to result in further credit deterioration.”;

Central Pacific, which had a $3 million profit a year ago, had a net loss of $6.38 a share last quarter compared with earnings of 11 cents a share in the comparable period in 2008.

Excluding the $111.4 million in charges, Central Pacific had a net loss last quarter of $71.7 million, or $2.54 a share.

Central Pacific Chief Financial Officer Dean Hirata said the bank needs to raise “;a significant amount of capital”; and that the amount needed will be based on the assessment of risk remaining on the balance sheet.

“;There's certain things we are doing to raise the capital, which include engaging a third-party review of our loan portfolio,”; Hirata said. “;We're also pursuing loan sales that include potential bulk loan sales, and that's being done to reduce the overall risk in the balance sheet.”;

Brett Rabatin, senior research analyst of Birmingham, Ala.-based Sterne Agee, said he was “;surprised”; the bank's financial situation had deteriorated to its current level.

“;It was a disappointing quarter from all aspects—core deposit growth (down $36.4 million from the previous quarter), asset quality and capital ratios,”; he said. “;Management has a difficult task in front of it to return Central Pacific to profitability over the next several years.”;

More than 100 banks have failed this year, but neither Migita, Hirata or Rabatin wanted to broach the subject.

However Migita did say that the bank is working with regulators and is attempting to raise additional capital to absorb anticipated credit costs in the future. The FDIC insures $250,000 per depositor, per institution, on individual accounts. In addition, if the interest rate is less than one-half of 1 percent on checking accounts, there is unlimited insurance, Migita said.