The parent of Central Pacific Bank reported a net profit of $3.1 million for the fourth quarter, reversing a $44.5 million loss in the same quarter in 2007, as the banking company continued to reduce its exposure to the troubled California real estate market.

Central Pacific Financial Corp. said yesterday that it netted 11 cents per share during the three months ending Dec. 31, 2008, which compares with a fourth quarter 2007 loss of $1.51 per share.

The results were in line with Wall Street's expectations. Analysts polled by SNL Financial had been forecasting fourth quarter earnings of 11 cents per share.

Central Pacific's stock closed at $6.81 on the New York Stock Exchange yesterday, down 1 cent.

"Given these challenging times, the fundamentals of the bank are improving and we are investing in our core Hawai'i franchise," said Ronald Migita, the company's CEO.

"We're heading in the right direction."

The fourth quarter was the second consecutive quarter in which Central Pacific posted a profit, following the company's $3 million, 11 cents per share, performance during the third quarter 2008.

For the full year, the company said it lost $138.4 million but all of those losses came in the first two quarters when the bank wrote off a significant portion of its troubled loans to California real estate developers.

Central Pacific said it is reducing its exposure to the California residential market. As of Dec. 31, the company's loans to that sector were $71 million, down from more than $340 million at the beginning of the year.

Central Pacific added that loan charge offs totaled $7 million during the quarter, down from $8.7 million in the year-earlier period.

Total assets were down 4.4 percent to $5.43 billion while deposits decreased by 4.5 percent to $5.65 billion. Loans and leases totaled $4.11 billion, a 1.5 percent decline.

During the quarter, the company received $135 million from the U.S. Treasury Department's Capital Purchase Program.

The company, which issued senior preferred stock to the federal government in the deal, said the capital infusion will go toward supporting its local commercial and retail operations.