Central Pacific Financial Corp., continuing a remarkable turnaround, posted its fourth consecutive profitable quarter amid an aggressive overhaul of its troubled loan portfolio.

The parent of Central Pacific Bank, which had suffered three straight years of losses before regaining profitability, said today it earned $12.1 million, or 29 cents a share, after adding $11.2 million in income that had been set aside for potential loan losses. It was the fourth straight quarter that the state’s fourth-largest bank had taken a credit in its provision for loan losses on its income statement, having added $19.1 million in the third quarter, $8.8 million in the second quarter and $1.6 million in the first quarter.

In the year-earlier quarter the bank lost $2.1 million, or $2.78 a share.

Central Pacific also took a $3.5 million expense to fund its CPB Foundation, which will be used to support nonprofits in the community. The bank put in $5 million in the third quarter.

For the year Central Pacific earned $36.6 million, or $3.31 a share, compared with a loss of $251 million, or $171.13 a share, in 2010.

"It’s been a wonderful turnaround for us," Central Pacific President and CEO John Dean said. "We’re pleased with the progress in terms of the recovery plan, but we’ve still got a lot of work to do."

The reduction in reserves was prompted by a $27.7 million decline in nonperforming assets — or loans delinquent 90 days or more — to $195.6 million. Nonperforming assets have come down from roughly a half-billion dollars two years ago to their current level, but Dean said they are still too high. He also said the $122 million that the bank still holds in its loan-loss reserve is 5.9 percent of the bank’s total loan portfolio, and the percentage is more than twice the size of its peer group.

"(Chief Credit Officer Bill Wilson) and his team have done an excellent job in improving the overall credit portfolio," Dean said. "As he continues to improve that credit quality, the reserves we once set up are no longer required. And that’s what is driving some of the reductions in the reserves today."

Central Pacific, which has stopped pursuing new loans in California after getting burned by that state’s real estate meltdown, still has $270 million in outstanding loans in California, with $55 million of those nonperforming assets. In Hawaii the bank has $1.8 billion in loans, with about $140 million of those nonperforming assets.

Overall, loans and leases decreased by $105 million year over year to $2.1 billion, but they rose $5 million from the third quarter.

"We had a large number of nonperforming assets and lost market share, but you have to look at us in terms of the Hawaii market and what we had on the mainland," Dean said. "We’ve stabilized the loan portfolio, and we’re looking to cautiously grow that portfolio in coming years."

Central Pacific, which has 34 branches, was on shaky ground before recapitalizing itself early last year with a $325 million stock sale to private investors and an additional $20 million generated from a shareholder rights offering.

"Obviously the capital was critical to this organization, but apart from the capital raised and our rights offering thereafter, I want to give a lot of credit to the improvement in the balance sheet, resulting in a strong earnings statement."

Central Pacific ended the year with $4.1 billion in assets, up from $3.9 billion a year ago, while deposits rose to $3.4 billion from $3.1 billion in the year-earlier period.

The company announced the earnings before the stock market opened today. On Tuesday the bank’s shares slipped 13 cents to $13.87 on the New York Stock Exchange.