Central Pacific Bank said the regulatory consent order placed upon it 17 months ago to improve its capital ratio and other segments of its operations has been terminated.

In place of the order, parent Central Pacific Financial Corp. said today the bank has entered into an informal memorandum of understanding with its regulators: the Federal Deposit Insurance Corp. and the Hawaii Division of Financial Institutions.

“We are pleased to have attained this important milestone as we continue to make progress in our company’s recovery,” said John Dean, president and CEO of Central Pacific. “With a solid capital foundation, we are well positioned to grow our institution and focus on profitability.”

The bank, which earned $4.6 million last quarter in posting its first profit in two years, agreed to a consent order on Dec. 11, 2009, to improve its capital position, asset quality, liquidity and management oversight, among other matters. Since then the bank has been ridding its loan portfolio of troubled mortgages, mostly in California, and recently completed a $325 million capital raise from private investment firms and shareholders, as well as an additional $20 million “rights offering” from existing shareholders.

Central Pacific said the replacement of the consent order with the MOU is indicative of the bank’s improved balance sheet and capital positions as well as the strengthening of its overall financial condition and management team. Dean, a turnaround specialist, was appointed executive chairman of the company in March 2010. He subsequently assembled a new management team for the positions of chief financial officer, chief credit officer and chief administrative officer. Last month, Dean was named president and CEO, and board member Crystal Rose was appointed chairwoman.

The $325 million raised by Central Pacific earlier this year allowed it to exceed capital ratios in excess of the minimum requirements of the consent order. In addition, the company completed a $20 million rights offering last week in which eligible shareholders were allowed to purchase a minimum of 1.3 shares at $10 apiece for every share they owned. Central Pacific’s stock closed down 59 cents, or 4.3 percent, at $13.28 today. 

Central Pacific said in a separate Securities and Exchange Commission filing today that eligible shareholders exercised their rights to purchase 1,325,230 shares of the 2 million shares to which they were entitled under the basic subscription rights. That left 674,770 shares to be distributed on a pro rata basis to shareholders who requested more than their allotment. Shareholders oversubscribed the offering fourfold, or by about 8.6 million shares.