UPDATE 2-Central Pacific plunges on Q2 loss warning, share sale

* Says to offer $100 million of shares

* Sees Q2 2009 loss per share about $1.22 to $1.35

* Shares plunge more than 25 percent to touch all-time low

By Archana Shankar

(Adds analyst comments, details, share price)

BANGALORE, July 14 (Reuters) - Central Pacific Financial Corp (CPF.N), forecast a second-quarter loss hurt by higher credit costs and set plans to offer $100 million of common stock, sending shares down more than 25 percent.

Shares of the Honolulu-based company touched a life low of $2.61 on the New York Stock Exchange. The stock has lost about 65 percent of its value in the last 12 months.

"The capital raise is a bad news for its shareholders as it will be very dilutive for the stock. Also, it will be tough for them to raise that money because it is more than its market capitalization," analyst Joe Gladue of B. Riley & Company said.

Central Pacific's market capitalization stood at about $98 million as at July 13.

The company said it may contribute net proceeds from the proposed offering to its banking subsidiary and may also pursue attractive growth opportunities.

Central Pacific, which took $135 million in funds from the U.S. Treasury's Capital Purchase Program (CPP), said the offering enhances its ability to repay TARP preferred stock once the economy recovers.

"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," Chief Executive Ronald Migita said in a statement.

Analyst Gladue, however, said he expects the company to take a year or more to be able to start paying dividends or repay government funds.

TOUGH QUARTER

The parent company of Central Pacific Bank said it expects to post a second-quarter loss of about $33 million to $37 million or $1.22 to $1.35 per share, much wider than consensus forecast of a loss of 17 cents a share, according to Reuters Estimates.

The bank holding company said it expects credit costs of about $77 million to $83 million in the quarter driven by a surge in provision for bad loans compared with $29.6 million in the first quarter.