Friday, October 24, 2003

Central Pacific’s
earnings rise 4.9%

The bank says improved interest
margins and growth in loans should
boost results in the fourth quarter

Central Pacific Financial Corp. announced a 4.9 percent rise yesterday in third-quarter earnings and suggested the profit could have been bigger if low interest rates had not held back growth of its net interest income.


The parent of 24-branch Central Pacific Bank said interest rates have risen and that should help profits for the rest of the year.

Net income for the three months through Sept. 30 was $8.3 billion, or 51 cents a share, up from $7.9 million, or 48 cents a share, in the year-earlier quarter.

Net interest income, the difference between what the company earns from borrowers and what it pays to attract deposits, was virtually unchanged year-over-year at $23.3 million in the latest quarter, before provisions for loan losses, compared with $23.1 million in the 2002 quarter.

"The recent increase in market rates from their June lows and strengthening loan demand is expected to increase revenues going forward," said Clint Arnoldus, chairman, president and chief executive officer of the company.

Neal Kanda, vice president and chief financial officer, said results should be better for this quarter. "In the fourth quarter, we expect continued loan growth and a slight improvement in the net interest margin" from the third quarter, Kanda said.

"As a result management expects diluted earnings per share for the year of $2.05 to $2.07," he said.

That indicates earnings of 53 cents to 55 cents in the fourth quarter, calculating from the company's earlier reports. That would be a dip of between 11.3 percent and 14.5 percent from 62 cents a share in the final quarter of last year, but full-year earnings would be up at least a penny from $2.04 last year.

Total assets of $2.13 billion on Sept. 30 were up 8 percent from $1.98 billion a year earlier. Total loans grew 11 percent to $1.43 billion, from $1.29 billion. Deposits of $1.73 billion were up 8 percent from $1.61 billion.

The company said its asset quality remains sound and nonperforming assets dropped 59 percent to $1.8 million, or 0.09 percent of total assets, from a year-earlier $4.5 million, or 0.23 percent of total assets.

CPF said it remains committed to its proposal to acquire local rival CB Bancshares Inc. in a stock-and-cash takeover bid, which would be worth about $273.9 million at yesterday's prices. It is continuing to seek regulatory approvals. CB Bancshares opposes the takeover.

Central Pacific recently raised $40 million to help pay for the merger and support other corporate expenses. The company said it spent $617,000 on merger-related costs in the latest quarter.


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