Acquisitions help double Central Pacific earnings
Central Pacific Financial Corp.
, strengthened by the acquisition of two Hawaii finance companies during the last year, posted record net income of $18 million in the third quarter as assets surpassed $5 billion for the first time.
The state's fourth-largest bank, which in July reduced its 2005 earnings-per-share forecast to $2.40 to $2.45 due to higher-than-expected loan prepayments, raised that outlook yesterday to $2.47 to $2.52. Before cutting its projection following the second quarter, the bank had forecast $2.50 to $2.60.
Central Pacific's earnings jumped 118.9 percent in the July-September period from the same quarter a year ago primarily because of its acquisition of City Bank last year. Central Pacific's earnings in the year-earlier quarter included only about two weeks as a combined operation with City Bank.
A second acquisition -- this one of residential mortgage broker Hawaii HomeLoans Inc. -- closed midway through last quarter.
Central Pacific had earnings per share last quarter of 58 cents compared with 41 cents a year earlier, when the bank had net income of $7.7 million.
"With the favorable economic environment combined with our growth prospects, we are well-positioned to achieve our goals in 2005 and beyond," Chief Executive Clint Arnoldus said.
Excluding merger-related expenses, Central Pacific's operating earnings were $20.1 million, or 65 cents a share, compared with $10.4 million, or 56 cents a share, a year earlier. On that basis, Central Pacific beat the consensus estimate of 62 cents, according to Thomson Financial.
Merger-related expenses of $3.5 million last quarter included severance accruals for two executives totaling $1.6 million and severance accounts for some former City Bank employees totaling $784,000. Merger-related expenses a year earlier were $4.5 million.
Central Pacific's assets grew 9.3 percent to $5 billion from $4.6 billion a year earlier while deposits rose 5.2 percent to $3.5 billion from $3.3 billion.
Total loans and leases increased by $304.8 million, or 10 percent, to $3.4 billion from $3.1 billion a year earlier. About 77 percent of third-quarter loan growth was generated from the bank's mainland loan-production offices and rest was sourced in Hawaii, Central Pacific said.
The bank's efficiency ratio, which measures how much it costs Central Pacific to make a dollar of revenue, improved to 48.71 percent last quarter from 62.73 percent a year earlier.
"The improvement in our efficiency ratio ... is primarily attributable to the revenue and expense synergies from our merger with CBBI," Arnoldus said.