Central Pacific's profit rises 12 percent
The parent of the state's fourth-largest bank had to trim 4 cents a share for a departing executive
Central Pacific Financial Corp. said yesterday its first-quarter net income rose 12.4 percent as its mainland lending operations contributed nearly $100 million in loan growth.
The parent company of Central Pacific Bank also took a $1.3 million after-tax charge to account for the retirement of Neal Kanda, the president and chief operating officer who left at the end of March after his COO position was eliminated.
Central Pacific, the state's fourth-largest bank in terms of assets, had net income of $19.3 million, or 63 cents a share, compared with $17.2 million, or 59 cents a share, a year ago. The charge taken for Kanda's departure trimmed 4 cents a share off earnings. Without the charge, Central Pacific had operating earnings of 67 cents a share, beating six analysts' consensus estimate by 3 cents, according to Thomson Financial.
The bank also reaffirmed its previous earnings guidance for 2006 operating earnings per share to increase 7 to 10 percent over a year ago.
"The bottom-line (earning-per-share) number was a little better than expected, but some of the underlying trends showed some softness, particularly the loan and deposit growth," said Joe Morford, a San Francisco-based analyst with RBC Capital Markets.
"Real estate paydowns in Hawaii (made that segment) a little more sluggish than we had expected," Morford said. "But credit-quality trends were very positive. They saw basically a 50 percent decline (from the fourth quarter) in the nonperforming assets -- the problem loans -- and had very minimal loan losses."
The bank said its Hawaii lending activity was adversely affected by higher-than-expected loan prepayments and the payoff of $12.2 million in nonaccrual and delinquent loans.
But Central Pacific continues to benefit from its August 2005 acquisition of Hawaii HomeLoans, now called Central Pacific HomeLoans. The addition of the Hawaii-based lending company increased Central Pacific's other operating income last quarter to 19 percent of revenue.
Overall, the bank's loans and leases grew 11.9 percent, or $384.7 million, to $3.6 billion from $3.2 billion a year earlier. Of that amount, $99.9 million was generated from mainland loan production.
Deposits increased 8.8 percent from a year earlier. Total assets gained 9.8 percent to $5.2 billion from $4.8 billion and deposits rose to $3.7 billion from $3.4 billion.
Central Pacific, which acquired the parent of rival City Bank in September 2004, had no merger-related expenses last quarter. It had $1.5 million in nonrecurring merger-related expenses in the first quarter of 2005.
Nonperforming assets declined 38.4 percent to $6.1 million, or 0.12 percent of total assets, from $9.9 million, or 0.21 percent of total assets, a year earlier. Central Pacific said the improvement in the quarter reflected the full payoff of $5.2 million in nonaccrual loans.
The bank's allowance for loans and lease losses as a percentage of total loans and leases was 1.47 percent compared with 1.6 percent a year ago.