City Bank parent’s
net sinks 70.7%

Special charges hurt
fourth-quarter earnings

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By Dave Segal
dsegal@starbulletin.com

CB Bancshares Inc., the parent company of City Bank, said yesterday that net income in the fourth quarter fell 70.7 percent as a result of after-tax impairment charges of $2.5 million tied to securities in its investment portfolio.

The Honolulu-based bank, which operates 21 branches on Oahu, Maui and the Big Island, posted net income of $885,000, or 24 cents per share, compared with $3 million in the year-ago quarter.

The company also saw its assets, deposits and loans all decline in the fourth quarter. Assets fell 7.9 percent to $1.59 billion from $1.72 billion, deposits declined 6.6 percent to $1.14 billion from $1.22 billion, and loans decreased 4.5 percent to $1.24 billion from $1.30 billion.

CB Bancshares said operating earnings, excluding the impairment charges, rose 10.3 percent. The bank, which cited the adoption of new accounting principles in its calculations, made $3.3 million, or 92 cents per diluted share, compared with $3 million, or 83 cents per diluted share, in last year's fourth quarter.

The company said its nonperforming loans were $15.8 million in the fourth quarter, a rise of 4.4 percent from $15.1 million a year ago.

Nonperforming assets gained 10.1 percent to $20.5 million from $18.6 million in the fourth quarter of 2000.

CB Bancshares said it more than doubled its provision for credit losses to $5 million in the fourth quarter from $2.2 million in the year-ago period.

Net interest income rose 28.8 percent in the fourth quarter to $18.8 million from $14.6 million a year ago.

Noninterest income plunged 88.9 percent to $346,000 from $3.10 million. Excluding the impairment charges, noninterest income rose 40.6 percent to $4.4 million from $3.1million. The gain was primarily due to an increase of $482,000 in service charges and fees due to higher volume and an increase of $1 million on gains from the sales of securities and loans.

For the full year, CB Bancshares' net income, including $6.4 million in after-tax impairment charges, fell 45.2 percent to $6.2 million from $11.2 million in 2000. Excluding the charges, operating earnings for the year were $12.6 million, or $3.55 per diluted share, an increase of 12.1 percent over 2000.

CB Bancshares' stock, which didn't trade the last two days of this week, closed yesterday at $35 on the Nasdaq.