CPB Inc., whose stock has outperformed all Hawaii companies this year with a 65 percent gain, said today that third-quarter earnings increased 29.6 percent from a year ago, excluding two nonrecurring items. Taxes hit CPB profits
By Dave Segal
dsegal@starbulletin.comThe parent of Central Pacific Bank said improved net interest margin, deposit growth, asset quality and efficiencies all contributed to its 14th consecutive quarter of record earnings of $8.4 million.
Clint Arnoldus, chairman, president and chief executive officer of CPB, said the bank would be de-emphasizing its record streak in future earnings reports because "it gets confusing to read and exhausting to us to explain every time."
Including the one-time items, CPB's net income was down 9.5 percent to $7.9 million from $8.7 million a year ago. But excluding a $2.2 million federal tax credit in the third quarter of 2001 and $877,000 the company paid this quarter for interest on a disputed state tax assessment, operating net income was $8.4 million from $6.5 million a year ago. Neal Kanda, vice president and chief financial officer, said the disputed $877,000 dates back to 1998 and has been paid to the state, but is being appealed. "There is a $4.8 million tax difference between what the state sees and what we have taken as far as our tax returns are concerned," he said. "The $877,000 is the interest amount of the nonpayment of tax."
Arnoldus, who credits the stock's rise to increased awareness in the company, this year began an aggressive investor relations program and attracted coverage from two Wall Street analysts. He also held his first conference call today.
CPB, meanwhile, saw its assets, loans and deposits increase from a year ago. At the end of the third quarter, assets were $2 billion, an 8.2 percent increase from $1.8 billion; loans were $1.29 billion, a 1.2 percent gain from $1.28 billion; and deposits were $1.6 billion, a 13.1 percent gain from $1.4 billion. The net interest margin, which is the difference between what a bank pays in interest to attract deposits and what it gets when lending out money, rose to 5.24 percent from 4.82 percent.
The company also said its nonperforming assets, which are loans unlikely to be paid, decreased by 19.3 percent to $4.5 million from $5.5 million a year ago. CPB's provision for loan losses also was lowered to $300,000 from $1.1 million.
