CB Bancshares CB Bancshares Inc., benefiting from a 2001 write-down, a big jump in service charges and fees, and an improved loan portfolio, posted a 307.2 percent increase in net income in the fourth quarter to top off a record year of earnings.
earnings skyrocket
The City Bank parent benefits
from fee income and a 2001 writedownBy Dave Segal
dsegal@starbulletin.com
The parent of City Bank and outsourcing services subsidiary Datatronix Financial Services Inc. had net income in the final three months of $3.6 million, or 92 cents a share, compared with $885,000, or 23 cents a share, a year earlier.
For the year, CB Bancshares net income rose 119.2 percent to a record $13.5 million, or $3.43 a share, compared with $7.3 million, or $1.85 a share, a year earlier.
"Thanks to strong growth in our core deposits and continued improvement in efficiency, we achieved the highest earnings in our history," said Ronald K. Migita, president and chief executive officer of CB Bancshares.
The huge gains for both the fourth quarter and the year were primarily due to a charge that CB Bancshares took both earlier this year and a year ago to write down to fair market value three collateralized loan obligations totaling $22.1 million.
The company had no write-down this quarter, compared with a $4 million write-down a year earlier, thus accounting for the big disparity in net income. Likewise, for the entire 2002 year, CB Bancshares had a $1.4 million write-down compared with a $10.6 million write-down in all of 2001.
Excluding the write-downs, CB Bancshares' earnings of $3.6 million in the 2002 fourth quarter would have represented an approximate 8 percent increase from $3.3 million in earnings a year earlier.
For all of 2002, the company would have had $14.4 million in earnings, about a 15 percent increase from $12.6 million a year earlier.
The company also benefited from a full year of service charges and fees from its investment services area that had approximately only two months of operations in 2001. The fees related to the sale of annuities and insurance products.
Noninterest income, which includes revenue from service charges and fees, showed a strong overall gain as it jumped to $3.5 million in the quarter, a 160.5 percent increase from $1.3 million a year earlier. For the year, noninterest income soared 227.2 percent to $12.8 million from $3.9 million a year earlier.
Total assets and deposits rose for the year while loans fell as the company limited its risk. Assets were $1.7 billion, up 5.6 percent from $1.6 billion, and deposits were $1.2 billion, up 2.2 percent from $1.1 billion. The company's core deposits, which include noninterest-bearing checking accounts and money-market accounts but not certificates of deposit, rose 8.8 percent to $1.2 million from $1.1 million.
Loans, however, fell 6.6 percent to $1.16 billion from $1.24 billion.
Despite the drop-off in loans, CB Bancshares saw its nonperforming loans decrease 19.4 percent in the quarter to $12.7 million from $15.8 million a year earlier and nonperforming assets, which consist of nonperforming loans and other real estate owned, decline 27.1 percent to $14.9 million from $20.5 million.
The decline in nonperforming assets was primarily due to a decrease of $1.8 million in the nonperforming commercial loan category, a decrease of $1.2 million in total nonperforming real estate loans and a decrease of $2.5 million in other real estate owned.
"The significant improvement in the coverage of the allowance to nonperforming loans reflects, in part, the continuing emphasis on reducing nonperforming loans and the strength and expertise of our risk management group," Migita said.
CB Bancshares also reduced its provision for credit losses in the quarter to $4.2 million from $5.0 million in the year-earlier quarter.
Net interest income, or the difference between interest earned on loans and investments minus interest paid on deposits, edged up 0.7 percent in the fourth quarter to $19 million from $18.8 million a year earlier while the net interest margin ended the year at 5.18 percent, an increase of 70 basis points from 4.48 percent a year earlier.
CB Bancshares Inc.