City Bank parent posts
another strong quarterThe firm plans to appeal a state
ruling in favor of a hostile takeover
City Bank's parent, facing a Thursday deadline to decide on a hostile takeover offer from rival Central Pacific Financial Corp., said yesterday that net income jumped 146.8 percent in the first quarter.
CB Bancshares Inc. also said it incurred $348,000 in expenses related to defending CPF's proposal but did not indicate its decision regarding the offer or when it would make an announcement.
The sweetened takeover bid, made on March 15, was valued at $400 million, or $87.26 a share.
Separately, CB Bancshares filed a notice in state Circuit Court that it intends to appeal a state agency's ruling in February that gave Central Pacific the go-ahead to proceed with its merger attempt. CB Bancshares appealed to the state agency last month but was later told there was no provision in the law to make such an appeal.
Bank officials could not be reached late yesterday to explain whether the filing was indicative which direction CB Bancshares was leaning on the merger proposal.
Meanwhile, CB Bancshares, which spent $6.6 million in 2003 fighting off the takeover proposal, had record net income of $9.8 million, or $2.21 a share, compared with $4 million, or 92 cents a share, a year ago.
Ronald Migita, president and chief executive of CB Bancshares, cited strength in the bank's core businesses, increased net interest margin and improved credit quality for the increase.
"We have produced four consecutive quarters of outstanding financial performance," Migita said.
CB Bancshares, which posted a 53.9 percent increase in net income in 2003 over 2002, had double-digit percentage gains last quarter in assets, deposits and loans.
Assets grew 13.1 percent to $1.9 billion from $1.7 billion. Deposits increased 14.2 percent to $1.3 billion from $1.1 billion. Loans rose 16.6 percent to $1.3 billion from $1.2 billion.
CB Bancshares' nonperforming loans and nonperforming assets both showed significant decreases for the quarter from a year ago.
Nonperforming loans decreased 60.3 percent to $4.6 million from $11.7 million. Nonperforming assets declined 62.8 percent to $4.6 million from $12.4 million.
The decrease in nonperforming assets was primarily from a $5.1 million decrease in nonperforming real estate loans.
The bank also reduced its provision for credit losses by 88.5 percent to $500,000 from $3.8 million a year ago.
"The improvement in asset quality resulted in the reduction of the provision," Chief Financial Officer Dean Hirata said.
The company's net interest margin, which reflects the difference between what a bank pays depositors and what it brings in from loans, improved to 4.9 percent in the quarter from 4.8 percent a year ago.
Net interest income increased 16.1 percent to $21.3 million from $18.3 million a year ago.
Noninterest income, which includes revenue from service charges and fees, rose 35.1 percent to $7.4 million from $5.5 million a year ago.
CB Bancshares' return-on-assets ratio, which indicates how much profits it gets for each dollar of assets it controls, improved to 2.1 percent from 1.0 percent, including the merger-related expenses.
The bank's return on equity, a measure of how well it used reinvested earnings to generate additional earnings, improved to 22.7 percent from 10.5 percent, including the merger-related expenses.
The bank's efficiency ratio improved to 50.7 percent from 57.3 percent a year ago when merger costs and other items were included.
Excluding special items, CB Bancshares' efficiency ratio improved to 53.2 percent from 57 percent. The efficiency ratio measures in percentages how much it costs the bank to make a dollar of revenue.
