City Bank earnings roar
on eve of merger

City Bank's parent company, which will disappear if its merger with rival Central Pacific Financial Corp. is approved by shareholders in September, is going out with a bang.

chart CB Bancshares Inc. continued to show why it was an attractive takeover target when its second-quarter net income rose 171.1 percent from the same period a year ago.

"This reflects five consecutive quarters of outstanding financial performance," said Ronald Migita, president and chief executive of CB Bancshares. "The success of our business is supported by sound asset quality, steady growth in loan volume and core deposits, which are expected to remain strong, and the continued efforts of our dedicated employees."

Shareholders of CB Bancshares and Central Pacific will have their final chance to vote on the $414 million merger Sept. 13. As of yesterday's market close, the value of the deal was about $92.20 a share for each share of CB Bancshares stock.

CB Bancshares, which has incurred $8.9 million in merger expenses, saw those expenses diminish last quarter to $1.9 million from $4.2 million a year ago when the bank was fighting what was then a hostile takeover attempt. The two banks announced their merger agreement on April 23, 2004.

Net income in the second quarter was $11.8 million, or $2.63 a share, compared with $4.4 million, or 99 cents a share, a year ago.

Assets rose 10.9 percent to $1.9 billion from $1.7 billion. Deposits gained 16.1 percent to $1.4 billion from $1.2 billion. And loans increased 16.7 percent to $1.4 billion from $1.2 billion. The strength of a 28 percent gain in the bank's commercial loan and commercial real estate portfolio more than offset a 12 percent decline in the bank's residential real estate business.

Commercial loans are corporate loans while commercial real estate loans are made in conjunction with real estate projects or construction loans.

"We expect the growth in our commercial and commercial real estate loans to remain strong," CB Bancshares Chief Financial Officer Dean Hirata said. "We would expect the residential real estate portfolio to continue to decrease because there are prepayments due to refinancings that has started to slow with the increase in interest rates."

CB Bancshares' nonperforming loans and nonperforming assets continued to show decreases.

Nonperforming loans fell 59.6 percent to $4.2 million from $10.3 million. Nonperforming assets declined 61.8 percent to $4.3 million from $11.1 million.

"The second quarter of 2003 marked a turning point in the asset quality of the bank, which positioned us for loan growth going forward as reflected in the last five quarters of strong earnings," Hirata said.

The bank also reduced its provision for credit losses to $500,000 from $550,000 a year ago.

CB Bancshares' net interest margin, which reflects the difference between what it paid depositors and what it brought in from loans, slipped to 4.76 percent from 4.82 percent.

Noninterest income, which includes revenue from service charges and fees, gained 121.6 percent to $14.3 million from $6.5 million a year ago. The gain was primarily due to a $2.9 million gain in investment securities, a $4 million lawsuit settlement and a $2.7 million gain on a sale of real estate that the bank had foreclosed on.

Hirata declined to provide any details on the settlement other than to say it did not involve Central Pacific Bank.


E-mail to Business Editor


Text Site Directory:
[News] [Business] [Features] [Sports] [Editorial] [Do It Electric!]
[Classified Ads] [Search] [Subscribe] [Info] [Letter to Editor]
© 2004 Honolulu Star-Bulletin --