Central Pacific’s
earnings rise 8.6%
Central Pacific Financial Corp. posted an 8.6 percent increase in second-quarter profits in what likely will be its final quarter before its merger with City Bank's parent.
Earnings grew to $8.7 million, or 53 cents a share, to exceed the consensus of 51 cents by the only two analysts who cover the company. A year ago, net income was $8 million, or 49 cents a share.
Central Pacific , which expects to merge with CB Bancshares Inc. in the third quarter, is offering CB Bancshares shareholders $20 in cash and 2.6752 shares of Central Pacific stock for each share of CB Bancshares stock.
The deal was worth more than $92 a share at today's market close.
"The company had an exciting second quarter that began with (the merger agreement)," said Clint Arnoldus, chairman, president and chief executive of Central Pacific.
Shareholders from both banks will have their final chance to vote on the merger Sept. 13 at Dole Cannery in Iwilei. Central Pacific has planned two informational briefings before the deadline. One meeting will be from 10 a.m. to 2 p.m. Aug. 17 at the Central Pacific Business Club. The other meeting is scheduled for 5:30 to 7:30 p.m. Aug. 18 at the Japanese Cultural Center of Hawaii.
Central Pacific expects the combined bank to have net income of $72.4 million in fiscal 2005 and $80.8 million in fiscal 2006 with the combined operations saving $19.5 million a year by 2006. Central Pacific also has said it will take an after-tax restructuring charge of about $50 million.
By itself, Central Pacific expects earnings per share to grow 5 percent to 7 percent in 2004.
Central Pacific attributed its second-quarter results to loan and deposit growth and increases in fee income.
Total loans and leases increased 22.7 percent to $1.6 billion from $1.3 billion a year ago while deposits gained 13.1 percent to $1.9 billion from $1.7 billion. Assets rose 19.6 percent to $2.5 billion from $2.1 billion.
Central Pacific's net interest margin, which reflects the difference of what it paid depositors and what it brought in from loans, fell to 4.31 percent from 4.79 percent due to repricing loans and continued low interest rates.
But net interest income rose 1.5 percent to $26 million while other operating income, including fees and service charges on deposit accounts, rose 11.7 percent to $4.1 million.
Central Pacific's return on equity, a measure of how well it used reinvested earnings to generate additional earnings, fell to 17.05 percent from 17.31 percent.
Its return on average assets ratio, which indicates how many dollars of profits it achieves for each dollar of assets it controls, dropped to 1.50 percent from 1.56 percent.
The bank's total nonperforming assets jumped 3,091 percent to $8.7 million from $274,000 a year ago in part because of the addition of $1.5 million in commercial property that is in the process of being sold. Loans delinquent for 90 days or more rose 694.5 percent to $14.4 million primarily due to two borrowers.
The loans are secured by commercial and residential properties, the bank said.