Central Pacific’s
net income doubles

The state's fourth-largest bank
continues to benefit from
its merger with City Bank

Central Pacific Financial Corp.'s net income more than doubled in the first quarter as the bank continued to reap benefits from its merger with City Bank.

The state's fourth-largest bank said yesterday that profit in the first quarter rose 117.5 percent to a record $17.2 million, or 59 cents a share, from $7.9 million, or 48 cents a share, a year earlier when the banks were separate companies.

Excluding merger-related expenses, Central Pacific's operating earnings were $18.1 million, or 62 cents a share, compared with $8 million, or 49 cents a share, a year earlier. Merger-related expenses were $1.5 million last quarter, down from $4.5 million in the fourth quarter.

"Our strong quarterly results demonstrate the strength and potential of our newly combined franchise," Central Pacific Chief Executive Clint Arnoldus said.

Central Pacific's earnings last quarter included a $1.5 million net gain from investment securities. The company also raised approximately $64 million last month to be used for general corporate purposes after selling more than 2 million shares of common stock.

The consensus estimate by three analysts surveyed by Thomson Financial was for 59 cents.

But analyst Joe Morford of San Francisco-based RBC Capital Markets said it appears that the bank fell short of estimates.

"Back out the securities gain and tax benefits, and earnings appear to have come in a bit below our estimate primarily due to lower fee income, but that said, overall I think the results were pretty encouraging," Morford said. "Some of the positive trends were that the (net interest) margin held in nicely -- actually a bit better than expected -- and loans grew at an 18 percent annualized pace from the fourth quarter. I expect much of that is coming out of the mainland."

Morford said he had not adjusted his earnings estimate to account for the stock offering.

Central Pacific also reaffirmed its 2005 earnings-per-share guidance of $2.50 to $2.60.

"We are extremely optimistic about the future as we continue to integrate and strengthen our team and meet with existing and prospective customers," Arnoldus said.

The bank's assets and deposits jumped last quarter as a result of the merger. Assets jumped 109.3 percent to $4.8 billion from $2.3 billion a year earlier.

Deposits gained 87.4 percent to $3.4 billion from $1.8 billion a year ago.

Loans and leases grew 121.7 percent to $3.2 billion from $1.5 million a year earlier and grew by 4.4 percent, from the end of last year.

Net interest income, which reflects the difference of what the bank pays depositors and what it brings in from loans, more than doubled to $46.3 million from $22.7 million but was up just $32,000 from the end of last year after the merger.

The net interest margin widened to 4.59 percent last quarter from 4.52 percent a year earlier but was down from 4.6 percent at the end of 2004.

Nonperforming assets rose 32.8 percent to $9.9 million, or 0.21 percent of total assets, compared with $7.5 million, or 0.33 percent of total assets, a year earlier. At the end of last year, nonperforming assets were $10.9 million, or 0.23 percent of total assets.