18% CPB stock dip prompts early earning report

By Dan Nakaso
Advertiser Staff Writer

Shares of CPB Inc., the parent company of Central Pacific Bank, dropped as much as 18 percent yesterday, prompting the company to issue its earnings statement a day early. The company reported its 12th consecutive quarter of record earnings.

CPB stock closed down $5.01, or 13.7 percent, at $31.50 on higher-than-normal volume of 297,205 shares. The company said the share price fell because an unidentified index fund apparently unloaded 85,400 shares yesterday.

CPB originally planned to release its earnings report today, but sped up the release after the drop in its shares.

"We decided to issue it a little early," said Ann Takiguchi, spokeswoman for the bank.

Clint Arnoldus, chairman, president and chief executive officer of CPB Inc., said: "Price movement from today's unusual trading activity is not consistent with our financial performance or condition. We understand that this activity is a one-time transaction by an institutional shareholder whose investment style was converted to match a stock index of which we are not a member."

A stock index fund keeps a portfolio of stocks designed to match the performance of a particular stock index, such as the Standard & Poor's 500.

CPB said yesterday its second quarter net income totaled $7.7 million, or a 33 percent increase compared to the same period for last year. Arnoldus credited marketing efforts to attract core deposits, management of credit risk and management of the "interest rate sensitivity of our assets and liabilities" for the second quarter performance.

Second quarter revenues grew 13 percent, to $25.2 million. The provision for loan losses was $300,000 — down from the $900,000 posted in the second quarter of 2001. And while salaries and employee benefits increased by $1.1 million, or 17 percent, overall operating expenses rose only 6 percent, to $13.2 million.

Total assets have grown 8 percent, to $1.9 billion. Investment securities grew 28 percent; loans increased 2 percent.

"Looking ahead," Arnoldus said, "we anticipate loan growth to accelerate as the Hawai'i economy improves and as we increase our market share."

CPB Inc., the state's third-largest commercial bank holding company, was rated as the 25th best performing bank in the nation by the ABA Banking Journal, a monthly magazine published by the American Bankers Association.

Advertiser news services contributed to this report.