Central Pacific Bank sees returns surge

By Frank Cho
Advertiser Staff Writer

CPB Inc., the parent company of Central Pacific Bank, said fourth-quarter profits surged 14.5 percent on higher bank fee income and lower interest expense.

CPB, the state's fourth-largest financial institution in terms of total assets, reported net income for the three months ending Dec. 31 of $10.2 million, or 62 cents per diluted share, compared with $8.9 million, or 55 cents, in the same year-ago period.

Revenues during the quarter grew 12 percent to $27.6 million, up from $24.6 million in the same quarter a year earlier.

Asset quality continued to improve at the bank subsidiary, with total nonperforming assets decreasing by 28 percent to $2.3 million or 0.12 percent at the end of last year. That compared favorably with $3.2 million in total nonperforming assets in 2002, or 0.18 percent of total assets.

"The record performance of the past year is a result of the hard work and dedication of our employees," Clint Arnoldus, the bank holding company's chairman, president and chief executive officer, said in a statement this morning.

For the full year, CPB reported earnings of $33.3 million on total revenues of $104.3 million, a 15.9 percent increase from the $28.7 million it earned in 2001.

Earnings grew nearly 19 percent in 2002 to $2.04 per diluted share, up from $1.72 in 2001. Return on average equity rose to 20.6 percent compared to 19.3 percent, and return on average assets increased to 1.7 percent from 1.6 percent.

Arnoldus said the bank's future earnings growth will depend on expanding its market share. "Hawai'i's economy continues its gradual recovery from the shocks of 2001, with visitor arrivals increasing, strong construction activity and rising home sales," he said. "While we believe the market for financial services will grow modestly in 2003, our growth will primarily be fueled by increases in loan and deposit market share."

The bank also said it plans to expand its penetration of the investment and wealth management market in Hawai'i over the next year.

"As a result, our team is targeting annual EPS (earnings per share) growth in the 10 to 12 percent range," Arnoldus said.

Total assets grew to a record $2 billion at the end of last year, up 10 percent from $1.8 billion a year earlier. Total loans rose by 2 percent to $1.3 billion while total deposits grew to $1.6 billion, an increase of 13 percent over the previous year.

"Solid growth in commercial loans more than offset the interest rate-induced decline in residential mortgage loans," said Neal Kanda, CPB's chief financial officer. "Our loan portfolio continues to perform extremely well, with asset quality measures significantly better than those of our peers."