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The Honolulu Advertiser

Posted at 11:50 a.m., Monday, July 21, 2003

City Bank buyout defense cost $4.2M

By Andrew Gomes
Advertiser Staff Writer

The parent company of Honolulu-based City Bank said today it has spent $4.2 million defending the hostile takeover attempt by rival Central Pacific Financial Corp.

Spending on the takeover defense reduced net profit of CB Bancshares Inc. by $2.7 million, or 64 cents per share after taxes, to $4.4 million, or 99 cents per share during the three months ended June 30.

Even with the added expense, CB net earnings were still 20.4 percent higher than they were in the second quarter of 2002, the company reported.

Excluding the expense for defending the unsolicited buyout offer announced April 16, CB second-quarter net income would have been $7.1 million, or $1.63 per share, a 97.4 percent increase.

Ronald Migita, CB president and chief executive officer, said in a statement that the bank continues to improve its asset quality, core deposits and fee income.

“With a clear strategy in place, improved asset quality and a committed management team, we are well-positioned for continued earnings growth,” he said.

As of June 30, company assets were up 9.2 percent to $1.7 billion, loans were up 6.9 percent to $1.2 billion, and deposits were up 4 percent to $1.2 billion.

Nonperforming loans were down by $5.2 million, to $10.3 million. Nonperforming assets were down by $7.6 million, to $11.1 million. The bank’s provision for credit losses was down by $3.6 million, to $550,000.

CB said the improvements were due to fewer bad real estate loans, improved quality of other assets and a lack of significant affect by combat in Iraq on its loan portfolio, the company said.

For the first six months of the year, CB reported net income of $8.3 million, an increase of $1.2 million, or 16.4 percent compared with the same period last year. On a per-share basis, the increase was 15.1 percent to $1.91.

The takeover fight is expected to continue to affect earnings of both banks, with two lawsuits pending and Central Pacific vowing to press on with its acquisition attempt. Central Pacific has not disclosed costs related to the takeover bid.

Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.