Posted on: Wednesday, July 28, 2004
Central Pacific seeks voluntary staff reductions
By Deborah Adamson
Advertiser Staff Writer
Central Pacific Financial Corp. yesterday said that it's looking into a program that would give employees an incentive to leave voluntarily.
In a conference call with analysts about its second-quarter earnings, Central Pacific CEO Clint Arnoldus said the company will stick to its pledge of not having involuntary layoffs as a result of its merger with the parent of City Bank.
But Central Pacific and CB Bancshares expect to cut costs through a voluntary termination program, a 20 percent attrition rate in personnel and a hiring freeze.
Arnoldus didn't provide more details about the voluntary program. A spokeswoman for the bank said that it's one option that could be offered if needed but nothing is in place at this time.
The merger is expected to close on Sept. 15, two days after both banks hold their annual shareholders meetings.
"We feel very positive about how the integration effort is proceeding," Arnoldus said. "Building a really formidable community bank will fill a much needed niche in Hawai'i."
Central Pacific also reported an 8.6 percent increase in its second-quarter earnings, driven in part by higher income from fiduciary activities and service charges as well as reduced taxes.
Net income came to $8.7 million, or 53 cents a share, compared with $8 million, or 49 cents, in the like period a year ago. Wall Street expected profits of 51 cents a share.
Revenue rose by 3 percent to $26.7 million in the quarter, up from $26 million.
Total assets rose by 20 percent to $2.5 billion. Total deposits went up by 13 percent to $1.93 billion.
But the level of nonperforming loans rose to $8.7 million from $7.5 million in the previous quarter and from $274,000 a year ago. The quarter-over-quarter change mainly came from $1.5 million in borrowings tied to a commercial property in the process of being sold.
Loans delinquent for 90 days or more rose to $14.4 million — mostly related to one borrower. But the loans are adequately secured by commercial and residential properties, the bank said. A year ago, these loans topped $1.8 million.
Brett Rabatin, an analyst at Midwest Research in Tennessee, said while it was a good quarter overall, he is concerned about the higher level of loans delinquent for 90 days or more. But he believes it's because of a unique situation and not part of a trend of deteriorating credit quality.
Shares of Central Pacific rose by 62 cents to $27.10 yesterday.
Reach Deborah Adamson at dadamson@honoluluadvertiser.com or 525-8088.
