<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to ________________
Commission file number 0-10777
CPB INC.
(Exact name of registrant as specified in its charter)
Hawaii 99-0212597
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
220 South King Street, Honolulu, Hawaii 96813
(Address of principal executive offices) (Zip Code)
(808)544-0500
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
X Yes No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, No Par Value, $1.25 Stated Value;
Outstanding at June 30, 1995 - 5,241,903 shares
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The financial statements listed below are filed as a part hereof.
Page
Consolidated Balance Sheets - June 30, 1995 and
December 31, 1994 F-1
Consolidated Statements of Income - Three and six months ended
June 30, 1995 and 1994 F-2
Consolidated Statements of Cash Flows - Six months ended
June 30, 1995 and 1994 F-3
Notes to Consolidated Financial Statements F-4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Overview
CPB Inc. (the "Company") posted second quarter 1995 net income of $3.523
million, increasing by 1.2% over the $3.480 million earned in the second
quarter of 1994. Net income for the first six months of 1995 was $6.965
million, increasing by 5.4% over the $6.606 million earned in the same period
in 1994. Increases in net interest income contributed to the increase in
earnings for the second quarter and first half of 1995 compared with the same
periods in 1994. In addition, net income for the first half of 1994 reflected
expenses of approximately $915,000 related to the Voluntary Early Retirement
Program (the "VERP") which was offered to qualified employees of Central
Pacific Bank (the "Bank), a subsidiary of the Company (refer to "Results of
Operations -- Other Operating Expense"). As of June 30, 1995, total assets of
$1,395.1 million increased by $13.6 million or 1.0%, net loans of $999.2
million increased by $25.5 million or 2.6%, and total deposits of $1,103.3
million increased by $21.4 million or 2.0% when compared with year-end 1994.
The following table presents return on average assets, return on average
stockholders' equity and earnings per share for the periods indicated.
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Annualized return on
average assets 1.03% 1.07% 1.01% 1.02%
Annualized return on average
stockholders' equity 11.13% 12.00% 11.13% 11.43%
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Earnings per share $0.67 $0.66 $1.33 $1.26
</TABLE>
The State of Hawaii's economy has shown signs of recovery in certain
sectors during the first half of 1995, but there is little evidence to support
a strong and lasting recovery. The visitor count during the first six months
of 1995 increased by 1.9% over 1994 levels, and industry analysts forecast
continued strength through the third quarter of the year. In particular,
tourism from Japan increased 10.9% in June 1995 compared with the same period
last year based on the strength of the Japanese currency. Conversely, the
local labor market has shown signs of weakness. Although slightly better than
the national average, the state unemployment rate reached 5.6% in June 1995,
increasing by 0.6% over the previous month. Further, the State of Hawaii
recently announced layoffs of approximately 700 employees in response to a
projected budget deficit. Economic uncertainty is also reflected in the local
housing market with prices holding flat and the number of sales declining
substantially. The results of operations of the Company for the second half
of 1995 will depend on the speed, strength and duration of economic recovery
in the State of Hawaii.
Results of Operations
Net Interest Income
A comparison of net interest income for the three and six months ended June
30, 1995 and 1994 is set forth below on a taxable equivalent basis using an
assumed income tax rate of 35%. Net interest income, when expressed as a
percentage of average interest earning assets, is referred to as "net interest
margin."
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
1995 1994 1995 1994
(Dollars in thousands)
<S> <C> <C> <C> <C>
Interest income $27,508 $22,884 $53,522 $45,447
Interest expense 11,366 7,373 21,958 14,541
Net interest income $16,142 $15,511 $31,564 $30,906
Net interest margin 5.07% 5.16% 4.94% 5.15%
</TABLE>
Interest income increased by $4.6 million or 20.2% and $8.1 million or
17.8% in the second quarter and first half of 1995, respectively, as compared
to the same periods in 1994 due to the higher level of interest rates in 1995.
In addition, average interest earning assets of $1,273.8 million and $1,277.0
million for the second quarter and first half of 1995, respectively, increased
by $72.0 million or 6.0% and $77.7 million or 6.5%, respectively, over the
same periods in 1994. As a result, the yield on interest earning assets for
the three and six months ended June 30, 1995 as compared to the same periods
in 1994 increased to 8.64% from 7.62% and to 8.38% from 7.58%, respectively.
2
<PAGE>
Interest and fees on loans increased by $4.5 million or 23.7% and $7.6
million or 20.0% in the second quarter and first half of 1995, respectively,
as compared to the same periods in 1994 due primarily to the increase in
interest rates during the first half of 1995. Interest on loans for the three
and six months ended June 30, 1995 also included $485,000 of previously
unaccrued interest on two nonaccrual loans which were repaid during the second
quarter of 1995 (refer to Results of Operations -- Nonperforming Assets).
However, fees on loans, which are included in interest income, decreased by
$47,000 or 7.9% and by $535,000 or 35.2% during those periods, partially
offsetting the increased yields on loans. Interest on deposits in other banks
increased by $272,000 or 50.0% and interest on Federal funds sold and
securities purchased under agreements to resell increased by $279,000 or
489.5% for the first half of 1995 as compared to the first half of 1994 due to
a combination of the rise in short-term interest rates and an increase in
average balances during 1995.
Interest expense for the three and six months ended June 30, 1995 increased
by $4.0 million or 54.2% and $7.4 or 51.0%, respectively, as compared to the
same periods in 1994, also a result of the upward interest rate trend
experienced in 1995. Average interest-bearing liabilities of $1,080.7 million
for the second quarter of 1995 increased by $62.7 million or 6.2% when
compared to the second quarter of 1994. Average interest-bearing liabilities
for the first half of 1995 of $1,084.3 million also increased by $68.6 million
or 6.8% when compared with the comparable period in 1994. As such, the rate
on interest-bearing liabilities for the second quarter and first half of 1995
as compared to the same periods in 1994 increased to 4.21% from 2.90% and to
4.05% from 2.86%, respectively, due primarily to the increase in rates paid on
the Bank's deposits and shifts in balances to higher-rate deposit products.
As a result, net interest income for the second quarter and first half of
1995 increased by $631,000 or 4.1% and $658,000 or 2.1%, respectively, over
the same periods in 1994. Net interest margin, however, decreased during the
same periods as average interest-bearing liabilities and the average rate on
those liabilities grew at a higher rate than average interest earning assets
and their corresponding average yield. Due to the expectation of increased
competition for both loans and deposits, the Company anticipates a continued
tightening of the net interest margin for the remainder of 1995.
Provision for Loan Losses
The provision for loan losses is determined by Management's ongoing
evaluation of the loan portfolio and assessment of the ability of the
allowance to cover inherent losses. Such evaluation is based upon the Bank's
loan loss experience and projections by loan category, the level and nature of
current delinquencies and delinquency trends, the quality and loss potential
of specific loans in the Bank's portfolio, evaluation of collateral for such
loans, the economic conditions affecting collectibility of loans, trends of
loan growth and such other factors which, in Management's judgment, deserve
recognition in the estimation of losses inherent in the Bank's loan portfolio.
3
<PAGE>
Provision for loan losses, loan charge-offs, recoveries, net loan charge-
offs (recoveries) and the annualized ratio of net loan charge-offs to average
loans and other real estate are set forth below for the periods indicated.
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Provision for loan losses $825 $825 $1,650 $1,650
Loan charge-offs $165 $492 $ 295 $ 650
Recoveries 173 83 216 134
Net loan charge-offs
(recoveries) $ (8) $409 $ 79 $ 516
Annualized ratio of net loan
charge-offs to average loans
and other real estate - 0.17% 0.02% 0.11%
</TABLE>
The provision for loan losses of $825,000 and $1,650,000 for the second
quarter and first half of 1995, respectively, remained constant with the same
periods in 1994. Net loan charge-offs of $79,000 for the first half of 1995,
when expressed as an annualized percentage of average total loans and other
real estate, was 0.02%. Net loan recoveries of $8,000 were recorded in the
second quarter of 1995. Approximately 93% of all loans charged off during the
first half of 1995 were consumer loans. The allowance for loan losses
expressed as a percentage of total loans was 1.95% and 1.84% at June 30, 1995
and December 31, 1994, respectively.
Management believes that the allowance for loan losses at June 30, 1995 was
adequate to cover the credit risks inherent in the loan portfolio. However,
no assurance can be given that economic conditions which may adversely affect
the Bank's customers or other circumstances, such as material and sustained
declines in real estate values, will not result in increased losses in the
Bank's loan portfolio.
4
<PAGE>
Nonperforming Assets
The following table sets forth nonperforming assets, accruing loans which
were delinquent for 90 days or more and restructured loans still accruing
interest at the dates indicated.
<TABLE>
<CAPTION>
June 30, December 31, June 30,
1995 1994 1994
(Dollars in thousands)
<S> <C> <C> <C>
Nonaccrual loans $ 3,696 $16,056 $ 4,125
Other real estate 3,356 2,242 2,758
Total nonperforming assets 7,052 18,298 6,883
Loans delinquent for 90 days or more 10,092 12,872 6,878
Restructured loans still accruing interest 5,974 8,486 -
Total nonperforming assets, loans delinquent
for 90 days or more and restructured
loans still accruing interest $23,118 $39,656 $13,761
Total nonperforming assets as a percentage
of total loans and other real estate 0.69% 1.84% 0.73%
Total nonperforming assets and loans
delinquent for 90 days or more as a
percentage of total loans and other
real estate 1.68% 3.14% 1.46%
Total nonperforming assets, loans
delinquent for 90 days or more and
restructured loans still accruing interest
as a percentage of total loans
and other real estate 2.26% 3.99% 1.46%
</TABLE>
Nonperforming assets, loans delinquent for 90 days or more and restructured
loans still accruing interest totalled $23.1 million at June 30, 1995,
decreasing by $16.5 million or 41.7% from year-end 1994. Nonaccrual loans,
loans delinquent for 90 days or more and restructured loans still accruing
interest were comprised primarily of loans secured by commercial or
residential real property in the State of Hawaii. Nonaccrual loans of $3.7
million were comprised of two commercial real estate loans and two residential
real estate loans. During the second quarter of 1995, nonaccrual loans to a
single borrower totalling $11,250,000 were paid in full, along with $485,000
of previously unaccrued interest thereon. Other real estate of $3.4 million
at June 30, 1995 consisted of several residential properties acquired by the
Bank through formal foreclosure proceedings. Write-downs totalling $175,000
were made to reflect declines in values on several properties during the
second quarter of 1995. Loans delinquent for 90 days or more and still
accruing interest totaled $10.1 million at June 30, 1995, decreasing by $2.8
million or 21.6% from year-end 1994.
5
<PAGE>
This decrease was due primarily to loans being paid in full or brought current
by borrowers. Management continues to closely monitor loan delinquencies
and is maintaining its efforts to determine the extent of loss exposure on
these and all other loans. A continued decline in general economic conditions
may result in further increases in nonperforming assets, delinquencies, net
loan charge-offs and provisions for loan losses.
In January 1995, the Company adopted the provisions of the Financial
Accounting Standards Board (the "FASB") Statement of Financial Accounting
Standards ("SFAS") No. 114, "Accounting by Creditors for Impairment of a
Loan," and SFAS No. 118, "Accounting by Creditors for Impairment of a Loan -
Income Recognition and Disclosures." SFAS Nos. 114 and 118 prescribe the
recognition criteria for loan impairment and the measurement methods for
certain impaired loans and loans whose terms are modified in troubled debt
restructurings. The effects of the implementation were not material to the
consolidated financial statements of the Company. At June 30, 1995, there
were no impaired loans not already included in nonaccrual loans, loans
delinquent for 90 days or more or restructured loans still accruing interest.
Other Operating Income
Total other operating income in the second quarter of 1995 of $2,604,000
decreased by $141,000 or 5.1% from the second quarter of 1994. A decline in
partnership income of $121,000, due primarily to the capitalization of costs
in 1994 related to the development of the Kaimuki Plaza, caused the majority
of the decline in other operating income.
Total other operating income for the first half of 1995 of $5,426,000
decreased by $103,000 or 1.9% from the first half of 1994. The decrease was
due primarily to a decline of $195,000 in gains from loan sales.
Other Operating Expense
Total other operating expense of $12,031,000 for the second quarter of 1995
increased by $513,000 or 4.5% over the same period in 1994. Salaries and
employee benefits of $6,240,000 increased by $165,000 or 2.7% as the number of
employees increased during this period, a result of the recent establishment
of the new In-Store Branch Department and the opening of two branches during
the past year. Other expenses increased $264,000 or 7.6% due in part to
write-downs on other real estate totalling $175,000 and related operating
expenses recorded in the second quarter of 1995.
Total other operating expense of $23,706,000 for the first half of 1995
increased by $38,000 or 0.2% over the first half of 1994. Salaries and
employee benefits of $12,475,000 decreased by $546,000 or 4.2% due in part to
costs incurred by the Bank in 1994 relating to the VERP. During the first
quarter of 1994, the Bank offered a special retirement bonus to qualifying
individuals who elected to retire by April 1, 1994. The total cost of the
VERP, which included a retirement bonus, accumulated vacation pay and related
payroll taxes thereon, amounted to approximately $915,000. Excluding the
impact of the VERP, salaries and employee benefits increased by $369,000
during the first half of 1995 due to the Bank's
6
<PAGE>
recent expansion. Other expenses of $7,143,000 increased by $363,000 or 5.4%
due to the other real estate write-downs and an increase in charge card
expenses.
Income Taxes
The effective tax rates for the second quarter and first half of 1995 were
39.67% and 39.61%, respectively, compared with the previous year's rates of
40.08% and 39.59%, respectively. The difference in effective rates during the
current year was attributable largely to the changes in tax-exempt investment
securities holdings during the first half of 1995 compared to the previous
year.
Financial Condition
Total assets at June 30, 1995 of $1,395.1 million increased by $13.6
million or 1.0% from December 31, 1994. Cash and due from banks of $46.0
million decreased by $15.6 million or 25.4%, while net loans of $999.2 million
increased by $25.5 million or 2.6% and investment securities increased by $5.9
million or 2.4%.
Total deposits at June 30, 1995 of $1,103.3 million increased by $21.4
million or 2.0% from year-end 1994. Noninterest-bearing deposits of $154.3
million decreased by $8.5 million or 5.2%, while interest-bearing deposits of
$949.0 million increased by $29.9 million or 3.2%. Core deposits
(noninterest-bearing demand, interest-bearing demand and savings deposits, and
time deposits under $100,000) at June 30, 1995 of $861.5 million decreased by
$17.1 million or 1.9% during the first half of 1995, while time deposits of
$100,000 or more of $241.7 million increased by $38.5 million or 18.9% during
the six months ended June 30, 1995. The decline in core deposits resulted
from a combination of declines in business savings and money market accounts
which decreased by $7.1 million and $11.3 million, respectively, and personal
savings accounts which decreased by $9.2 million during the first half of
1995. Higher deposit rates offered during the first half of 1995 attracted
depositors to longer-term, higher-yielding certificates of deposits as time
deposits with maturities greater than one year increased by $22.7 million.
Capital Resources
Stockholders' equity of $127.3 million at June 30, 1995 increased by $6.2
million or 5.1% from December 31, 1994. Approximately $1.5 million of this
increase was attributable to the reduction in the unrealized loss, net of
taxes, on investment securities available for sale. When expressed as a
percentage of total assets, stockholders' equity was 9.12% and 8.77% at June
30, 1995 and December 31, 1994, respectively. On June 13, 1995, the Board of
Directors declared a second quarter cash dividend of $0.22 per share, bringing
total dividends declared to $0.44 per share for the first half of 1995,
consistent with dividends declared during the same period in 1994. Dividends
declared in the first half of 1995 totalled $2,305,000 compared with
$2,303,000 in the first half of 1995. The Company's objective with respect to
capital resources is to maintain a level of capital that will support
sustained asset growth and anticipated credit risks and to ensure that
regulatory guidelines and industry standards are met.
7
<PAGE>
Regulations on capital adequacy guidelines adopted by the Federal Reserve
Board (the "FRB") and the Federal Deposit Insurance Corporation (the "FDIC")
are as follows. Effective December 31, 1992, an institution is required to
maintain a minimum ratio of qualifying total capital to risk-weighted assets
of 8%, of which at least 4% must consist of Tier I capital, essentially common
stockholders' equity (before unrealized loss on investment securities) less
intangible assets. The FRB and the FDIC have also adopted a minimum leverage
ratio of Tier I capital to total assets of 3%. The leverage ratio requirement
establishes the minimum level for banks that have a uniform composite
("CAMEL") rating of 1, and all other institutions and institutions
experiencing or anticipating significant growth are expected to maintain
capital levels at least 100 to 200 basis points above the minimum level.
Furthermore, higher leverage and risk-based capital ratios are required to be
considered well-capitalized or adequately capitalized under the prompt
corrective action provisions of the FDIC Improvement Act of 1991. The
following table sets forth capital requirements applicable to the Company and
the Company's capital ratios as of the dates indicated.
<TABLE>
<CAPTION>
Required Actual Excess
<S> <C> <C> <C>
At June 30, 1995:
Tier I risk-based capital ratio 4.00% 11.57% 7.57%
Total risk-based capital ratio 8.00% 12.82% 4.82%
Leverage capital ratio 4.00% 9.13% 5.13%
At December 31, 1994:
Tier I risk-based capital ratio 4.00% 11.31% 7.31%
Total risk-based capital ratio 8.00% 12.56% 4.56%
Leverage capital ratio 4.00% 8.84% 4.84%
</TABLE>
The increase in retained earnings, which exceeded the rate of growth in
risk-weighted assets in the first half of 1995, contributed to the increase in
capital ratios.
In addition, effective December 19, 1992, FDIC-insured institutions such as
the Bank must maintain leverage, Tier I and total risk-based capital ratios of
at least 5%, 6% and 10%, respectively, to be considered "well capitalized"
under the prompt corrective action provisions of the FDIC Improvement Act of
1991.
The following table sets forth the Bank's capital ratios as of the dates
indicated.
<TABLE>
<CAPTION>
Required Actual Excess
<S> <C> <C> <C>
At June 30, 1995:
Tier I risk-based capital ratio 6.00% 10.40% 4.40%
Total risk-based capital ratio 10.00% 11.66% 1.66%
Leverage capital ratio 5.00% 8.53% 3.53%
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Required Actual Excess
<S> <C> <C> <C>
At December 31, 1994:
Tier I risk-based capital ratio 6.00% 10.11% 4.11%
Total risk-based capital ratio 10.00% 11.37% 1.37%
Leverage capital ratio 5.00% 8.17% 3.17%
</TABLE>
Liquidity and Effects of Inflation
A discussion of liquidity and effects of inflation is included in the 1994
Annual Report to Shareholders. No significant changes in the Company's
liquidity position or policies have occurred during the six months ended June
30, 1995.
9
<PAGE>
PART II - OTHER INFORMATION
Items 1 to 5.
Items 1 to 5 are omitted pursuant to instructions to Part II.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K during the second quarter of
1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CPB INC.
(Registrant)
Date: August 11, 1995 /s/ Yoshiharu Satoh
Yoshiharu Satoh
Chairman of the Board and
Chief Executive Officer
Date: August 11, 1995 /s/ Neal Kanda
Neal Kanda
Vice President and Treasurer
(Principal Financial and
Accounting Officer)
10
<PAGE>
CPB INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION> June 30, December 31,
(Dollars in thousands, except per share data) 1995 1994
<S> <C> <C>
Assets
Cash and due from banks $ 45,970 $ 61,604
Interest-bearing deposits in other banks 40,132 40,277
Federal funds sold and securities purchased under agreements to resell - -
Investment securities:
Held to maturity, at cost (fair value $155,233 and $157,345 at
June 30, 1995 and December 31, 1994, respectively) 156,256 162,098
Available for sale, at fair value 93,403 81,690
Total investment securities 249,659 243,788
Loans 1,019,060 991,968
Less allowance for loan losses 19,867 18,296
Net loans 999,193 973,672
Premises and equipment 24,119 24,217
Accrued interest receivable 9,303 9,781
Investment in partnership 5,889 5,428
Due from customers on acceptances 935 1,459
Other assets 19,897 21,313
Total assets $ 1,395,097 $ 1,381,539
Liabilities and Stockholders' Equity
Deposits:
Noninterest-bearing deposits $ 154,276 $ 162,776
Interest-bearing deposits 949,001 919,133
Total deposits 1,103,277 1,081,909
Federal funds purchased and securities sold under
agreements to repurchase 57,000 67,355
Other borrowed funds 92,169 94,324
Bank acceptances outstanding 935 1,459
Other liabilities 13,959 14,889
Employee stock ownership plan note payable 500 500
Total liabilities 1,267,840 1,260,436
Stockholders' equity:
Preferred stock, no par value, authorized 1,000,000 shares, none issued - -
Common stock, no par value, stated value $1.25 per share;
authorized 25,000,000 shares; issued and outstanding 5,241,903 and
5,235,331 shares at June 30, 1995 and December 31, 1994, respectively 6,552 6,544
Surplus 45,210 45,178
Retained earnings 76,046 71,386
Unrealized loss on investment securities (51) (1,505)
127,757 121,603
Employee stock ownership plan shares purchased with debt (500) (500)
Total stockholders' equity 127,257 121,103
Total liabilities and stockholders' equity $ 1,395,097 $ 1,381,539
Book value per share $ 24.28 $ 23.13
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
F-1
<PAGE>
CPB INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
(Dollars in thousands, except per share data) 1995 1994 1995 1994
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 23,511 $ 19,007 $ 45,350 $ 37,791
Interest and dividends on investment securities:
Taxable interest 3,278 3,120 6,474 6,228
Tax-exempt interest 33 88 68 210
Dividends 191 190 378 435
Interest on deposits in other banks 436 346 816 544
Interest on Federal funds sold and securities purchased
under agreements to resell 9 28 336 57
Total interest income 27,458 22,779 53,422 45,265
Interest expense:
Interest on deposits 9,221 5,937 17,671 11,755
Interest on other borrowed funds 2,145 1,436 4,287 2,786
Total interest expense 11,366 7,373 21,958 14,541
Net interest income 16,092 15,406 31,464 30,724
Provision for loan losses 825 825 1,650 1,650
Net interest income after provision for loan losses 15,267 14,581 29,814 29,074
Other operating income:
Service charges on deposit accounts 638 685 1,314 1,354
Other service charges and fees 1,270 1,280 2,588 2,545
Partnership income 285 406 671 739
Fees on foreign exchange 270 254 564 535
Investment securities gains (5) - 25 -
Other 146 120 264 356
Total other operating income 2,604 2,745 5,426 5,529
Other operating expense:
Salaries and employee benefits 6,240 6,075 12,475 13,021
Net occupancy 1,420 1,332 2,778 2,598
Equipment 641 645 1,310 1,269
Other 3,730 3,466 7,143 6,780
Total other operating expense 12,031 11,518 23,706 23,668
Income before income taxes and cumulative effect
of accounting change 5,840 5,808 11,534 10,935
Income taxes 2,317 2,328 4,569 4,329
Net income $ 3,523 $ 3,480 $ 6,965 $ 6,606
Per common share:
Net income $ 0.67 0.66 $ 1.33 $ 1.26
Cash dividends declared $ 0.22 0.22 $ 0.44 $ 0.44
Weighted average shares outstanding (in thousands) 5,237 5,234 5,236 5,233
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
F-2
<PAGE>
CPB INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
(Dollars in thousands) 1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $ 6,965 $ 6,606
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses 1,650 1,650
Provision for depreciation and amortization 1,314 1,149
Net amortization and accretion of investment securities 977 1,464
Net loss (gain) on investment securities (25) -
Federal Home Loan Bank stock dividends received (378) (656)
Net deferred loan origination fees 360 (51)
Net change in loans held for sale 1,218 6,831
Net gain on sale of loans (9) (204)
Amortization of intangible assets 50 54
Deferred income tax expense (benefit) (1,376) 582
Partnership income (671) (739)
Decrease (increase) in accrued interest receivable and other assets 3,574 386
Increase (decrease) in accrued interest payable and other liabilities (957) (1,847)
Net cash provided by (used in) operating activities 12,692 15,225
Cash flows from investing activities:
Proceeds from maturities of and calls on investment securities held to maturity 21,937 55,202
Purchases of investment securities held to maturity (17,083) (54,944)
Proceeds from maturities of and calls on investment securities available for sale 7,493 70,841
Purchases of investment securities available for sale (16,377) (77,284)
Net decrease (increase) in interest-bearing deposits in other banks 145 (9,487)
Net loan repayments (originations) (30,029) (145)
Loans acquired in branch acquisition - (2,656)
Purchases of premises and equipment (1,423) (1,515)
Proceeds from disposal of premises and equipment 207 -
Distributions from partnership 210 340
Net cash provided by (used in) investing activities (34,920) (19,648)
Cash flows from financing activities:
Net increase (decrease) in deposits 21,368 (12,067)
Deposits acquired in branch acquisition - 10,821
Proceeds from Federal Home Loan Bank intermediate-term advances 24,000 6,600
Repayments of Federal Home Loan Bank intermediate-term advances (6,138) (25,115)
Net increase (decrease) in other short-term borrowings (30,372) 20,123
Cash dividends paid (2,304) (2,302)
Proceeds from sale of common stock 40 44
Net cash provided by (used in) financing activities 6,594 (1,896)
Net increase (decrease) in cash and cash equivalents (15,634) (6,319)
Cash and cash equivalents:
At beginning of period 61,604 63,152
At end of period $ 45,970 $ 56,833
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 23,267 $ 14,892
Cash paid during the period for income taxes $ 6,000 $ 4,480
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
F-3
<PAGE>
CPB INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The financial information included herein is unaudited, except for the
consolidated balance sheet at December 31, 1994. However, such information
reflects all adjustments (consisting solely of normal recurring adjustments)
which are, in the opinion of management, necessary for a fair statement of
results for the interim periods.
The results of operations for the three and six months ended June 30, 1995
are not necessarily indicative of the results to be expected for the full
year.
F-4
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<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 45,970
<INT-BEARING-DEPOSITS> 40,132
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 4
<INVESTMENTS-HELD-FOR-SALE> 93,403
<INVESTMENTS-CARRYING> 249,659
<INVESTMENTS-MARKET> 248,636
<LOANS> 1,019,060
<ALLOWANCE> 19,867
<TOTAL-ASSETS> 1,395,097
<DEPOSITS> 1,103,277
<SHORT-TERM> 63,000
<LIABILITIES-OTHER> 13,959
<LONG-TERM> 86,669
<COMMON> 6,552
0
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<INTEREST-INCOME-NET> 31,464
<LOAN-LOSSES> 1,650
<SECURITIES-GAINS> 25
<EXPENSE-OTHER> 23,706
<INCOME-PRETAX> 11,534
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