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, 1996
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. Yes [ X ] 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, 1996: 5,267,134 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, 1996 and
December 31, 1995 F-1
Consolidated Statements of Income - Three and six
months ended June 30, 1996 and 1995 F-2
Consolidated Statements of Cash Flows - Six months
ended June 30, 1996 and 1995 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 1996 net income of
$3.577 million, increasing by 1.5% over the $3.523 million earned
in the second quarter of 1995, notwithstanding a decrease in net
interest income in the second quarter of 1996. Net income for the
first six months of 1996 was $7.131 million, increasing by 2.4%
over the $6.965 million earned in the same period in 1995.
Reductions in the provision for loan losses and Federal Deposit
Insurance Corporation ("FDIC") deposit assessment contributed to
the increase in earnings for the second quarter and first half of
1996 compared with the same periods in 1995. As of June 30, 1996,
total assets of $1,365.0 million decreased by $6.9 million or 0.5%,
and total deposits of $1,110.0 million decreased by $28.4 million
or 2.5% compared with year-end 1995. During the same period, net
loans of $998.5 million increased by $28.3 million or 2.9%.
The following table presents return on average assets, return on
average stockholders' equity and earnings per share for the periods
indicated.
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
Annualized return on
average assets 1.06% 1.03% 1.05% 1.01%
Annualized return on average
stockholders' equity 10.56% 11.13% 10.57% 11.13%
1
<PAGE>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
Earnings per share $0.68 $0.67 $1.36 $1.33
Hawaii's economy has shown signs of recovery in certain sectors
during the first half of 1996, but there is little evidence to
support a strong and lasting recovery. The visitor industry
continues to sustain the economy, with the visitor count during the
first six months of 1996 increasing by 6.8% over 1995 levels. The
development of the Hawaii Convention Center is expected to further
contribute to the growth of the visitor industry in the future.
Conversely, the local labor market has shown signs of weakness. In
June of 1996, the state unemployment rate was 6.8%, surpassing the
national rate of 5.5%, and reaching a level matched only once in
the past thirteen years. Likewise, the residential real estate
market has experienced declines in both volume and average sales
price during the past year. Bankruptcies and foreclosures also
increased over 1995 levels. In summary, although local economists
characterize the Hawaii economy as being in a state of slow
recovery since 1994, evidence indicates that weakness in labor
and real estate market conditions have had, and will likely
continue to have, an adverse effect on our economy. Consequently,
the results of operations of the Company for the second half of
1996 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, 1996 and 1995 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."
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
(Dollars in thousands)
Interest income $25,886 $27,508 $52,314 $53,522
Interest expense 10,154 11,366 20,743 21,958
Net interest income $15,732 $16,142 $31,571 $31,564
Net interest margin 4.93% 4.99% 4.93% 4.87%
Interest income decreased by $1.6 million or 5.9% and $1.2
million or 2.3% in the second quarter and first half of 1996,
respectively, as compared to the same periods in 1995 due to the
2
<PAGE>
decline in earning assets and the lower level of interest rates in
1996. Average interest earning assets of $1,276.5 million and
$1,279.7 million for the second quarter and first half of 1996,
respectively, decreased by $17.4 million or 1.3% and $17.6 million
or 1.4%, respectively, from the same periods in 1995. The yield
on interest earning assets for the three and six months ended June
30, 1996 as compared to the same periods in 1995 decreased to
8.11% from 8.50% and to 8.18% from 8.25%, respectively.
Interest and fees on loans decreased by $1.9 million or 7.9% and
$1.6 million or 3.5% in the second quarter and first half of 1996,
respectively, as compared to the same periods in 1995 due to
declines in average loan balances and average loan yields during
the those periods. In addition, interest on loans for the three
and six months ended June 30, 1995 included $485,000 of previously
unaccrued interest on two nonaccrual loans which was collected
during the second quarter of 1995. Fees on loans, which are
included in interest income, increased by $33,000 or 5.7% and by
$334,000 or 25.3% during those periods, partially offsetting the
decrease in interest on loans. Interest on investment securities
for the three and six months ended June 30, 1996, increased by
$608,000 or 17.4% and by $1,413,000 or 20.4%, respectively,
compared to the same periods in 1995 due to higher average balances
and yields. Interest on deposits in other banks and interest on
Federal funds sold and securities purchased under agreements to
resell decreased from prior year levels due to an arbitrage
transaction made in 1995.
Interest expense for the three and six months ended June 30, 1996
decreased by $1.2 million or 10.7% and $1.2 million or 5.5%,
respectively, as compared to the same periods in 1995, resulting
from declines in average interest-bearing liabilities and the lower
level of short-term interest rates during those periods. Average
interest-bearing liabilities of $1,048.0 million and $1,054.1
million for the second quarter and first half of 1996 decreased by
$32.7 million or 3.0% and $30.3 million or 2.8% compared with the
comparable periods in 1995. Accordingly, the rate on interest-
bearing liabilities for the second quarter and first half of 1996
as compared to the same periods in 1995 decreased to 3.88% from
4.21% and to 3.94% from 4.05%, respectively.
As a result, net interest income for the second quarter of 1996
decreased by $410,000 or 2.5% from the second quarter of 1995, and
net interest margin declined to 4.93% from 4.99% during the same
period. Net interest income for the first half of 1996 was
virtually unchanged from the previous year, increasing by $7,000,
while net interest margin increased to 4.93% from 4.87%. Due to
the expectation of strong competition for both loans and deposits,
no assurances can be given that the Company will be able to
maintain net interest margin at its current level for the remainder
of 1996.
3
<PAGE>
Provision for Loan Losses
Provision for loan losses is determined by Management's ongoing
evaluation of the loan portfolio and assessment of the ability of
the allowance for loan losses to cover inherent losses. The
Company, considering current information and events regarding the
borrowers' ability to repay their obligations, treats a loan as
impaired when it is probable that the Company will be unable to
collect all amounts due according to the contractual terms of the
loan agreement. When a loan is considered to be impaired, the
amount of impairment is measured based on the present value of
expected future cash flows discounted at the loan's effective
interest rate or, if the loan is considered to be collateral
dependent, based on the fair value of the collateral. Impairment
losses are included in the allowance for loan losses through a
charge to the provision for loan losses. Amounts deemed
uncollectible are written-off through a charge against the
allowance for loan losses. For smaller-balance homogeneous loans
(primarily residential real estate and consumer loans), the
allowance for loan losses is based upon Management's evaluation of
the quality, character and inherent risks in the loan portfolio,
current and projected economic conditions, and past loan loss
experience. The allowance is increased by provisions charged to
operating expense and reduced by charge-offs, net of recoveries.
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 are set forth below for the periods
indicated.
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
(Dollars in thousands)
Provision for loan losses $450 $825 $ 900 $1,650
Loan charge-offs $475 $165 $ 630 $ 295
Recoveries 107 173 156 216
Net loan charge-offs
(recoveries) $368 $ (8) $ 474 $ 79
Annualized ratio of net
loan charge-offs to
average loans 0.15% - 0.10% 0.02%
The provision for loan losses of $450,000 and $900,000 for the
second quarter and first half of 1996, respectively, decreased by
45.5% compared to the same periods in 1995. Net loan charge-offs
of $368,000 and $474,000, when expressed as an annualized
percentage of average total loans, was 0.15%. Charge-offs during
the second quarter of 1996 included $231,000 for a single
residential mortgage loan. Approximately 91% of all other loans
4
<PAGE>
charged off during the first half of 1996 were consumer loans.
The allowance for loan losses expressed as a percentage of total
loans was 2.02% and 2.04% at June 30, 1996 and December 31, 1995,
respectively.
Management believes that the allowance for loan losses at June
30, 1996 was adequate to cover the credit risks inherent in the
loan portfolio. However, continuation of current economic
conditions in the State of Hawaii may adversely affect borrowers'
ability to repay, collateral values and, consequently, the level of
nonperforming loans and provision for loan losses.
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.
June 30, December 31, June 30,
1996 1995 1995
(Dollars in thousands)
Nonaccrual loans $13,380 $3,583 $ 3,696
Other real estate 2,157 2,231 3,356
Total nonperforming
assets 15,537 5,814 7,052
Loans delinquent for 90
days or more 12,271 9,189 10,092
Restructured loans still
accruing interest - 5,974 5,974
Total nonperforming
assets, loans delin-
quent for 90 days or
more and restructured
loans still accruing
interest $27,808 $20,977 $23,118
Total nonperforming assets
as a percentage of total
loans and other real
estate 1.52% 0.59% 0.69%
Total nonperforming assets
and loans delinquent for
90 days or more as a
percentage of total loans
and other real estate 2.72% 1.51% 1.68%
Total nonperforming assets,
loans delinquent for 90
days or more and
restructured loans still
accruing interest as a
5
<PAGE
percentage of total loans
and other real estate 2.72% 2.11% 2.26%
Nonperforming assets, loans delinquent for 90 days or more and
restructured loans still accruing interest totalled $27.8 million
at June 30, 1996, increasing by $6.8 million or 32.6% from year-end
1995. 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 $13.4 million were comprised
of several large commercial real estate loans, including a $6.0
million loan which was transferred to nonaccrual status from its
previously classification as restructured but still accruing
interest, and several residential real estate loans. Other real
estate of $2.2 million at June 30, 1996 consisted of several
residential properties. Loans delinquent for 90 days or more and
still accruing interest totaled $12.3 million at June 30, 1996,
increasing by $3.1 million or 33.5% from year-end 1995. Increases
in delinquencies occurred in the residential and commercial real
estate portfolios. Management has increased its monitoring of loan
delinquencies and its efforts to work with borrowers to resolve
their delinquencies. Continued stagnation of local economic
conditions may result in further increases in nonperforming assets,
delinquencies, net loan charge-offs and provisions for loan losses.
Other Operating Income
Total other operating income in the second quarter of 1996 of
$2,699,000 increased by $104,000 or 4.0% from the second quarter of
1995. Partnership income declined by $184,000 or 64.6%, due to
operating losses sustained from leasing activities at the Kaimuki
Plaza and the effects on vacancies and lease rates of an oversupply
of office space in the Honolulu area. This decrease was offset by
an increase of $215,000 in other income attributable to $190,000 of
interest on income tax refunds received in the second quarter of
1996.
Total other operating income for the first half of 1996 of
$5,300,000 decreased by $117,000 or 2.2% from the first half of
1995 due primarily to the $455,000 decline in partnership income.
Due to concessions granted in connection with the leasing of the
Kaimuki Plaza, partnership income is expected to remain at this
lower level throughout the remainder of 1996 and improve slowly
over the next several years.
Other Operating Expense
Total other operating expense of $11,992,000 for the second
quarter of 1996 decreased by $30,000 or 0.2% from the same period
in 1995. Salaries and employee benefits of $6,378,000 increased by
$138,000 or 2.2%, and net occupancy expense of $1,596,000 increased
by $176,000 or 12.4% due primarily to the openings of five in-store
branches during the fourth quarter of 1995 and
6
<PAGE>
first half of 1996. Other expenses decreased by $384,000 or 10.3%
due to the $601,000 reduction in the FDIC deposit assessment, which
was partially offset by increases in computer software and charge
card related expenses.
Total other operating expense of $24,044,000 for the first half
of 1996 increased by $347,000 or 1.5% over the first half of 1995.
Salaries and employee benefits of $12,988,000 increased by $513,000
or 4.1% due to the recent branch expansions and $241,000 in
severance payments made in conjunction with a staff reduction plan
implemented in the first quarter of 1996. Other expenses of
$6,495,000 decreased by $639,000 or 9.0% due again to increases in
software and charge card expenses.
Income Taxes
The effective tax rates for the second quarter and first half of
1996 were 39.76% and 39.69%, respectively, compared with the
previous year's rates of 39.67% and 39.61%, respectively.
Financial Condition
Total assets at June 30, 1996 of $1,365.1 million decreased by
$6.9 million or 0.5% from December 31, 1995. Investment securities
of $260.7 million decreased by $22.9 million or 8.1%, while net
loans of $998.5 million increased by $28.3 million or 2.9% and
other borrowed funds of $100.8 million increased by $18.7 million
or 22.8% Proceeds from maturities of investment securities were
not reinvested and additional borrowings were made in response to
an increase in loans and a decline in deposits during the first
half of 1996.
Total deposits at June 30, 1996 of $1,109.9 million decreased by
$28.4 million or 2.5% from year-end 1995. Noninterest-bearing
deposits of $160.1 million decreased by $10.4 million or 6.1%, and
interest-bearing deposits of $949.8 million decreased by $18.0
million or 1.9%. Core deposits (noninterest-bearing demand,
interest-bearing demand and savings deposits, and time deposits
under $100,000) at June 30, 1996 of $850.1 million decreased by
$27.9 million or 3.2% during the first half of 1996, while time
deposits of $100,000 or more of $259.8 million were comparable to
year-end 1995 levels. The decline in core deposits resulted from
decreases in business checking and savings accounts of $11.7
million and $9.6 million, respectively. Local competition for
deposits remains strong and will continue to challenge the bank's
ability to gather retail funds.
Capital Resources
Stockholders' equity of $135.4 million at June 30, 1996 increased
by $2.8 million or 2.1% from December 31, 1995, reflecting the
impact of a $1.7 million increase in the unrealized loss, net of
taxes, on investment securities available for sale. When expressed
as a percentage of total assets,
7
<PAGE>
stockholders' equity was 9.92% and 9.66% at June 30, 1996 and
December 31, 1995, respectively. On June 12, 1996, the Board of
Directors declared a second quarter cash dividend of $0.24 per
share, bringing total dividends declared to $0.48 per share for the
first half of 1996, an increase of 9.1% over dividends declared
during the same period in 1995. Dividends declared in the first
half of 1996 totalled $2,527,000 compared with $2,305,000 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.
Regulations on capital adequacy guidelines adopted by the Federal
Reserve Board (the "FRB") and the FDIC are as follows. 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.
Required Actual Excess
At June 30, 1996:
Tier I risk-based
capital ratio 4.00% 12.39% 8.39%
Total risk-based
capital ratio 8.00% 13.65% 5.65%
Leverage capital ratio 4.00% 10.11% 6.11%
At December 31, 1995:
Tier I risk-based
capital ratio 4.00% 12.35% 8.35%
Total risk-based
capital ratio 8.00% 13.61% 5.61%
Leverage capital ratio 4.00% 9.61% 5.61%
In addition, FDIC-insured institutions such as the Bank must
maintain leverage, Tier I and total risk-based capital ratios of
8
<PAGE>
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.
Required Actual Excess
At June 30, 1996:
Tier I risk-based
capital ratio 6.00% 11.11% 5.11%
Total risk-based
capital ratio 10.00% 12.37% 2.37%
Leverage capital ratio 5.00% 9.46% 4.46%
At December 31, 1995:
Tier I risk-based
capital ratio 6.00% 11.05% 5.05%
Total risk-based
capital ratio 10.00% 12.31% 2.31%
Leverage capital ratio 5.00% 8.99% 3.99%
Liquidity and Effects of Inflation
A discussion of liquidity and effects of inflation is included in
the 1995 Annual Report to Shareholders. No significant changes in
the Company's liquidity position or policies have occurred during
the six months ended June 30, 1996.
9
<PAGE>
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 12, 1996 /s/ Joichi Saito
Joichi Saito
Chairman of the Board and
Chief Executive Officer
Date: August 12, 1996 /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) 1996 1995
<C> <C>
ASSETS
Cash and due from banks $ 46,929 $ 50,274
Interest-bearing deposits in other banks 184 7,140
Investment securities:
Held to maturity, at cost (fair value of $112,929
and $137,347 at June 30, 1996 and December 31,
1995, respectively) 113,713 136,693
Available for sale, at fair value 147,003 146,934
Total investment securities 260,716 283,627
Loans 1,019,120 990,356
Less allowance for loan losses 20,582 20,156
Net loans 998,538 970,200
Premises and equipment 25,173 25,452
Accrued interest receivable 10,075 9,454
Investment in partnership 6,438 6,221
Due from customers on acceptances 820 1,443
Other assets 16,108 18,098
Total assets $1,364,981 $1,371,909
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing deposits $ 160,140 $ 170,494
Interest-bearing deposits 949,795 967,825
Total deposits 1,109,935 1,138,319
Federal funds purchased and securities sold under
agreements to repurchase 2,500 2,500
Other borrowed funds 100,832 82,104
Bank acceptances outstanding 820 1,443
Other liabilities 15,541 15,036
<PAGE>
Total liabilities 1,229,628 1,239,402
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 5,267,134 and 5,251,762 shares at
June 30, 1996 and December 31, 1995, respectively 6,584 6,565
Surplus 45,461 45,337
Retained earnings 84,974 80,370
Unrealized gain (loss) on investment securities,
net of taxes (1,666) 235
Total stockholders' equity 135,353 132,507
Total liabilities and stockholders' equity $1,364,981 $1,371,909
Book value per share $25.70 $25.23
<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
(Dollars in thousands, June 30, June 30,
except per share data) 1996 1995 1996 1995
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $21,651 $23,511 $43,785 $45,350
Interest and dividends on
investment securities:
Taxable interest 3,801 3,278 7,722 6,474
Tax-exempt interest 36 33 80 68
Dividends 273 191 531 378
Interest on deposits in other banks 74 436 91 816
Interest on Federal funds sold and
securities purchased under
agreements to resell - 9 1 336
Total interest income 25,835 27,458 52,210 53,422
Interest expense:
Interest on deposits 8,618 9,221 17,775 17,671
Interest on Federal funds purchased,
securities sold under agreements
to repurchase and other borrowed
funds 1,536 2,145 2,968 4,287
Total interest expense 10,154 11,366 20,743 21,958
Net interest income 15,681 16,092 31,467 31,464
Provision for loan losses 450 825 900 1,650
Net interest income after
provision for loan losses 15,231 15,267 30,567 29,814
Other operating income:
Service charges on deposit accounts 701 638 1,373 1,314
Other service charges and fees 1,354 1,270 2,761 2,588
Partnership income 101 285 216 671
<PAGE>
Fees on foreign exchange 197 270 468 564
Investment securities gains (6) (5) (6) 25
Other 352 137 488 255
Total other operating income 2,699 2,595 5,300 5,417
Other operating expense:
Salaries and employee benefits 6,378 6,240 12,988 12,475
Net occupancy 1,596 1,420 3,204 2,778
Equipment 681 641 1,357 1,310
Other 3,337 3,721 6,495 7,134
Total other operating expense 11,992 12,022 24,044 23,697
Income before income taxes 5,938 5,840 11,823 11,534
Income taxes 2,361 2,317 4,692 4,569
Net income $ 3,577 $ 3,523 $ 7,131 $ 6,965
Per common share:
Net income $ 0.68 $ 0.67 $ 1.36 $ 1.33
Cash dividends declared $ 0.24 $ 0.22 $ 0.48 $ 0.44
Weighted average shares outstanding
(in thousands) 5,264 5,237 5,262 5,236
<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) 1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $ 7,131 $ 6,965
Adjustments to reconcile net income
to net cash provided by operating
activities:
Provision for loan losses 900 1,650
Provision for depreciation and
amortization 1,359 1,314
Net amortization and accretion of
investment securities 567 977
Net loss (gain) on investment securities 6 (25)
Federal Home Loan Bank stock
dividends received (531) (378)
Net change in loans held for sale (981) 1,218
Deferred income tax benefit (158) (1,376)
Partnership income (216) (671)
Decrease in accrued interest
receivable and other assets 2,803 3,975
Increase (decrease) in accrued
interest payable and other
liabilities 838 (957)
Net cash provided by operating
activities 11,718 12,692
Cash flows from investing activities:
Proceeds from maturities of and
calls on investment securities
held to maturity 22,383 21,937
Purchases of investment securities
held to maturity - (17,083)
Proceeds from sales, maturities and
calls on investment securities
available for sale 30,412 7,493
Purchases of investment securities
available for sale (33,091) (16,377)
Net decrease in interest-bearing
deposits in other banks 6,956 145
Net loan originations (28,607) (30,029)
Proceeds from disposal of premises
and equipment 15 207
Purchases of premises and equipment (1,095) (1,423)
Distributions from partnership - 210
Net cash used in investing
activities (3,027) (34,920)
<PAGE>
Cash flows from financing activities:
Net increase (decrease) in deposits (28,384) 21,368
Proceeds from Federal Home Loan
Bank intermediate-term advances 25,000 24,000
Repayments of Federal Home Loan
Bank intermediate-term advances (15,409) (6,138)
Net increase (decrease) in other
short-term borrowings 9,137 (30,372)
Cash dividends paid (2,523) (2,304)
Proceeds from sale of common stock 143 40
Net cash provided by (used in)
financing activities (12,036) 6,594
Net decrease in cash and cash
equivalents (3,345) (15,634)
Cash and cash equivalents:
At beginning of period 50,274 61,604
At end of period $46,929 $45,970
Supplemental disclosure of cash flow
information:
Cash paid during the period
for interest $21,448 $23,267
Cash paid during the period
for income taxes $ 990 $ 6,000
Supplemental disclosure of noncash
investing and financing activities:
Transfer of loans to other real estate $ 350 $ 1,289
<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, 1995. 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, 1996 are not necessarily indicative of the results to be
expected for the full year.
F-4
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 46,929
<INT-BEARING-DEPOSITS> 184
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 147,003
<INVESTMENTS-CARRYING> 260,716
<INVESTMENTS-MARKET> 259,932
<LOANS> 1,019,120
<ALLOWANCE> 20,582
<TOTAL-ASSETS> 1,364,981
<DEPOSITS> 1,109,935
<SHORT-TERM> 12,495
<LIABILITIES-OTHER> 15,541
<LONG-TERM> 90,698
0
0
<COMMON> 135,353
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 1,364,981
<INTEREST-LOAN> 43,785
<INTEREST-INVEST> 8,333
<INTEREST-OTHER> 92
<INTEREST-TOTAL> 52,210
<INTEREST-DEPOSIT> 17,775
<INTEREST-EXPENSE> 20,743
<INTEREST-INCOME-NET> 31,467
<LOAN-LOSSES> 900
<SECURITIES-GAINS> (6)
<EXPENSE-OTHER> 24,044
<INCOME-PRETAX> 11,823
<INCOME-PRE-EXTRAORDINARY> 7,131
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,131
<EPS-PRIMARY> 1.36
<EPS-DILUTED> 1.36
<YIELD-ACTUAL> 8.18
<LOANS-NON> 13,380
<LOANS-PAST> 12,271
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 20,156
<CHARGE-OFFS> 630
<RECOVERIES> 156
<ALLOWANCE-CLOSE> 20,582
<ALLOWANCE-DOMESTIC> 20,582
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 7,104
</TABLE>
